Recruiters supplying workers to the construction industry can make big savings on the amount they pay to agency workers in holiday pay by taking advantage of a special exemption by Her Majesty's Revenue & Customs that lasts to 30 October 2012.

Alan Nolan, director, people services employment tax at KPMG told Recruiter that the exemption allowed recruiters into the construction industry to continue to use a concession granted by HMRC on holiday pay that allows employers to pay for annual leave without the usual National Insurance contribution of 12.8% - a concession withdrawn for all other sectors on 30 October.

But, certain conditions had to be met first, said Nolan. "The worker has to be an employee of the agency, registered with the Construction Industry Scheme and "personally engaged" in "construction operations", he said.

The holiday allowance also had to be paid into an independently administered central fund used by more than one employer, and operated by a third party. "The money can then be passed on to the worker," said Nolan.

The two major firms providing this service are B&CE and Welplan.