Subbie or Employee?
Is That Subbie Really Self-Employed? HMRC’s Coming for ‘Disguised Employment’ in Construction
If you use subcontractors in your business, there’s a phrase you need to know in 2025:
“Disguised employment.”
It’s the latest buzzword HMRC are throwing around as they tighten up on how workers in the building trade are paid — and they’re not messing about.
So, what does it mean, and could it land you (or your subbies) in hot water? Let’s break it down.
What Is ‘Disguised Employment’?
It’s when someone’s treated like an employee in all but name, but is paid as a subcontractor to avoid things like PAYE, NICs, sick pay, holiday pay, and all the other costs that come with hiring someone properly.
To HMRC, this smells a lot like tax dodging — even if that’s not what you intended.
Why’s This a Big Deal in 2025?
Because HMRC is turning up the heat.
They’ve already said construction is a high-risk industry when it comes to dodgy employment setups. And now they’re putting more resources into investigations, with real fines (and backdated tax) if they think someone’s not genuinely self-employed.
And guess who gets stung if they get it wrong? You – the contractor.
Signs a Subbie Might Actually Be an Employee
Ask yourself:
Do they only work for you?
Do you tell them exactly when and how to do the job?
Do they use your tools, van or uniform?
Can they not send someone else in their place?
Do you give them regular hours or guaranteed work?
If you answered yes to most of these, HMRC may decide they’re actually an employee – even if you both agreed otherwise.
What’s the Risk?
If HMRC decides someone is “disguised” as self-employed, they can:
Demand backdated PAYE and NICs
Add interest and penalties
Question other subbies on your books
Flag your business for further review
Worst case? You could owe tens of thousands in tax, plus all the admin hassle and stress that comes with it.
“But My Subbie’s Happy With It!” – Doesn’t Matter
Even if they want to be self-employed, HMRC don’t care.
It’s not about what’s convenient – it’s about how the working relationship looks on paper and in practice.
So What Can You Do?
✅ Check Subbie Status Carefully
Use HMRC’s Check Employment Status for Tax (CEST) tool – it’s not perfect, but it gives you a good starting point.
✅ Get Proper Contracts in Place
A clear subcontractor agreement helps show the relationship is genuinely self-employed – not just someone working for you full-time with a different label.
✅ Avoid Telling Them How to Do the Job
Subbies should have control over how and when they work. If you’re micro-managing them, that’s more “boss” than “client”.
✅ Don’t Rely on Verbal Agreements
If it’s not written down, you’ve got nothing to back you up if HMRC comes knocking.
Final Thought: It’s Not About Scaring You
This isn’t about saying “don’t use subcontractors.” It’s about doing it properly – so you stay on the right side of HMRC and avoid a tax nightmare.
If you’re not sure whether your setup is squeaky clean, get it looked at now. A quick check now is a lot cheaper than dealing with an enquiry later.
Worried About Your Subbie Setup?
We help builders and contractors across the UK get their employment status sorted – with no jargon and no judgement.
Drop us a message and we’ll take a look – before HMRC does.
