Self-employed or employed: which suits a site carpenter

Nearly every carpenter faces this decision at some point, usually when somebody offers a rate that sounds better than what they are on. The trap is comparing two numbers that are not measuring the same thing. This page sets out both routes properly so you can work out which one fits the way you want to live, not just the way you want to be paid this month.

The two set-ups, in plain terms

Employed. You are on the payroll. Income tax and National Insurance come out through PAYE before you see the money. You accrue statutory holiday, currently 5.6 weeks a year including bank holidays for a full-time worker. You are covered by statutory sick pay rules, you are auto-enrolled into a workplace pension if you meet the criteria, and you have employment rights that build up with length of service. The company usually supplies the plant and the consumables, and it carries the cost of a quiet fortnight.

Self-employed. You are running a business, even if that business is one person and a van. You invoice for the work. On construction sites you will normally be paid through the Construction Industry Scheme, so the contractor deducts a percentage of the labour element of your invoice and sends it to HMRC as an advance against your tax bill. You file a self assessment return, claim your allowable expenses and settle up from there. No holiday pay, no sick pay, no employer pension contribution, and no guarantee that next month looks like this month.

Money: the comparison people get wrong

A self-employed rate is almost always higher on paper. It has to be, because it is doing more jobs. Out of it you fund your own holiday, your own sick days, your own pension, your van, your fuel, your tools, your insurance and your accountant, and you absorb the weeks when there is nothing on.

A rough way to sanity check it: take the number of weeks you actually expect to be earning in a year rather than 52. Knock off the weeks you want off, a couple for illness, and any dead time between jobs. Work out your annual running costs, van included, and divide the lot back into the weeks you will genuinely be paid for. Most carpenters who do this exercise properly find the gap between the two routes is a lot narrower than the headline suggests.

Under CIS the standard deduction is 20 per cent for a subcontractor who is registered and verified, and 30 per cent for one who is not, so registering is the single easiest way to stop lending HMRC money. Some subcontractors qualify for gross payment status and are paid at 0 per cent, which helps cash flow enormously but puts the whole tax bill on you in one go. Deductions apply to labour, not to materials, provided your invoice separates them. Whatever route you take, put a fixed percentage of every payment straight into a second account the day it lands. The carpenters who come unstuck are almost never the ones who could not earn, they are the ones who spent the tax.

Where price work changes the maths

Price work is the strongest argument for self-employment. Paid by the plot, the roof, the joist set or the metre, a quick carpenter with a good standard is not capped by the clock and can materially out-earn a day rate. A slow one, or one who has to go back and put things right, does the opposite.

Price work also rewards the things experience gives you: reading the drawing properly before you start, setting out once, having the right kit in the van, not stopping every hour because a material is missing. If that describes you, self-employment on price work is where the money is. If you would rather have a steady figure landing every week whatever the weather does, day work suits you better, and there is no shame in either answer.

Plenty of contractors, AJB included, run both alongside each other, so it is not always the either or decision it is made out to be.

Security, and what happens when things go wrong

This is the part that gets skipped in the pub. Employed carpenters have notice periods, statutory sick pay, redundancy rights after two years and paid holiday. Self-employed carpenters have none of that. Break your wrist in March and the difference between the two routes becomes very concrete, very quickly.

It cuts the other way too. Self-employment gives you control: you choose which jobs to take, you can turn down the ones that smell wrong, you can work for several clients, and you can walk away from a site that is badly run without handing in notice. For some carpenters that freedom is worth more than the safety net. Know which one you are before you decide.

If you go self-employed, sort out your own protection: public liability insurance, cover for your tools, and something for income if you are out of action. Nobody else is doing it for you.

You do not simply get to choose

Worth being clear about, because it catches people out. Employment status is determined by how the work actually operates, not by what the contract calls it. HMRC looks at whether you can send a substitute in your place, who controls how and when the work is done, whether you provide your own tools and equipment, whether you can profit from working efficiently, and whether you carry any real financial risk.

If a role has fixed hours, close supervision, company tools and no ability to send someone else, it looks like employment however it is labelled, and the risk of getting that wrong sits with both sides. A straight contractor will tell you which basis a role is on and why. If somebody is vague about it, that is worth noticing.

Which one suits which carpenter

Self-employment tends to suit the carpenter who is fast, experienced, well equipped, comfortable with paperwork, happy to chase an invoice, and content to trade certainty for upside. It suits gangs and subbie teams particularly well, because a team that can take a plot and run it is exactly what contractors want to buy.

Employment tends to suit the carpenter who wants a predictable income, holiday they get paid for, somebody else worrying about where next month's work comes from, and a chance to develop on bigger jobs without carrying the commercial risk. It also suits anyone with a mortgage application coming up, since lenders are markedly happier with payslips than with two years of accounts.

Neither one is the grown-up option. They are different trades off, and plenty of carpenters do both at different points in their working life.

How it works at AJB Group

AJB Group has fourteen full-time employed carpenters and also works with a vetted network of self-employed carpenters, gangs and subbie teams across Lincolnshire, Cambridgeshire and Norfolk. Pay is weekly, and price work is available alongside day work on a lot of jobs.

Which basis is on offer depends on the role and what is on at the time, so when you get in touch, say which one you are looking for. If you want to see what the week to week work looks like first, the guide to working for a carpentry contractor covers it, and if you are earlier in the trade, start with carpentry apprenticeships.

One last thing: nothing on this page is tax advice, and the rules change. Before you commit either way, speak to an accountant who works with tradespeople and check the current position on GOV.UK.