Making compliance a breeze: Avoiding non-compliant umbrella companies

Making compliance a breeze: Avoiding non-compliant umbrella companies

Non-compliant umbrella companies are back in the spotlight, highlighting how some workers have been left vulnerable to unexpected tax bills and unethical practices. In response, the government is taking action to safeguard workers from bearing the financial burden.

What is an umbrella company?

An umbrella company is an intermediary between a recruitment agency and a worker. They handle payroll, tax deductions and employment rights. Workers become employees of the umbrella company, which processes their payments, deducts tax and National Insurance, and provides benefits like holiday pay and pension contributions.

What has happened recently in the news?

Growing concerns over worker exploitation and tax avoidance have been raised in recent months, forcing the UK government to crack down on non-compliant umbrella companies. Poor conduct has included the withholding of holiday pay, operating disguised remuneration schemes and non-payment of taxes.

In response, the government has announced plans to introduce a legal definition for umbrella companies and bring them under regulatory oversight. Additionally, new tax compliance measures outlined in the Autumn Budget 2024 will take effect from April 2026, aiming to prevent tax loss within labour supply chains. These changes signal a major shift towards greater transparency and accountability.

A recruitment agency you can trust

At Safehands Recruitment we take compliance seriously, ensuring 100% transparency and protection for our clients and workers.

The service we provide offers as standard:

• A robust payroll process which is managed by our in-house finance team
• A transparent and ethical approach to paying staff
• Our workers are paid on a PAYE basis, which includes holiday pay, pension contributions and full compliance with employment regulations
• No tax avoidance
• A point of contact available on the phone and by email when you need it

In a small number of cases where umbrella schemes offer higher benefits for our workers than our own payroll, we ensure they are fully vetted by our Compliance team. These providers are regularly reviewed.

Get in touch

Your financial security and peace of mind matter to us. If you ever have questions about your pay, or how we pay our workers, our team is always here to help.

For more information, call our team today on 03308 288 202.

Visit the government website here.