What are 'contractors' and what do they typically do?
If there is one word you have probably heard about in the construction industry, it is probably ‘contractors’. Building would not happen without contractors, who essentially do the specialist or skilled work that enables construction to take place.
Here is our guide to the kinds of contractors and subcontractors there are, and what they do.
There are many types of contractors
Also known as the main contractor, general contractors are the individuals or company responsible for the construction work on a site. They have an overseeing role over the project and manage the specialty or sub-contractors on a day-to-day basis. The general contractor is directly accountable to the client for delivering the construction work on time and within the budget set by the client.
They work closely with the architect and engineer, provide cost estimates, apply for building permits, ensure safety standards and manage communication between the different trades that might be working on a project. Though they may do some of the construction work themselves, general or main contractors hire specialty contractors and deal with the contractual aspects of contractors’ work.
Specialty contractors are any kind of sub-contractor that does specialised work on a construction site for a general contractor. Electricians, plumbers, bricklayers, and painters and decorators are all examples of specialty contractors. They hold the licenses needed to do their jobs and have a skillset that a general contractor does not have. Speciality contractors are employed to do specific skilled tasks within a project but do not have any wider input or say in the development of the project.
Design and build contractors are appointed by the client to manage the design as well as the construction of a project. They would be involved in the design process alongside architects and engineers and are usually appointed early so their experience can be used in the design stage to help with costings and buildability. Design and build contractors are sometimes preferred by clients because they reduce the number of parties involved in a project and may help to improve how quickly and efficiently construction takes place.
Architects are highly skilled contractors whose work is essential for any construction project. An architect plans and designs how a building will look, how it will be built and how it will function when it is built. Architects will have a degree in architecture, at least two years’ work experience in an architecture practice and have passed a professional examination.
An architect will receive a brief from a client and produce technical drawings to illustrate various elevations of the building. Architects will consult engineers, surveyors, and other specialists to determine how the design of the building will be compatible with its infrastructure and building materials and any planning regulations that may affect it.
There are many kinds of engineers who might work as contractors on construction projects. Engineers will usually be consulted as part of the design process and use their skills to help clients with the feasibility and logistics of a project.
Building engineers and civil engineers are two of the most common types of engineer contractors in the construction industry. Building engineers have specialist knowledge in how buildings incorporate the services and utilities they need to function for the people living or working in them. This might mean the water, lighting, heating and telecommunications systems.
Civil engineers would be consulted on larger building projects such as apartment blocks, transportation and maritime schemes that will impact the environment in a significant way or have major planning and technical challenges.
Things you need to know
Contractors are self-employed
Being self-employed means you’re responsible for every aspect of your employment so you will be paying your own tax and national insurance and won’t have the employment benefits and rights that an employed person would have, such as mandatory sick pay and paid holiday.
Self-employed contractors operate as sole traders or limited companies. There are advantages and disadvantages to both, but the main difference is that as a sole trader the business owner takes on unlimited liability for the costs of the business. This means that your personal assets could be at risk if the business is not performing well. Setting up as a sole trader is a much quicker process than as a limited company, with far less paperwork.
You decide how, when and where you work
While there are benefits to being an employee, contractors like the freedom of being self-employed. Contractors work for themselves. They can choose how much work they do, when and where they do it; they can take more holiday than an employee, or less, depending on what they can afford to do.
You get to enjoy tax advantages
There are tax advantages to being a contractor. If you are self-employed, you only need to pay income tax twice yearly, on 31 January and 31 July. So, while a contractor may have more cash than an employed person, they need to ensure that this money is kept back for their tax payments.
Legitimate business costs and expenses can also be claimed against your business profits, for tax purposes. There are also capital allowance deductions on expensive items such as vans. Interest on loans can also be claimed back.
You need to know about IR35
The off-payroll working rules, or IR35, apply to workers who are contractors. These rules ensure that contractors pay the same amount of income tax and national insurance contributions as employed workers who are taxed when they are paid by their employer each month. Find out more about the IR35 rules and what to do to ensure you are complying with them.
Become a self-employed contractor
Independent contractors in the construction industry have spent several years training and gaining the experience to do their skilled jobs, so it is not an overnight process. But with the right apprenticeship or work experience, you too could have the confidence and skill set to go it alone as a contractor.