With the recruitment sector continuing to go from strength to strength, the rise of agency workers in the UK over the last ten years almost doubled in the last 6 years alone. There are now 1.7 million temporary workers being employed by agencies across the United Kingdom making up almost 6% of the total UK workforce. But are they all being paid fairly?
This surge in flexible workers has led to a record number of recruitment agencies now operating in the UK to support this demand. According to companies house there were 6000 new recruitment agencies set up in 2021 and it has become apparent that many of them are paying their workers via an umbrella company rather than using an in-house payroll department. There has been a lot in the press recently with HMRC warning temporary workers to make sure they are not being caught up in a tax avoidance scheme.
Many umbrella companies follow the tax rules but some are uncompliant and do not. As a contractor or temporary worker, it is your responsibility to ensure you are paying the correct amount of tax. You MUST understand how you are being paid as YOU are liable for any underpayment tax owed.
“You need to be aware of umbrella companies who attract people by claiming that you’ll be able to take home a higher percentage of your pay.” - HMRC
Many workers are joining agencies that use umbrella companies by being sold on the benefits of higher pay, however, they are not fully aware of the potential implications of being paid by them. If you are caught using a tax avoidance scheme, you’ll have to pay the tax that is legally due, plus interest and you may have to pay a penalty. This is on top of the fees you may have paid to the person who sold you the scheme.
HMRC has released a case study showing personal stories from people who have been caught up in tax avoidance schemes to make workers aware of the negative impact of working with them.
You can read about a Nurse’s story
In addition to the information on HMRC’s site, a recent report from the Association of Independent Professionals and the Self-Employed (IPSE) reveals interesting findings from freelancers. The research conducted has revealed that a third of self-employed workers are operating through an umbrella company with more than 61% of those workers believing there are no advantages in doing so.
The research also showed that 74% of freelancers are dissatisfied with working via an umbrella company, with 50% very dissatisfied. When asked why they are dissatisfied, 80% of umbrella company workers cited the fact that they have to cover the liability for their National Insurance, and where applicable, the Apprenticeship Levy, through a reduction in their daily rate.
Recent research carried out by IPSE
What is Vetro doing about it?
At Vetro, we are clear and transparent with our approach to pay so you’ll be glad to know that you are in safe hands. Not only are you paid great rates of pay but there is ZERO risk of any form of tax avoidance, oh and we also don’t charge you a fee for processing your pay. We have a fantastic internal payroll team here that takes care of everything for you, so rather than you making a payment to HMRC, the correct amount is deducted from your salary before you are paid, and sent to HMRC by Vetro.
We are proud to be known as a recruitment agency that you can trust and we want to assure all of our temporary workers that you can depend on us to always be professional and compliant, especially when it comes to your pay. So much so, that we were one of the very first agencies to sign up with the FCSA, which is recognised as the industry’s compliance gold standard.
Their purpose is to safeguard the long-term future of the professional freelance sector for the benefit of the UK economy whose primary role is to raise standards and promote compliance. FCSA Accreditation is awarded to service providers that have been independently audited by top experts to confirm that they adhere to rigorous codes of compliance.
We are always looking for great staff to work through Vetro in all of our divisions. If you are looking for a new permanent position, or looking for agency work that pays fair, offers career progression, and hours that fit around your family, we can help! You can trust us that you’re in safe hands. View jobs.
