Preparing for the New Financial Year: Time to Sort Your Financial Compliance
by on January 24, 2024
With only weeks until the new financial year, this article examines what to consider when choosing an umbrella partner, how to remain compliant, and the consequences of not doing so.
Start the New Financial Year Without a Hangover
The UK's financial year ends on 5th April, and a new one begins on 6th April. So, if you're running a recruitment business, you must organise your financial affairs and report all the details to HMRC to determine how much tax you will pay in the forthcoming year.
It can be an arduous and time-consuming procedure that no one looks forward to. But were you aware of the assistance a compliant umbrella company can offer in compiling and reporting your tax affairs?
Sharing the burden of your tax affairs
Running a recruitment business can be demanding, and sometimes the paperwork can be overwhelming. But it's vital to get things right when it comes to tax. HMRC is vigilant and unyielding, and the penalties for not paying the correct amount of tax can be substantial.
By partnering with Payme, you can reduce your administration responsibilities, minimise overheads, and reduce your employment risk. We can manage your taxation affairs and those of your contractors, ensuring that all Employers' National Insurance, National Insurance and Income Tax contributions are deducted at source so you can concentrate on your core business.
Rest assured, we're members of the Freelancer & Contractor Services Association (FCSA) and have undergone a rigorous process to demonstrate our adherence to its Charter and best practice Codes of Compliance. So, we handle everything with utmost care and abide by HMRC's rules.
Help with Changes to NIC Contributions
The amount of National Insurance Contributions (NICs) that contractors will pay has been reduced as of 6th January 2024 from 12% to 10%, meaning that around 27 million people will pay around £450 less than before.
Calculating these changes can be difficult without specialist software or a dedicated team, both of which Payme can provide to hard-press recruitment businesses, ensuring that contractors receive the full benefit of the cuts in the rate of NIC.
Help with Changes to the National Minimum Wage
The National Minimum Wage (NMW) and National Living Wage will both increase from 1st April 2024 and affect over 2 million people across the UK. If your contractors are affected by this change, which raises the NMW to £11.44 per hour (an increase of almost 10%), you must plan accordingly and prepare to adjust your advertised rates.
You'll also have to issue all your contractors a new Key Information Document (KID) informing them of the new rate and how it will affect their take-home pay. This can be an extra administrative burden if you're dealing with hundreds of contractors every week.
But, with Payme as your recruitment partner, it's all taken care of, as we'll automatically send out new KIDs to all affected contractors, saving you time and money.
Staying Abreast of Future Tax Changes
The next budget is due on 6th March 2024, and the Chancellor is expected to make cuts to income tax before a general election (which must be held before the end of January 2025). While this would be good news for contractors, calculating the new rates and the increase in take-home pay could stretch resources and team members to the full, as these changes would come in immediately.
With Payme on your side, you don't have to worry about that. We'll use our sophisticated software to calculate the new rates, adjust payments, and reflect that in the payslips and remittance advice we give each of the 4,000+ contractors we pay weekly.
The Dangers of Non-Compliance
We frequently discuss the dangers of partnering with a non-compliant umbrella company and the effect that can have on a recruitment agency's livelihood and reputation. At the minimum, the agency can be fined and its name published on HMRC's Named and Shamed list (causing reputational and financial embarrassment).
At the other end of the scale, individual directors who either deliberately or unknowingly mislead or try to deceive HMRC may face substantial fines, which will attempt to recover the tax and other financial penalties.
But you don't have to worry about that if you partner with Payme. Over the past 12 years, we've made it our business to navigate the issues surrounding tax, NI, and other financial matters affecting recruiters and contractors on their behalf, minimising stress and bureaucracy and maximising efficiency and compliant take-home pay.
What's more, we don't need weeks to sort out your financial compliance. You can partner with us with minimum fuss and maximum efficiency, leaving you to enjoy the benefits of a compliant partner who'll work hard on your behalf.
For more information about how we can help you sort your financial compliance, call 0333 200 0845, email us at email@example.com or fill in the contact form here.