ADVANCED PAYROLL COMPLIANCE
ADVANCED PAYROLL COMPLIANCE
As we approach the end of 2025, the year has seen many discussions, consultations and policy documents outlining intentions, but the real changes in the umbrella company market are starting in 2026.
With the new Fair Work Agency (FWA) due to be officially established in April 2026, the groundwork and key appointments are in progress, but what is the new body and how will it work?
The UK compliance landscape is undergoing a necessary change. The critical new powers inherited by Companies House through the Economic Crime and Corporate Transparency Act 2023 mandate that identity verification is now a legal requirement for all new company directors and Persons with Significant Control (PSCs) on the register appointed on or after 18 November 2025.
With new legislation coming in April 2026 to tackle non-compliance in the umbrella company market, recruitment firms are preparing for their increased legal responsibilities.
Recruitment expert warns construction sector is 'at serious risk' if suppliers are unprepared for imminent payroll legislation.
Dan Eley, who has almost three decades of experience in recruitment in the construction sector, has joined the board of the Payroll Compliance Authority (PCA), a not-for-profit accreditor in the outsourced payroll market.
As the umbrella company market gears up for a regulatory shift from April 2026, HMRC continues to send clear signals that stamping out tax avoidance and all forms of non-compliance is an ongoing focus.
As expected, as part of its Finance Bill 2025-26, the government has now published full details of the legislation announced at the Autumn Budget 2024 that will make recruitment agencies accountable on payments to workers supplied through umbrella companies that employ workers on behalf of agencies and end clients.
In a quick turnaround, HMRC has published its summary of responses to the consultation on 'Closing in on promoters of marketed tax avoidance', which ran until 18 June 2025.
The Economic Crime and Corporate Transparency Act is continuing to introduce a number of changes that are impacting businesses on the UK's Companies House register to improve the accuracy and integrity of its data.
In May 2025, payroll supplier Core Finance Management was accredited by the Payroll Compliance Authority (PCA), having successfully completed a forensic assurance audit.
We have taken the opportunity to speak with Core co-founder and Head of Sales Lauren Baker, to find out more about the organisation and its ethos, why accreditation matters, and her thoughts on upcoming umbrella sector regulation.
Regulation of the umbrella company market is imminent to crack down on tax avoidance and all forms of non-compliance. Recruitment firms will become legally responsible for calculating the correct amount of income tax and National Insurance contributions of the contract workers they supply, in place of the umbrella companies that are deemed to employ the workers.
The Payroll Compliance Authority (PCA) is pleased to welcome payroll supplier Core Finance Management as a newly accredited member after the firm successfully completed a forensic assurance audit comprising more than 150 elements to demonstrate that it is operating in compliance with all relevant legislation.
With the countdown now on until legislation is introduced to tackle tax avoidance in the umbrella company market, scheduled for April 2026, HMRC has already begun to show that its spotlight is aimed clearly at the sector.
A consultation is underway seeking views on HMRC proposals to close in on promoters and enablers of tax avoidance schemes, as well as support individuals to avoid or get out of illegal operations.
The Payroll Compliance Authority encourages relevant stakeholders to respond, and in this article, we summarise the key details of the consultation.
The countdown is on for recruitment firms that engage the services of umbrella companies, with legislation coming in April 2026 that will increase the legal responsibilities of these employment businesses.
HM Treasury has published a summary of responses to its consultation on tackling non-compliance in the umbrella company market.
Former England cricket captain Michael Vaughan OBE has become an ambassador of the Payroll Compliance Authority (PCA), a not-for-profit accreditor in the outsourced payroll sector.
In a little more than 12 months, legislation of the umbrella company market will come into play to crack down on tax avoidance, from April 2026. Preparation will be key, but what can umbrella companies do now?
As we approach the end of 2024, a lot has happened but has much changed in the umbrella company market?
HM Revenue & Customs has released a new tool and guidance this month so that workers and employment businesses that use umbrella companies can work out what gross and net (take-home) pay should be for an individual role.
Many recruitment businesses, accrediting organisations and other stakeholders welcomed the recent announcement, by the chancellor herself, that a legislative crackdown on umbrella companies was imminent, from April 2026.
As the umbrella company market and all its stakeholders await further guidelines on upcoming legislation, which is due to come into force from April 2026, due diligence remains more important than ever.
The much anticipated first budget for the new Labour government has now been delivered, for the first time by a female Chancellor of the Exchequer, and the initial reactions are rolling in on the extensive range of measures announced, many of which previously 'leaked'.
With Budget Day around the corner speculation is rife on what will be included, and what will not. The wait will soon be over but in the meantime Olivia Spruce, Director of the Payroll Compliance Authority (PCA), shares her views on a key area that needs addressing on 30th October.
With the new government having laid its new Employment Rights Bill before Parliament, including proposals to introduce a ban on zero-hour contracts, Martin Innes, Director at the Payroll Compliance Authority (PCA), a not-for-profit accreditor in the outsourced payroll sector, warns that a blanket ban could push more contractors into the unregulated umbrella company market.
With fraudulent activity widespread among a minority umbrella companies, trust can be hard to earn within the contracting payroll market.
Paul Newsham - CEO of Payroll Compliance Authority (PCA) and Chartered Accountant with more than 30 years of experience.
With a new Labour government in place, we can expect numerous proposed changes to employment law. One such change is to create a Single Worker Status, under Labour's plan to Make Work Pay.
Olivia Spruce - PCA Director and CEO of healthcare recruitment firm, Positive Healthcare
MYTH: All recruitment firms handle the payroll function for the contract workforce they manage.
A new Labour government will be entering Parliament, and we at the PCA are keeping a close eye on Labour's plans for the outsourced payroll sector.
In the UK, the contracting workforce faces the risk of being taken advantage of by a minority of unscrupulous payroll providers, known as umbrella companies, looking to make a profit from their payslips.
In April this year, HMRC announced that regulation was on the cards for the umbrella company market to tackle widespread non-compliance with tax and employment legislation, which we discussed in a previous blog.
The growing number of healthcare contractors in the UK means that more professionals are at financial risk from fraudulent activity in the outsourced payroll sector, warns Martin Innes, the newest board member at the Payroll Compliance Authority (PCA), a not-for-profit accreditor in the outsourced payroll sector.
In a scheduled update from the government on its plans for tackling non-compliance in the umbrella company market last week, HMRC made clear its intention to regulate the sector. The update moots a new statutory due diligence regime for businesses that use umbrella companies, following further engagement with stakeholders.
Healthcare contractors are at significant risk due to a lack of awareness of fraudulent activity in the outsourced payroll sector, warns Martin Innes, the newest board member at the Payroll Compliance Authority (PCA).
In a previous article, we explored three ways that recruiters and contract workers can identify a fraudulent umbrella company. However, the majority of umbrella companies operating in the UK are compliant, and yet their reputation is tarnished by unscrupulous players.
As of the 6 April 2024, regulations around IR35 changed to prevent double taxation where hiring firms have misclassified the tax status of contractors under off-payroll working rules. Since the introduction of IR35 in the public sector in 2017 and the private sector in 2021, hiring organisations have complained about the complicated system and the expensive risks involved if they get it wrong.
When temporary workers or recruitment agencies select a payroll provider, it is essential that they do everything they can to ensure the provider is fully compliant with employment law, pays taxes as it should, and acts ethically.
On 6 March 2024, the government opened a new consultation to understand the issues facing the tax advice sector, learn how best to raise standards in the industry, and explore the possibility of regulation.
As anticipated, Wednesday's Spring Budget did not include any announcement around regulation of umbrella companies. Unsurprisingly, the focus of the measures announced, and the financial claims made was to win over as much of the electorate as possible in the months before a General Election.
New measures coming into force in March awarding greater powers to Companies House could catch out some unscrupulous payroll suppliers, but will not replace the need for sector regulation, says Paul Newsham, CEO of Payroll Compliance Authority (PCA), an accreditor in the outsourced payroll sector.
With the Spring Budget on 6 March, speculation is rife on what package of measures Jeremy Hunt will announce in the run up to an election.
Unclaimed holiday pay is one of the easiest ways an unscrupulous umbrella company can make a profit at the expense of the temporary workforce. Every worker is legally entitled to paid annual leave, but by not being transparent about what is owed or clear about how or whether it is being paid, it is much harder for a contract worker to access this money. By failing to inform a worker that they have annual leave still to claim, an unscrupulous firm can use the worker's holiday pay to supplement their own profits.
One of the distinctive elements of the Payroll Compliance Authority (PCA) is the fact that it is a not-for-profit organisation. In the UK, there are many accreditors across various industries that are set up as not-for-profits or charities.
The UK healthcare sector, and the NHS in particular, are facing well-documented issues with understaffing and low pay. The cost-of-living crisis is exacerbating these problems, with recent strikes a clear demonstration of the dissatisfaction of the workforce.
For recruitment companies and temporary workers that arrange or receive pay through umbrella companies, identifying which ones are compliant and trustworthy is challenging. Even with considerable due diligence, recognising the sophisticated tax avoidance schemes that are widespread in the unregulated contracting payroll market is extremely difficult.
The PCA is delighted to confirm that Edward Thomas is the first company to have passed its compliance audit and has now been awarded their certification. Edward Thomas successfully completed a forensic analysis of all processes and procedures utilised in relation to their payroll models and organisational structures, which was conducted throughout the summer of 2023 by Pricewaterhouse Coopers LLP.
London - 27th July 2023
Representatives of the PCA attended a highly informative seminar focussing on the regulation of the umbrella market in London at the end of July 2023.
