Do contractors need to make pension contributions for subcontractors?

Workplace pensions follow workers, not invoices

UK auto-enrolment applies when you employ staff who meet the age and earnings tests. Labelling someone a subcontractor on an invoice does not take them outside the regime if, in law, they are a worker.

A genuine self-employed subcontractor running their own business, with their own insurance, tools and substitution rights, is usually outside auto-enrolment. That is a facts test. HMRC and The Pensions Regulator look at control, substitution, mutuality of obligation and whether the person is in business on their own account.

CIS and pensions are different systems

The Construction Industry Scheme is a tax deduction regime for certain construction payments. Being in CIS does not automatically mean the person is self-employed for National Insurance, employment rights or pensions.

Many disputes start because a firm operates CIS on a labour-only individual who only works for them, uses their van and cannot send a substitute. That pattern often looks like employment. If it is employment, PAYE, auto-enrolment and holiday pay can all follow.

• Write a status assessment before the first payment, not after a letter from a regulator.
• Keep contracts, timesheets and substitution evidence with the payroll file.
• If status is finely balanced, take advice before you skip pension contributions.

What employers actually pay

Where auto-enrolment applies, the employer must put eligible jobholders into a qualifying scheme and pay at least the minimum employer contribution unless the worker has opted out correctly. Missing that is a compliance failure, not a bookkeeping preference.

Directors of their own personal service company sit in a different analysis again. IR35 and off-payroll working can recharacterise income for tax without turning every site labourer into an employee. Do not mix those tests.

How Solaratax helps contractors

We review whether people you pay are workers or genuine subcontractors, set up PAYE where it is required, and file CIS returns on time. If you already have a mixed labour force, contact us before the next payday rather than after a Pensions Regulator notice.

Questions we are asked

If I deduct CIS tax, do I still need a pension scheme?

CIS tax is not a substitute for auto-enrolment. If the person is a worker, you may need both a correct employment tax treatment and a workplace pension.

Can a one-person company be a subcontractor?

Yes, if they are genuinely in business. Paying a limited company does not, by itself, prove self-employment of the individual who turns up each day.

What if I have treated people as subcontractors for years?

Status can still be challenged. A disclosure and a clean payroll from a set date is usually better than waiting for a review. Solaratax can map the risk with you.