RCT Subcontractors

Implications for you of eWHT

If you are currently an RCT subcontractor, you will be become a Specified Person (SP).
The Designated Withholder (DW) (formerly principal contractor) will operate eWHT on their payment to you.
RCT will no longer be operated.
The existing three rates of RCT – 0%, 20% and 35% will no longer apply. They will be replaced by:
- a Personalised Deduction Rate (PDR) for payments to individuals
- and
- a flat rate deduction for payments to a corporate, partnership or other entity.
Contract Notifications will continue to be required for contracts in the construction sector only. They will no longer be required for contracts in the meat processing and forestry sectors.
Your DW and Revenue will communicate in real time about the payment due to you and the rate of withholding tax to be applied to your payments.
The tax withheld will be credited to your income tax/corporation tax account.
You will have the ability to advise Revenue of your other incomes and expenses. While optional, reporting will improve the accuracy of your PDR. The more you engage, the more accurate your PDR will become.

eWHT will apply to the same range of subcontractors as RCT does now.
eWHT will apply to the same range of services as RCT does now.
Many features of the current RCT regime e.g. contract notifications, payment notifications, and deduction authorisations will continue to be important parts of eWHT.
Contract notifications will no longer be required for contracts in the meat processing and forestry sectors.
Tax agents currently acting for subcontractors will be able to continue acting on their behalf in the new regime.

Integrating tax into how you get paid will increase the accuracy of data, reduce errors and reduce effort for you.
Improved accuracy of data will make it easier for you to manage your taxes.
Your income tax return will be simpler, we will pre-populate it with the information we have.
For individuals, PDR means the rate applied to your payments will be unique to you and tailored to your circumstances. This will be more relevant to your final tax position than the existing tiered rates.
PDR will help you to pay as you go and will reduce or eliminate preliminary tax lump sum payments.
You will be able to inform a more accurate PDR by engaging with Revenue.
For corporates/partnerships and other entities, a new single flat rate of deduction will apply. This will provide some with an opportunity to pay as you go. This will relieve others of a deduction at disproportionate rates.
The new regime will help reduce the administrative burden associated with the self-assessment process.
You will have real time visibility of the information we have about your income and expenses.

We would like to get your feedback on what we are proposing.