Your questions answered about the new Umbrella Legislation and its impact on the recruitment sector

by Steve McDermott | Aug 6, 2025 | Employee Rights BIll, HMRC, Legislation, News, Recruitment Businesses, UK Employers, Umbrella Legislation

Your questions answered about the new Umbrella Legislation and its impact on the recruitment sector

Need Answers To Your Umbrella Legislation Questions?…

Let our expert ‘Umbrella Man’ shed a light on several questions recruiters and end clients have asked about the legislation that comes into play on April 6th, 2026.

Let’s hear what he has to say in response to your questions…

Your questions answered about the new Umbrella Legislation and its impact on the recruitment sector - Umbrella Man superhero cartoon character in office

What is the shift in risk and responsibility?

The new legislation fundamentally shifts the responsibility for PAYE compliance up the labour supply chain, placing greater accountability on recruitment agencies.

What is Joint and Several Liability?

Recruitment agencies will become jointly and severally liable for unpaid PAYE if their partnered umbrella company fails to meet its tax obligations. This means HMRC can pursue the agency in the first instance for any unpaid amounts, even if the agency was not directly involved in the non-compliance.

What is the increased burden on compliance?

Agencies will need to significantly enhance their due diligence processes and ongoing monitoring of umbrella companies to ensure compliance and mitigate potential liabilities. This includes verifying their compliance status, reviewing detailed compliance documents, and auditing payslips and reconciliation statements.

What is the potential rise in costs?

The need for increased due diligence, compliance tools, and ongoing monitoring may result in higher operational costs for recruitment agencies.

Could there be any reputational damage for getting it wrong?

Agencies may face reputational damage if they are associated with non-compliant umbrella companies or those engaging in questionable pay practices.

How do I navigate the new and complex regulatory landscape?

The new legislation, alongside the Employment Rights Bill, creates a complex regulatory environment that agencies must navigate to ensure continued compliance.

Umbrella superhero giving his thoughts on the umbrella legislation and employee rights bill

Umbrella Man’s thoughts on tackling the legislation:

Strengthen due diligence processes: Implement robust and continuous checks on umbrella companies, including using due diligence tools and verifying compliance certifications. FCSA members (New Red Planet Ltd is one) hold the highest level of compliance in the market.
Partner with certified umbrellas: Prioritise working with independently certified and accredited umbrella companies (FCSA recommended companies such as New Red Planet) that can provide verifiable proof of compliance.
Stay informed and engage with industry updates: Monitor updates from HMRC and industry bodies like the FCSA, REC, and New Red Planet Ltd website and LinkedIn page to stay ahead of regulatory developments.
Proactive Approach: Begin preparing for the changes now, rather than waiting for the final implementation, to avoid potential financial and reputational risks. To stay ahead of the game and have a no obligation conversation with an FCSA Accredited member, just give New Red Planet Ltd a call or email on the details below.
Consider Diversifying Candidate Payment Options: Explore alternatives to umbrella options, such as PEO or direct PAYE employment, to reduce exposure to the new risks associated with the legislation. New Red Planet Ltd can offer many options to our clients including outsourced payroll and Bureau options to reduce in-house employment, compliance and legal costs associated with bringing payroll inhouse.
Centralise Documentation: Ensure contracts, payment records, and proof of PAYE compliance are accessible and consistent for potential HMRC inquiries.

By implementing these measures, you can proactively manage the risks associated with the new umbrella company legislation, ensuring compliance, protecting your business, and building stronger relationships with both clients and contractors.

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

PEO – Simplifying the Process

by Steve McDermott | Nov 21, 2023 | Blog, Freelance Professionals, HMRC, Legislation, News, Recruitment Businesses, UK Employers

PEO – Simplifying the Process

In a world of changing payments and regulations, the professional employer organisation is here to help.

The word ‘nuanced’ could have been created for the contracting and freelance workforce in the UK, especially when it comes to payment with differing rules, exemptions and requirements to contend with.

And a nuance is one short hop from a grey area, which in the temporary work market, can easily turn into a lack of transparency.

Turning to an intermediary to take care of matters, such as an umbrella company, has hence been a natural step for contractors and the agencies and employers who manage and pay them.

But, in a sector that continues to be unregulated, the bad as well as the good stories are well documented.

Professional Employment Organisation (PEO)

What is a PEO?

Enter the professional employer organisation (PEO), which aims to bring more transparency for all parties involved.

Like an umbrella, a PEO is an employment intermediary, which provides recruitment agencies, contractors and small to medium-sized businesses with an outsourced HR and payroll solution.

The PEO, which first became popular in the US, takes on responsibility for all the typical employer services like tax, National Insurance Contributions (NICs), compliance and all other legislative and administrative requirements. This includes contracts of employment and in some cases, if operating a worker model, contracts for service.

Steve McDermott, business development manager at New Red Planet:

“We understand the growing demand in the temporary labour market for a range of payroll options, and that is why we have taken the decision to work with the FCSA to be accredited for both our umbrella and PEO models of pay”

PEO Compared to an Umbrella set-up

Where it differs from an umbrella set-up is that it provides the contractor with a simplified picture of how their pay is presented.

Under a typical umbrella model, the employee would see deductions such as Employer NICs, Apprenticeship Levy and the margin amount retained by the umbrella for its services on a reconciliation statement, which if not properly made clear – as is required by the Freelancer and Contractor Services Association (FCSA) – can cause confusion.

Under the PEO model, these deductions are charged to the hiring company separately.

Hence the contractor sees just their gross pay rate rather than the increased amount or “the uplifted rate”, usually called “the assignment rate”, which is charged by the umbrella to cover these extra costs.

In some cases, but not all, the agency may advertise the uplifted rate to the contractor who then doesn’t always understand why the received rate is lower.

Deborah Murphy, head of operations of the FCSA explains;

“Under the PEO model, the contractor should know exactly what rate they will be getting as it’s not advertised at a higher rate. If operated correctly, it can be a clearer model, but that being said, if the umbrella model is operated correctly and transparently that, too, shouldn’t cause confusion.”

Julia Kermode, CEO of payroll compliance service provider, PayePass Solutions, explains that recent off-payroll changes have caused confusion for contractors who are now being engaged via umbrellas, particularly in relation to assignment rate versus gross pay rate.

She agrees the PEO model simplifies these financial arrangements.

“Umbrellas can be confusing by comparison as their payslips are accompanied by a breakdown of the assignment rate (the uplifted umbrella rate), which shows all employment costs and overheads in addition to the worker’s gross pay.

“The PEO model brings extra clarity to the pay rate for temps and contractors. It is very logical as it charges overheads to the recruitment company on top of workers’ gross pay.

“The main advantage of a PEO is that temps and contractors should always know how much their gross pay rate is. This clarity is important because it should mean that there are no surprises when it comes to payday.”

HMRC Guidance

HMRC provides guidance on the supply of staff and VAT on the GOV.uk site. These two links in particular may be useful for recruitment agencies considering using an umbrella or professional employer organisation (PEO).

HMRC’s policy on supplies of staff is set out in VAT Notice 700/34 (see information on joint employment in section 3.2.)

In the medical sector, a relief applies for some of these employment businesses and you can find out more about this in VAT Notice 701/57 (Section 6).

Umbrella and question mark symbolising "which Umbrella Company to Use?"

New Red Planet (NRP), which is also FCSA-accredited, has seen demand for the PEO model continue to grow over the past couple of years – and the PEO model is one of our most sought after solutions.

Steve McDermott, business development manager at NRP explains;

“This is especially the case in public sectors, such as education and social care, where contractors and the supply chain in general prefer the simplicity provided by the PEO model to the worker,”

He explains that crucial to the ethos of NRP is having an understanding and acting upon the needs and demands of all parties – agencies, contractors and end clients – so it works to ensure it understands the nuances within the different sectors.

Many of NRP’s PEO clients operate in the public sector where there is an increasing desire for workers to be paid through a standard PAYE model, explains McDermott.

“Rather than this forcing an agency to run in-house PAYE, the PEO model allows the agency to continue their main focus on recruitment while working with a payroll partner to provide the employment and payroll solution that is perfect for their supply chain.”

NRP managing director Phil Whelan, was a teacher and headteacher for 15 years prior to taking the helm.

He maintains regular contact with his public sector colleagues to ensure the company maintains an understanding of current legislation and requirements within education and beyond.

“Having worked with schools, agencies and workers on both sides of the fence gives a unique insight into what is desired and required in the public sector environment. PEO gives teachers, and many other such contractors, agencies and end clients, the payroll choice and solution that meets the demands of the whole supply chain.”

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

Securing work after RTW goes digital on October 1st

by Steve McDermott | Aug 9, 2022 | Blog, HMRC, Legislation, News, Recruitment Businesses, UK Employers

Securing work after RTW goes digital on October 1st

Securing work after RTW goes digital on October 1st will be quite a job without an in-date passport.

Changes to Right To Work checks – In under eight weeks, the Home Office’s new Right to Work changes mean any contractor without an in-date British / Irish passport, or in-date visa, will not be able to get jobs remotely, writes Keith Rosser, chair of the Better Hiring Institute .

The background is much brighter.

Hundreds of thousands of UK workers (including contractors) have benefitted from temporary right-to-work changes during the covid-19 pandemic.

And those changes enabled people to get jobs remotely, online.

For anyone without in-date passports this is all going to change, and soon. In particular, from September 30th 2022, there will be no more right to work checking by video interview.

Hiring done the old-fashioned way

I’m pleased to say I’ve personally helped drive this permanent change to what will be digital right-to-work checks, to enable entirely digital-remote hiring.

But there is a gap.

Under the current proposed scheme which is centred around the usage of certified digital identity providers, any contractor with an expired British or Irish passport, or any contractor without a passport entirely, will not be included in the scheme.

That exclusion means; they will be left to have to secure work the old-fashioned way – by attending, in-person, a hirer’s physical office.

Unfortunately, delays at the UK Passport Office compound the issue. That’s why I warned ContractorUK readers about this back in May.

But the current delays are so extensive that any contractor who is reading this now with a passport soon to expire is very unlikely to be able to renew in time.

Not having an in-date passport could cost some contractors that lucrative placement they’ve got their eye on!

Working with the UK government

Research carried out alongside The Open University’s Professor Jon G Hall has identified as many as one in five UK citizens as being without in-date passports.

It’s a statistic that becomes worse in the regions of the UK, furthest from the major cities.

The previous minister for ‘Levelling Up,’ and the new minister (following the mass resignations that rocked Number 10), both wrote to Home Office on my behalf outlining the issue and the potential solutions.

I have been privy to a letter sent to the House of Lords from the Minister of State acknowledging the issue, thanking me for my efforts in transforming digital hiring and — most importantly — agreeing to look at the proposals with the aim of finding a solution before September 30th 2022. So I am hopeful we can still find the answer in time.

It would be a great shame for many work-seekers and contractors if a solution cannot be found and quickly implemented.

Finally, first things first – stopping the emergence of second-class job candidates

But more immediately, my sights are fixed on ensuring that work-seekers without valid passports don’t become second-class job candidates.

Fortunately, there is a ‘Live Event with UK Home Office’ planned in just four weeks – where employers and others can ask officials any questions about the new scheme.

But that September 1st event is too close for comfort to the deadline of September 30th, after which time individuals will no longer be permitted to verify their right to work remotely if they have an expired or out-of-date passport (or birth certificate).

Due to the positive sounds so far from The Home Office, I am still confident that we can arrive at a scheme by the deadline that is fair for all.

8th August 2022 – Story courtesy of ContractorUK and written by Keith Rosser (Chair of the Better Hiring Institute).

New Red Planet – Compliance – FCSA – Security – Changes to Right To Work checks

New Red Planet’s accreditation comes from FCSA (The Freelancer & Contractor Services Association), The UK’s leading membership body dedicated to raising standards and promoting compliance for the temporary labour market.

FCSA’s “Code of Compliance” is recognised as the gold standard in the industry, and its members go through the most stringent audit processes on an annual basis.

The FCSA Code of Compliance has been developed by Ernst & Young, in consultation with HMRC, and is available to the public on the FCSA website.
All FCSA Accredited Members are tested annually against the FCSA Codes of Compliance by independent, carefully selected assessors.
The assessors are top-tier, regulated accountants and solicitors bound by their own professional standards and code of conduct and are independent of the FCSA.
The FCSA Codes of Compliance are continually updated to reflect current legislation.
Non-compliance by FCSA Accredited Members results in the suspension or termination of FCSA Accredited Membership.
No FCSA Accredited Member is allowed to operate Offshore Schemes, Loan Schemes, Trusts, Managed Services Companies Schemes, Pay-day-by-Pay-day models, or similar.

In Conclusion

If you are looking for a reliable, best-in-practice umbrella company that prides itself on its client-focused approach, contact New Red Planet today using the form below or call us on 0161 713 1730.

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

What are the benefits of being paid through an Umbrella Company?

by nrpnewsite | Aug 3, 2022 | Blog, HMRC, Legislation, News, Recruitment Businesses, UK Employers

What are the benefits of being paid through an Umbrella Company?

The Benefits of Using an Umbrella Company

When looking at what an Umbrella Company is and how it can benefit you – being employed by an Umbrella company is something which offers a wealth of benefits to contractors.

But, to understand the benefits, we must first understand what an Umbrella company is.

An Umbrella company undertakes the employment of temporary workers supplied by recruitment agencies.

It pays the appropriate tax on behalf of the contractor, as well as sending them a payslip weekly or monthly, depending on how frequently they get paid.

In essence, a recruitment agency finds work for a contractor, and an Umbrella company pays them.

Flexibility in using an Umbrella

Using an umbrella company is a great way to dip your toe in the water that is working as a contractor.

You have the option to opt in and opt-out of self-employment, so you can try both and make your own decision on which you prefer.

Umbrella Companies can aid with finances

Contractors don’t want to spend unnecessary time nursing their own accounts. An Umbrella company manages the contractor’s tax payments so that there are no nasty surprises when the tax bill arrives.

Due to the ever-expanding and confusing presence of IR35, being paid as a contractor through an Umbrella company.

Employee Benefits when working through an Umbrella Company

When you work as an Umbrella contractor, you become an employee of the Umbrella company, thus you benefit from: sick pay; maternity/paternity pay; holiday pay.

This is a huge added layer of security that a contractor wouldn’t get if they were self-employed.

Taking the safe route when choosing an Umbrella Payroll company

Safest route

As an added safety net to recruiters, contractors and end clients, the recommended type of payroll company would be one that is FCSA Accredited. The FCSA is seen as the industry standard for Compliance and Customer Service and as New Red Planet are FCSA Accredited, there is no need to search any further.

How We Can Help…

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

What is the FCSA Code of conduct?

by nrpnewsite | Jul 15, 2022 | Blog, Freelance Professionals, HMRC, Legislation, News, Recruitment Businesses, UK Employers

What is the FCSA Code of conduct?

What is the FCSA Code of Conduct?

As a contractor working in the freelance sector, you may be aware of the importance of choosing the right umbrella company. There are many such providers in the market, so how do you choose the most suitable one?

An umbrella company should ensure they provide all the benefits of employment, while ensuring the very highest standards of customer service and compliance.

Continue reading to discover more and understand why an FCSA Accredited umbrella company (one of which is New Red Planet) will be the best choice you can make.

Compliance and Standards of Service

The company you’d want to work with should be a reputable firm that offers the highest standards of services and compliance. Ideally, these firms would be audited by a trade body or association, so you have a guarantee as to what you can expect.

This is particularly important now due to the increase in the government’s focus on the contractor market and the recent changes in the IR35 Legislation.

Therefore, it is more important than ever that both contractors and agencies can rely on a reputable firm to provide compliant advice.

FCSA

New Red Planet’s accreditation comes from FCSA (The Freelancer & Contractor Services Association), The UK’s leading membership body dedicated to raising standards and promoting compliance for the temporary labour market.

FCSA’s “Codes of Compliance” are recognised as the gold standard in the industry, and its members go through the most stringent audit processes on an annual basis.

The FCSA Codes of Compliance have been developed by Ernst & Young, in consultation with HMRC, and is available to the public on the FCSA website.
All FCSA Accredited Members are tested annually against the FCSA Codes of Compliance by independent, carefully selected assessors.
The assessors are top-tier, regulated accountants and solicitors bound by their own professional standards and code of conduct and are independent of the FCSA.
The FCSA Codes of Compliance is continually updated to reflect current legislation.
Non-compliance by FCSA Accredited Members results in the suspension or termination of FCSA Accredited Membership.
No FCSA Accredited Member is allowed to operate Offshore Schemes, Loan Schemes, Trusts, Managed Services Companies Schemes, Pay-day-by-Pay-day models, or similar.

Source: www.FCSA.org.uk

If you are already a New Red Planet partner or employee, you can feel confident in the compliance of your pay model and agreement.

If you are looking for a reliable, best-in-practice umbrella company that prides itself on its client-focused approach, contact us today by calling us on 0161 713 1730 or email us at : info@newredplanet.com

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below