The Price of Progress – Outsourcing PayrollJune 18, 2021
The new off-payroll IR35 rules kicked in last month, and just over a month-on, so has the financial and compliance impact. Could an outsourced PAYE payroll model be the solution? David McCormack, our CEO investigates.
- Changes to IR35 legislation took effect on 6 April 2021.
- The rules mean there’s more tax to pay.
- Public and private sector businesses engaging workers through intermediaries must identify if the worker is a direct employee for income tax purposes.
- IR35 applies to the end-user; unless it is a small company, IR35 applies, and the business must apply the rules based on client’s determination of status.
- If a worker falls under IR35, then any claim against the Employment Allowance is disallowed, meaning intermediaries knowingly using the mini umbrella model with a client deemed supply within IR35, the business and client are exposed to tax risk.
- If the worker provides services to a public sector, medium or large-sized private sector client, they need an employment status determination and the reasons from the client.
Compliance and choice
Recruitment businesses have three options:
- Set-up an in-house payroll facility,
- Cut workers’ pay, or,
- Outsource payroll to a recommended PAYE, compliant specialist.
Umbrella companies: charge recruiters for administering payroll, at an average £20 per worker per week, i.e. £1,000 per worker a year, based on an £18,000 salary.
In-house payroll: carries costs. A recruiter with 400 workers should expect an additional £30,000 each year in administration and resource costs, which can be ‘absorbed’ or passed on via a worker pay cut.
Outsourcing PAYE payroll: cost-savings that speak for themselves:
- Recruiters outsourcing temporary workers’ PAYE payroll to HIVE360 save around £100 or more per worker in the first year.
- A temp agency with 2,000 PAYE temps could see a return of £200,000 per annum.
- An employer with 100 employees could achieve a return of over £10,000.
Candidate retention and attraction rates remain top priorities, and what is setting progressive recruitment businesses apart is an embedded employee/candidate engagement strategy that looks after payroll and people.
Employee retention involves practices that improve or maintain a positive working environment to create a strong workplace culture. Ideally forming part of an employee engagement strategy, it includes onboarding and career progression, reward and recognition policies, training and development, employee benefits, and work:life balance initiatives like flexible working, financial/mental health and wellbeing support.
Pay, benefits and wellbeing all in hand
HIVE360 is dedicated to empowering businesses to achieve better engagement with their people, to create a happy, loyal and motivated workforce, and improve employee retention.
As well as a fully HMRC and GLAA compliant PAYE outsourced payroll provider, we provide wellbeing and benefits via our unique customisable engagement app: Engage.
Provided at zero cost and as standard with the HIVE360 outsourced payroll and employment administration solution, Engage’scomplete package of employee benefits includes:
- 24/7, confidential access to mental health support, counsellors and GPs
- personal doctor, support helpline and care support
- gym memberships, high-street, lifestyle, dining and insurance discounts, digital payslips
- real-time workplace pension dashboard to support employees’ financial wellbeing
- access to an online training platform.
Six reasons to partner with HIVE360
- Fully HMRC & GLAA compliant and transparent PAYE payroll support.
- Future-proof solution that meets the demands of IR35 and the Good Work Plan.
- Auto enrolment pension administration with high performing workplace pension provider.
- Structured to deliver significant cost savings and operational efficiency gains.
- Centred around a mobile platform that enhances candidate wellbeing support and benefits.
- HR legal advisory support included for continued compliance and protection.
HIVE360 is an expert in recruitment agency PAYE payroll, wellbeing and benefits provision. A GLAA license holder and corporate member of Inspiring Workplaces, championing a new model of employment administration and redefining employment and pension administration processing.