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Labour only sub-contracting income and tax

Becoming a labour only sub-contractor

When you enter into a contract within the building and construction industry, the contract will specify the terms of engagement. It is the duty of all parties involved to establish those terms, including making it clear if it is a labour only contract.​

Bringing small tools or incidental materials to the job will not change your status as a labour only sub-contractor.

Deduction of tax

If you are a labour only sub-contractor working in the building and construction industry, the main contractor is required to deduct 21% (combined ITIS and long-term care contribution) from the payments made to you. 

However, if you have an exemption card (issued to individuals) or a good compliance letter (issued to companies) then you can be paid without any tax deductions.

Evidence of tax deducted

The contractor making the tax deductions must provide you with a written notice stating the amount of tax deducted as they would with an employee.

Applying for an exemption card

Exemption cards are issued and are only valid if you are working as a labour only sub-contractor within the building and construction industry. If you are an employee you must hand in your ITIS effective rate notice.

An exemption card or good compliance letter (for companies) will only be issued if your income tax affairs are up to date and you have complied with the requirements of the tax law to our satisfaction.

This includes:

  • all completed tax returns have been sent to us, including the most recent year
  • up to date accounts have been sent in (if required)
  • employer returns are up to date and paid (if required)
  • income tax payments are up to date
  • GST returns are up to date and paid (if required)

If you have just arrived in Jersey or you are starting work for the first time, we will not be able to issue an exemption card for labour only sub-contracting. You may apply in the following year once we have some tax history for you.

To apply for an exemption card, complete and send us the following form.

Download labour only sub-contractors exempt certificate application (size 60kb)

Using your exemption card

When you show your exemption card to the building contractor they will:

  • check that you are the authorised holder of the exemption card by asking to see photographic identification
  • check that the card is valid and has not expired

The contractor should not hold your exemption card, but they may take a copy for their records.

The possession of an exemption card does not determine the nature of your contract, as the decision to issue the card is only based on your tax compliance record. You may also have different terms of engagement for different contracts which may be a combination of:

  • labour only sub-contracting
  • employee
  • self employed sub-contracting providing labour or materials

The decision about the relevance of an exemption card to any particular contract is a decision for the contracting parties.

Re-issuing the exemption card

If you continue to keep you good compliance record, we will automatically re-issue the card or good compliance letter.

If the card or letter is not re-issued we will write and advise you of the reason(s) why. We would not re-issue the exemption card if you do not keep to your tax obligations or do not comply with the conditions attached to the exemption card.

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