'Pay cut' shock hits thousands

Thousands of construction workers on some of the biggest sites in the country, including Heathrow Terminal Five and the Channel Tunnel Rail Link (CTRL), face what is effectively a pay cut as a result of an initiative by the Inland Revenue (IR).

TGWU national secretary Bob Blackman claims the IR intends to stop the tax-free concession for fares and travel allowances for all sites of more than two years' duration. This is on the grounds that longer duration sites represent a "permanent place of work".

Blackman said: "This amounts to a pay cut. It will affect thousands of workers and every trade. All the national agreements in construction have agreed allowances for fares and travel."

He said the matter was drawn to his attention by workers on the CTRL project. Blackman plans to contest the IR's line through the union's group of sponsored MPs.

"The IR has recently become extremely unhelpful in respect of the interpretation of the rules covering deductions for travel expenses," he said.

"This is a relatively new development. The IR would appear to be ignoring its own rules. Nationally negotiated travel allowances have been accepted by the IR since collective bargaining arrangements were initially formulated in the 1920s."

Blackman said there had been many problems with the new construction industry tax scheme - or CIS - since it was implemented in 1997. These mainly centred on the number of CIS4 certificates that the IR was issuing.

He concluded: "It would appear that, rather than look at the CIS4 holders for extra revenue, it is scrutinising PAYE workers in an attempt to claw back monies where it can - even if this does mean bending its own rules."

An IR spokesman responded: "I've heard of the two-year rule applying to lodging allowances but not to travel money. I suppose the same thinking is behind it."