The 1980s were a time of major economic shifts in the UK. One key labor debate of the era centered on the difference between SC60 subcontractors and the growing wave of self-employed workers. This transition not only affected taxes and employment rights but also reflected the larger shift in the country’s economy.
What Was the SC60 Scheme?
The SC60 scheme was part of the Construction Industry Scheme (CIS), introduced in 1971 and revised in 1975 to combat tax evasion in the construction industry. Workers under this system received payments through SC60 forms, which documented tax deductions made by contractors at source.
This allowed subcontractors to avoid handling direct tax payments, but it also meant they didn’t have full employee rights nor the complete independence of self-employment.
“You were stuck in the middle,” one SC60 subcontractor recalled. “Not quite an employee, but not fully self-employed either.”
Subcontractors who qualified for the 714 tax certificate received gross payments and avoided tax deductions at source.
Rise of Self-Employment in the 1980s
During this period, self-employment surged as workers sought more control and flexibility. Many left SC60-type arrangements in favor of full independence, drawn by the idea of setting their own rates, hours, and clients.
However, this freedom came with risk. A self-employed worker from the era said it was “exciting but full of risks,” noting the pressures of managing taxes, regulations, and business uncertainty.

SC60 vs Self-Employed: A Comparison
Feature | SC60 Subcontractor | Fully Self-Employed |
---|---|---|
Tax Handling | Deducted at source via SC60 | Self-assessed, pay later |
Employment Rights | Limited | None |
National Insurance | Sometimes missed | Required (Class 4 NICs) |
Admin Burden | Lower | Higher |
Flexibility | Medium | High |
Workers under SC60 had more predictable finances but less independence. Fully self-employed individuals had full control but faced higher administrative and financial risks.

The Problem of Bogus Self-Employment
As self-employment rose, so did abuse. Many workers were mislabeled as self-employed to help employers avoid paying National Insurance and offering benefits.
By the late 1980s, nearly 50–60% of construction workers were considered falsely self-employed.
This created safety concerns, reduced training investments, and led to major tax losses. Parliament reports estimated a £2.5bn shortfall in NI contributions and £5bn in overall losses due to the practice.

Government Reforms and SC60 Phase-Out
The government began phasing out SC60 in the mid-1980s. In 1999, it was officially replaced by the new CIS system, with stricter classification rules.
New forms like CIS6 were introduced, requiring annual earnings above £30,000 to maintain certain benefits. The reforms pushed many workers into formal self-employment or regular employment.
“We had to adapt quickly,” said a former SC60 worker. “It wasn’t easy, but we found our way through.”
Lessons for Today’s Gig Economy
The SC60 vs self-employed debate foreshadowed today’s gig economy issues. Questions about worker rights, fair classification, and tax obligations remain relevant.
With the rise of digital platforms, the IR35 debate echoes the 1980s struggle between flexibility and protection.
“The SC60 and self-employment debate was a sign of a changing economy,” one economist noted, “where old labor structures were being challenged by new market realities.”
The rise in bogus self-employment practices blurred the lines between actual self-employment and exploitative setups.
FAQs
Q1: What was the SC60 tax form?
A record for tax deducted at source, used in construction subcontracting under CIS.
Q2: Why was SC60 phased out?
To reduce tax abuse and promote clearer labor classifications.
Q3: How did SC60 differ from being self-employed?
SC60 deducted taxes upfront and offered limited benefits. Self-employment gave full control but also full tax/admin responsibility.
Q4: What replaced SC60?
The CIS system introduced in 1999 with new forms like CIS6 and stricter oversight.
Q5: Why does this matter today?
Many of the same issues gig work, classification, and rights are relevant in the modern labor market.
Final Thoughts
The shift from SC60 to self-employment reshaped the UK labor market. It brought both freedom and new challenges. The story of this transition is not just a relic, it’s a mirror of today’s ongoing gig economy evolution.