Recruitment agencies versus the 2024 budget – what you need to know

The first budget released by the newly formed Labour Government, introduced huge changes and complications to the recruitment industry, from changes to National Insurance Contributions, to the first steps towards real compliance in the Umbrella industry.

Here SG will talk you through the changes affecting your agency, as well as how partnering with SG will help ensure your agency remains compliant.

National Insurance Contributions (NICs)

From April 2025, employer NICs will rise by 1.2 percentage points to 15%, and at the same time, the threshold for payment will drop from £9,100 to £5,000. For agencies with large payrolls, this combination represents a potentially heavy financial burden.

Agencies with smaller payrolls, could however, save up to and additional £5,500 annually due to the Employment Allowance going up from £5,000 to £10,500 in April 2025.

National Living Wage

Increases to the National Living Wage mean full-time workers on minimum wage will be paid an additional £1,400 annually. This provides a real challenge to the market for agencies working close to or at the National Living Wage with a significant uplift in wages for their own staff, plus the support needed to ensure workers and end clients are compliant and happy! Workers may wish to renegotiate their day rates even if they’re already about NLW, and you may need to supply updated KIDs to all affected workers for example.

HMRC have been opening more and more investigations into National Living Wage failures and this is likely to ramp up following the recent changes. As FCSA members we have been part of NLW talks with HMRC this year and are in prime position to advise and support our partner agencies to manage their associated risk.

At SG we can help support our agency partners by providing you with suggested uplifts in day rate as well as Key Information Documents (KIDs) for all your associated workers. You can read more about KIDs in our guide here.

Umbrella Compliance

The commitment to ensuring compliance in the umbrella market has been a focus of not just this government but also the previous one. The budget highlights a plan to move liability for the payment of PAYE and NIC away from the Umbrella company and onto the agency. This means that working alongside umbrella companies which operate at the highest levels of compliance has never been more vital for the financial security of your agency.

Now is the time for agencies to ensure they operate proper due diligence, to manage their own risk, and to provide workers with a robust but strict PSL of only umbrella companies which adhere to the highest levels of compliance.

SG – Safe hands for your agency and your workers

At SG Umbrella we are proud of our commitment to compliance. Not only are we both SafeRec and FCSA accredited, and hold a Cyber Essentials plus certification, we also have a 5* TrustPilot rating, so you have all the proof you need about our credentials and dedication to great service across the supply chain. We’re in this for the long-run, to be a trusted partner to agencies wanting a fail-safe Umbrella partners.

For more information on how SG can work with you to ensure the latest changes don’t affect your agency, please reach out to us on newbusiness@sg-umbrella.co.uk 01962 896954.