Our latest Pay Less Tax newsletter is now available, with practical tax points for employers, contractors and growing companies.
This edition focuses on contractors’ responsibilities under the Construction Industry Scheme (CIS), the incentives for taking on young people who are not in education, employment or training (NEET), the pitfalls of employees working remotely overseas, and the bigger Enterprise Management Incentive (EMI) limits.
Contractors’ responsibilities
Contractors operating within the Construction Industry Scheme (CIS) often face HMRC enquiries for failing, usually inadvertently, to comply with the rules – and errors can leave the contractor liable for the CIS tax that should have been deducted, plus interest and penalties. Key areas to check include whether the work falls within CIS, whether subcontractors are genuinely self-employed, verifying subcontractors with HMRC before the first payment (and reverifying after a gap of more than two years or a change in business structure), and whether the material costs claimed by subcontractors are genuine and reasonable. We can help you navigate CIS, as well as the VAT reverse charge for construction services.
Is NEET an option?
More than one million 16 to 24 year olds – around 13.5% of that age group – are now classed as NEET: not in education, employment or training. Taking one on can be more cost-effective than you might expect: employers pay no employer’s National Insurance on earnings up to £50,270 for employees under 21, there’s a similar exemption for apprentices under 25, apprenticeship subsidies are available, and training costs are generally tax-deductible. Small, tax-free perks under the trivial benefits rules may also mean more to a younger employee than traditional benefits such as pensions or company cars.
Remote working overseas pitfalls
Letting an employee work remotely from abroad can help retain key staff, but it can bring pitfalls for the employer: a local payroll and social security contributions may be needed, a ‘permanent establishment’ could make some of the business’s profits taxable in that country, and there may be local tax registration and employment law requirements to meet. The employee may have their own tax registration needs, and can no longer pay the cheaper voluntary Class 2 National Insurance to top up their state pension record – they would need to pay the higher Class 3 contributions instead, subject to conditions. It’s worth thinking the implications through before the move is made.
The incentive just got bigger
The Enterprise Management Incentive (EMI) scheme lets a company grant share options to key employees, with valuable tax and National Insurance advantages for both the company and the employee. For options granted on or after 6 April 2026, the limits have increased significantly: the total value of shares under EMI options can be up to £6 million (previously £3 million), the company’s gross assets can be up to £120 million (previously £30 million), it must have fewer than 500 full-time equivalent employees (previously 250), and options can be exercised up to 15 years after grant (previously 10). This opens EMI up to far more companies – if you’d like to look at setting up a scheme, we’d be happy to help.