How to reclaim £180m in tax
Amid tough times for the UK construction industry, employers should be encouraging their workforce to claim back what is owed to them by HMRC, writes Jan Post, managing director of industry tax specialist RIFT.
Last week, my organisation RIFT, released a report that found a staggering £180million of tax refunds are going unclaimed by workers in the UK construction industry. With many employers cutting overtime, introducing pay freezes, or at worst, making redundancies, this report will both anger and be welcome news for many workers struggling to make ends meet.
Against a backdrop of tax cuts for the richest 1% of the country recently announced in the budget, many would be rightly justified in claiming that the RIFT report has uncovered a ‘national scandal’ – with HMRC sitting on unclaimed money desperately needed by hard pressed workers with neither the time or resources to publicise it, to those who are missing out.
When faced with complex legislation and Government bureaucracy, it is not at all surprising that there are over 500,000 eligible workers in the industry who are still out of pocket. Reclaiming tax is arduous and even costly if using HMRC 0845 telephone lines. In fact these help-lines make a colossal profit in the region of £5million, with £500,000 of this being generated from calls that go unanswered.
With little in the way of Government communication, I would urge construction employers to do all they can to ensure their workforce is not being short changed. In giving support employers should seek to arm their staff with the right information, and make individuals aware of the things they can do in the short term to help them secure an annual tax refund.
First, employers need to be aware of the Temporary Workplace Rules in relation to taxation. Unlike self-employed workers who deduct travel expenses as part of their annual self-assessment tax returns, many PAYE construction workers are unaware of their eligibility for claiming back these expenses.
As set out in s.339 ITEPA 2003, all employees are eligible to reclaim tax on travel at a rate of 45p for the first 10,000 miles and 25p thereafter, if they satisfy the Temporary Workplace Rules. This ruling particularly applies to ground workers, plant operators, scaffolders, labourers and any other construction operatives who do not receive expenses from their employer for travelling to different sites.
In addition, employers should ensure their staff are keeping records of the sites they are visiting for work and also the duration they are working on them. Armed with this information, future claims can be easily calculated and processed by the individual or through a tax refund specialist.
I would like to see larger employers form alliances with tax refund companies as a preferred partner. In doing this, employers can draw on the expertise of companies like ourselves who can advise their workforce on a one to one basis to get optimum returns for any travel expenses owed. RIFT, like many of our competitors, often give presentations to an entire workforce about the current tax issues affecting them, and how they are entitled to reclaim that money. For those who want it, we then support individuals by phone so that we take all the hassle out of dealing with HMRC.
Our report has lifted the lid on an issue which is affecting a large number of the UK’s construction workforce. Times are hard, however it is disappointing that so many construction workers are missing out on a £180 million pot, which they are entitled to reclaim. With little in the way of Government publicity regarding rebate eligibility for construction workers, it is up to employers to develop a suitable support network for their workforce – one which seeks to raise awareness of tax issues and helps hard working people reclaim money which is rightfully theirs.