What Is a Bona Fide Subcontractor

What Is a Bona Fide Subcontractor?

In the UK construction industry, the term bona fide subcontractor is often used when arranging insurance or managing contractor relationships. But what does it actually mean, and why does it matter?

Understanding the difference between bona fide subcontractors and labour-only subcontractors is crucial for businesses working in construction, especially when it comes to liability, tax, and insurance responsibilities. In this article, we explain what a bona fide subcontractor is, how they differ from other types of subcontractors, and what you need to consider when working with them.

Definition of a Bona Fide Subcontractor

A bona fide subcontractor (BFSC) is a self-employed tradesperson or business that is contracted to carry out a specific task or service independently. They provide their own tools, materials, and labour, and work without direct supervision from the main contractor.

Bona fide subcontractors operate as independent businesses. They invoice for their work, take full responsibility for their own health and safety compliance, and usually hold their own insurance.

Typical examples include:

• An electrician hired to complete a fixed part of a larger project

• A roofing company contracted to complete all roof work independently

• A groundwork team brought in to prepare a site before construction begins

Key Characteristics of a Bona Fide Subcontractor

A bona fide subcontractor typically:

• Has their own business or company registration

• Supplies their own tools, equipment, and materials

• Controls how and when they carry out the work, within agreed deadlines

• Works without supervision from the main contractor

• Is responsible for their own insurance, including public liability and employers’ liability (if applicable)

• Submits their own risk assessments and method statements

They are distinct from labour-only subcontractors, who act more like employees and work under the direction of the main contractor.

Bona Fide vs Labour-Only Subcontractors

Understanding the difference between bona fide and labour-only subcontractors is essential for:

• Insurance cover

• Tax status

• Employment liability
  

  Feature Bona Fide Subcontractor Labour-Only Subcontractor

Works independently ✅ ❌

Uses own tools and materials ✅ ❌ (usually uses your equipment)

Has own insurance ✅ ❌ (covered by your insurance)

Controls work method and timing ✅ ❌ (takes instruction from you)

Pays own tax and NI ✅ (usually via Self ❌ (you may be liable)
Assessment)

If you hire labour-only subcontractors, you may be required to cover them under your employers’ liability insurance and treat them as workers for tax purposes.

Bona fide subcontractors, on the other hand, reduce your responsibility for their tax and health and safety compliance, provided proper checks are in place.

Why It Matters for Insurance

The distinction between subcontractor types is especially important for construction insurance.

• If you use labour-only subcontractors, you must include them in your employers’ liability insurance and may need to list them in your public liability cover

• If you use bona fide subcontractors, they should have their own public liability insurance. You are not generally responsible for their cover

When arranging insurance, your broker or provider will ask about the proportion of work completed by your direct employees, labour-only subcontractors, and bona fide subcontractors. Failing to classify them correctly can lead to claims being rejected.

Before working with a bona fide subcontractor, always request copies of their:

• Public liability insurance certificate

• Employers’ liability insurance (if they have staff)

• Qualifications or accreditations

• Risk assessments and method statements

Tax and Legal Responsibilities

When working with bona fide subcontractors, you still have some legal obligations:

• You may need to verify them through the Construction Industry Scheme (CIS) if you are acting as a contractor

• You must check that they are registered with HMRC and deduct the appropriate amount of tax if required

• You are still responsible for ensuring that work on your site meets health and safety regulations

That said, bona fide subcontractors are generally responsible for their own tax, insurance, and legal compliance, reducing the burden on the main contractor.

Final Thoughts

A bona fide subcontractor is an independent business hired to carry out specialist or standalone work without supervision. They are not treated as employees or labour-only workers and are expected to provide their own tools, manage their own risks, and carry their own insurance.

Understanding the difference between bona fide and labour-only subcontractors is vital for staying compliant with tax law, insurance conditions, and health and safety regulations. Whether you are a contractor hiring others or a subcontractor offering your services, getting this classification right protects your business from risk and costly mistakes.