If you work in construction as a contractor or subcontractor, it’s important to understand the potential changes to the Construction Industry Scheme that may take effect from 6 April 2026. While some adjustments are simple administrative updates, others grant HMRC increased authority to tackle non-compliance. Preparing late can lead to penalties, audits, and unnecessary disruptions. Here’s a straightforward overview of the upcoming changes, their impact, and recommended actions. What Is CIS and Why Are Changes Being Considered? The Construction Industry Scheme (CIS) regulates how contractors manage payments to subcontractors, including withholding taxes and reporting to HMRC. You can find the full official framework on the HMRC Construction Industry Scheme guidance page. HMRC has raised ongoing concerns about inconsistent compliance across the sector, mistakes in reporting and verification, and fraud within labour supply chains. Consequently, consultations have aimed to enhance oversight and streamline certain administrative procedures. Monthly Reporting and Nil Returns One topic being discussed is the strengthening of monthly reporting requirements, especially during times when no payments are made to subcontractors. Historically, the requirement to submit nil returns was removed in April 2015 to reduce administrative burden. However, in practice, this has led to confusion around reporting obligations, particularly where contractors have periods of inactivity. In some cases, if HMRC still expects a return and no notification has been given, this can lead to late filing penalties. Payments to Public Bodies: A Formal Exemption Another topic under review is how payments to public sector bodies are handled under the Construction Industry Scheme (CIS). Historically, certain organisations—such as local authorities—have been subject to distinct treatment, with specific payments exempt from CIS deductions. However, this practice has been characterised by a lack of definitive legislative guidance, thereby fostering uncertainty for contractors. The proposed amendments are intended to establish a more explicit legal definition and clarify whether payments to designated public sector bodies fall within or outside the scope of CIS. Such clarification would enhance confidence for businesses engaging with public sector clients, minimise errors in CIS applications, and potentially streamline reporting obligations when payments are confirmed to be outside the scheme. Stronger Compliance and Enforcement Approach A primary emphasis in HMRC’s approach is on improving accountability within contractor supply chains. This encompasses verifying whether businesses have exercised reasonable due diligence in vetting subcontractors, maintained accurate records, and responded appropriately to available information. Furthermore, an enhanced application of the “reasonable care” standard is expected to align CIS regulation more closely with other areas of tax compliance. The HMRC compliance checks guidance outlines what businesses can expect when HMRC reviews their records and procedures. For your organisation, this signifies that informal or undocumented procedures may pose increased risks, underscoring the importance of meticulous record-keeping and explicit verification procedures. Gross Payment Status (GPS) Scrutiny Although no final decisions have been made, ongoing consultations suggest there could be increased scrutiny of the Gross Payment Status (GPS), especially when compliance issues arise. This might involve quicker removal of GPS for non-compliance and implementing more thorough review procedures. For subcontractors, this highlights the importance of staying fully compliant to preserve GPS, since losing this status could significantly affect cash flow and business operations. Practical Steps You Can Take Now The practical steps remain the same whether you’re dealing with nil returns, the public body exemption, or the supply chain enforcement risk. Review your monthly reporting procedure Ensure you understand the process for filing your CIS return and determine the appropriate actions for months with no subcontractor activity. Confirm that your team is informed to either file the return or notify HMRC accordingly during such months. Review your subcontractor verification records Demonstrating that you took reasonable steps to verify a subcontractor’s status now serves as a direct safeguard against the updated enforcement rules. Any gaps in your records could become your liability. Enhance your supply chain due diligence Contractors working with multiple subcontractors should establish clear processes for onboarding, verifying statuses, and continuous monitoring. If your current procedures are informal or lack documentation, it’s essential to formalise them before April 2026. Keep your HMRC contact details up to date HMRC issues notifications regarding updates in subcontractor status. Should these notices be sent to an outdated address or to an incorrect individual, and there is a failure to respond, the responsibility for any consequences lies with your business. How The Infinity Group Can Help At The Infinity Group, we provide a comprehensive CIS payroll service that oversees compliance and administrative tasks for contractors and subcontractors. Our service executes all necessary compliance checks, including employment status determinations (IR35 and SDC checks), right to work, identity, and CIS status verifications. We manage the entire payroll process, which includes submitting CIS300 returns and managing nil submissions as required. Furthermore, we continually monitor and re-verify subcontractor statuses to ensure ongoing compliance. With our support, you can be confident that your CIS obligations are managed accurately, efficiently, and in line with current regulations. Subscribe to Our Newsletter for Weekly Updates!
National Minimum Wage Compliance: What Employers Must Check for Salaried Staff
Many employers assume that paying a fixed annual salary ensures compliance with the National Minimum Wage (NMW). In practice, this is not always the case. The law requires employers to ensure that, when an employee’s pay is divided by their hours worked, the resulting hourly rate does not fall below the NMW, whether the employee is paid hourly or salaried. Issues may arise if salaried employees consistently work beyond the hours set out in their contracts, particularly where those additional hours are unpaid. In such cases, this can bring their pay below the National Minimum Wage threshold. Without proper monitoring of working hours, employers may unintentionally underpay the NMW. Understanding Salaried Hours Work and Its Importance for NMW Compliance Under the National Minimum Wage (NMW) rules, a worker is considered to be performing salaried hours work if their contract states a set number of hours annually and they receive a fixed salary paid in regular instalments, such as weekly or monthly. This salary is meant to cover those basic hours and is not calculated per hour. Although this setup seems simple, problems can occur if employees work beyond their contracted hours without extra pay. From April 2026, the National Living Wage for workers aged 21 and over will be ÂŁ12.71 per hour. For workers aged 18 to 20, the rate will be ÂŁ10.85 per hour, while those aged 16 to 17 and apprentices will be entitled to ÂŁ8.00 per hour. Employers must ensure their pay calculations meet or exceed these rates. How Excess Hours Can Affect NMW Compliance Many employers face issues with National Minimum Wage compliance without realising it. For workers paid based on salaried hours, compliance is checked within each pay period, usually aligned with their pay cycle (e.g., monthly). Employers need to ensure that the total pay divided by the hours counted for NMW calculations does not drop below the minimum wage. Issues frequently arise when salaried employees regularly undertake overtime beyond their contractual obligations without receiving supplementary compensation. In such circumstances, as these employees work additional hours while their pay remains unchanged, their effective hourly rate may drop below the minimum wage. Common Mistakes That Lead to Unintentional Underpayments Many violations of the National Minimum Wage (NMW) happen unintentionally. They often stem from payroll systems, contracts, and working practices that do not accurately reflect how employees actually work. Common reasons include: â—Ź Contracted hours that no longer accurately reflect reality.Contracts might specify a 37.5-hour workweek, but employees often work extra hours in practice. If these additional hours are not included in pay calculations, the actual hourly rate could drop below the NMW. â—Ź Salary sacrifice arrangements reducing NMW paySalary sacrifice arrangements, such as pension contributions or cycle-to-work schemes, reduce the pay used for National Minimum Wage calculations. Employers are required to ensure that employees’ pay remains above the NMW threshold following these deductions. â—Ź Lack of accurate working time recordsEmployers are required to demonstrate that employees receive at least the National Minimum Wage (NMW). In the absence of comprehensive records of hours worked, providing evidence of compliance becomes challenging in the event of a review by HMRC. â—Ź Incorrect classification of work typeThe NMW rules differentiate among various categories of work, including salaried hours work, time work, output work, and unmeasured work. Incorrect classification may result in erroneous calculations and possible underpayment. The Importance of Record-Keeping in NMW Compliance Employers are required to maintain records demonstrating compliance with the National Minimum Wage regulations and retain them for a minimum of 3 years. In addition to statutory obligations, meticulous record-keeping is crucial in the event of a review by HMRC. Effective record-keeping entails: · Monitoring contracted hours against actual hours worked for salaried employees; · Explicitly documenting salary sacrifice arrangements and other deductions affecting NMW entitlement; · Recording any modifications to work schedules, contracts, or pay structures along with supporting dates; · Preserving an audit trail of the methodologies used in calculating NMW for each pay period. Being able to demonstrate how pay and hours were calculated is just as important as ensuring the calculations are correct. How The Infinity Group Can Help We assist businesses in ensuring that payroll is not only processed accurately but also fully compliant with current laws. For employers with salaried employees, our managed payroll service provides regular reviews of National Minimum Wage (NMW) compliance. This includes checking actual working hours against contractual agreements, identifying potential excess hours, and highlighting risks before they become liabilities. We also assess how salary sacrifice arrangements and employee benefits affect NMW-qualifying pay, as these can often lead to compliance issues. If there is uncertainty about current payroll practices, we can undertake a targeted compliance review. This includes an assessment of employment contracts, pay structures, and record-keeping processes, providing a clear, informed view of your current position and any areas that require attention. Addressing these issues proactively is usually less disruptive than dealing with HMRC inquiries. Subscribe to Our Newsletter for Weekly Updates!
Variable Recurring Payments 2026: What Businesses Need to Know
Open Banking has been a subject of discussion for several years; however, in 2026 the focus is shifting from discussion to practical use. Variable Recurring Payments (VRPs) are beginning to be utilised commercially, regulators are establishing a comprehensive long-term regulatory framework, and the retail payments infrastructure is undergoing reassessment to meet future demands. It is crucial for businesses that regularly send or receive payments to comprehend these developments. The Numbers Behind the Shift Before exploring Variable Recurring Payments and their significance, it’s helpful to understand the current state of Open Banking. Over 16 million individuals and businesses now use Open Banking services, with Open Banking payments increasing by 53% annually. Variable Recurring Payments, which were primarily discussed in regulatory circles a few years ago, now account for about 16% of all Open Banking transactions. These statistics, published by the Financial Conduct Authority in December 2025, demonstrate that Open Banking is no longer just an emerging idea but has become a well-established component of the payments ecosystem, continuing to grow rapidly. What Are Variable Recurring Payments? Variable Recurring Payments (VRPs) are a bank-to-bank payment method allowing businesses to automatically collect funds from a customer’s account. Unlike traditional direct debits, VRPs give customers greater control over the arrangement. When setting up a VRP, customers approve specific limits such as a maximum per payment, a monthly cap, or a set time period. As long as payments stay within these limits, the business can collect varying amounts each time without issuing a new payment request or chasing invoices. This method is particularly useful for managing subscriptions, retainers, or any regular billing with fluctuating amounts, offering a more flexible and efficient payment collection process. Why 2026 Is a Turning Point Since 2018, Open Banking has been accessible, but adoption by businesses has remained slow. Initially, it was mainly utilised for consumer applications such as budgeting tools, mortgage checks, and account aggregation. However, this is beginning to change. In 2025, 31 companies from various parts of the payments industry formed the UK Payments Initiative (UKPI) to promote the use of Variable Recurring Payments (VRPs) for businesses. The first live transactions under this initiative are expected to commence in early 2026. The initial focus will be on sectors such as utilities, financial services, and government payments—common transactions used by millions of businesses and consumers, making them ideal starting points. Simultaneously, the regulatory structure for Open Banking is evolving. HM Treasury is expected to introduce legislation that formally empowers the Financial Conduct Authority (FCA) to regulate Open Banking. The FCA also plans to seek input on a long-term framework by late 2026 to guide the future development of Open Banking and VRPs. What This Means for Your Business The effect will vary based on how your business manages payments, but VRPs provide several obvious advantages. Faster payments and improved cash flow: VRPs operate on the Faster Payments network, meaning payments can settle within seconds rather than days. Businesses relying on BACS direct debits, which typically take about three working days, might experience quicker access to their funds. While VRPs reduce card-related fees, payment providers may still apply processing charges. Companies should assess these costs carefully and incorporate them into pricing and cash flow strategies. Fewer payment disruptions Setting up a VRP is a straightforward process. Unlike card payments, there are no concerns regarding expiring or outdated card information. If a customer receives a new card, it will not affect the existing payment arrangement. For organisations that maintain subscriptions, retainers, or recurring service charges, this can reduce the incidence of failed payments and result in a more stable revenue stream. Easier reconciliation Open Banking payments include structured data, simplifying the process of matching payments with invoices. When integrated with accounting software, this can decrease manual effort and reduce the chance of reconciliation mistakes. The Regulatory Picture: What to Watch The Payments Vision Delivery Committee, comprising HM Treasury, the Bank of England, the Financial Conduct Authority, and the Payment Systems Regulator, published its strategy for retail payments infrastructure in November 2025. The strategy emphasises enhancing the payments system by offering more choices for consumers and businesses, promoting interoperability across different digital money types, bolstering fraud protection, ensuring fair access for payment providers, and securing long-term resilience. To facilitate this effort, a Retail Payments Infrastructure Board, led by the Bank of England, has been formed to oversee the design of the new system. An industry-led delivery company will then handle the procurement and construction of the infrastructure. These initiatives are long-term; most businesses won’t need to engage directly. Nevertheless, companies developing payment processes or integrating financial systems should recognise that the payments landscape will continue to develop over the next few years, and decisions made now might require adjustments as the infrastructure evolves. How The Infinity Group Can Help At The Infinity Group, our services extend beyond payroll. We keep clients informed about key financial and regulatory updates that could impact their business. This includes sharing insights on financial trends, industry shifts, and new tools that influence how businesses handle their finances. Our goal is to ensure businesses remain knowledgeable and comprehend how these changes may affect their operations. Through clear updates and practical advice, we assist clients in making informed decisions and staying ready for evolving financial conditions. Frequently Asked Questions Are VRPs the same as direct debits? Not quite. Both enable businesses to collect ongoing payments from customers’ accounts, but VRPs are quicker and offer more flexibility. While direct debits use the BACS system, VRPs operate via Open Banking and typically settle faster. Customers can also restrict the amounts that can be collected. Do I need to take any action now that commercial VRPs are accessible? Not necessarily, as VRPs are optional. However, if your business manages subscriptions, retainers, or variable invoices, it might be beneficial to consider whether they can enhance your payment process. Is Open Banking secure for businesses? Yes. It functions under Financial Conduct Authority regulation and employs robust bank-level authentication. Customers approve payments directly
New HMRC Agent Registration Requirements in 2026: Is Your Adviser Properly Registered?
Many business owners and subcontractors often believe that their accountant can simply log into HMRC using the client’s details, handle necessary issues, and then report back. This assumption is common, especially when clients have already handed over their financial records and vital information to their adviser. However, in reality, this is not how the system functions. Accountants and tax advisors are required to interact with HMRC through authorised agent arrangements, not by using the client’s personal login credentials. Starting from May 2026, HMRC plans to implement a formal registration process for tax advisers. This aims to improve oversight of professionals dealing with HMRC on behalf of clients. Advisers offering paid tax services and interacting with HMRC must register and meet specific minimum standards. What Is Changing and When From May 2026, HMRC will require all tax advisers who deal with HMRC on behalf of clients to register officially. This new legislation aims to enhance control over the tax advice market and ensure that paid tax service providers meet set standards. According to the proposed system, advisers who manage client interactions with HMRC—such as submitting returns, communicating, or discussing tax affairs—must be registered. HMRC has stated that the implementation will begin in May 2026, with a minimum three-month transition period for existing agents to register and comply. Once fully enforced, unregistered advisers may face restrictions on interacting with HMRC on behalf of their clients, including submitting returns, replying to HMRC correspondence, or discussing client matters directly with HMRC. What Counts as Interacting with HMRC HMRC’s definition of “interaction” is intentionally broad. It encompasses contacting HMRC via telephone, postal mail, or electronic mail, as well as engaging through digital platforms such as GOV.UK. Furthermore, it includes the submission of tax returns, claims, or other documentation on behalf of clients through official HMRC online services. The regulations do not depend on the professional’s designation; it is not necessary to label oneself as a “tax adviser” to be subject to these rules. Any individual compensated for managing interactions with HMRC on behalf of another person or enterprise may be required to register. This includes sole traders providing tax-related services, overseas advisers serving UK clients, and professionals with a limited client base. As a result, the scope extends beyond initial expectations, generating considerable interest within the accounting and payroll sectors. Why This Matters for Your Business As a business owner or subcontractor, you might wonder why this change is important to you. While your accountant is responsible for their own professional compliance, if they are not properly registered when necessary, it could impact your tax affairs. For instance, if your adviser cannot interact with HMRC on your behalf, they may be limited in their ability to discuss your tax issues, respond to HMRC correspondence, or submit returns through standard agent channels. This could lead to delays or complications, especially with deadlines or ongoing inquiries. Therefore, it’s wise to have a straightforward conversation with your tax adviser to confirm if they are aware of the upcoming requirements and will be properly registered under the new system. A reputable adviser should be able to give a clear and reassuring answer. Who Does Not Need to Register Not every individual involved in tax-related work will fall within the scope. HMRC has clarified that certain roles and activities are likely excluded from the new registration rules. For instance, in-house payroll teams or tax staff handling only their employer’s tax matters are not required to register. Likewise, individuals managing tax issues solely within their corporate group are not expected to be affected. The rules also do not cover those providing unpaid or voluntary tax assistance, nor professionals whose HMRC interactions stem from statutory duties in other regulated roles, such as insolvency practitioners. Moreover, businesses that develop or sell payroll or accounting software without engaging with HMRC for clients typically won’t need to register. Activities related exclusively to customs, import VAT, or specific Northern Ireland trading arrangements may also be outside the scope of the proposed regime. However, for most accountants, tax advisers, and bookkeepers who offer paid services and engage with HMRC on behalf of clients, registration is likely required. How The Infinity Group Can Help At The Infinity Group, we are a registered HMRC agent operating through authorised HMRC agent services accounts. This enables us to communicate directly with HMRC on behalf of our clients, including submitting tax returns, handling payroll and CIS submissions, and managing HMRC queries or correspondence via official channels. Our goal is to keep clients fully compliant with HMRC requirements while efficiently and professionally managing their tax and payroll matters. As HMRC introduces the new registration framework for tax advisers starting in 2026, working with a properly authorised and compliant adviser will become even more crucial. If you require a reliable partner for your accounting, taxation, payroll, or CIS obligations, The Infinity Group is prepared to assist. We provide transparent guidance, compliant procedures, and expert support to ensure your business remains on track. Frequently Asked Questions Does my accountant already have an Agent Services Account?Many established accountancy firms already have an HMRC Agent Services Account (ASA) to manage client tax affairs online. However, the new registration framework expected from May 2026 may introduce additional requirements. If you are unsure, it is sensible to ask your accountant directly. What happens if an adviser is not registered when required?Advisers who are not properly registered may be unable to interact with HMRC on behalf of their clients, including submitting returns or discussing tax matters with HMRC. What if my accountant only handles payroll? Payroll providers who submit PAYE or RTI filings already interact with HMRC and may also need to ensure they meet the new registration requirements. Can my accountant use my HMRC login to manage my tax affairs?No. HMRC requires advisers to use authorised agent accounts, not a client’s personal Government Gateway login. Subscribe to Our Newsletter for Weekly Updates!
Employment Rights Act: April 2026 Changes Explained
The Employment Rights Act 2026 represents the most significant reform to employment law in over a decade. Although it received Royal Assent in December 2025, its provisions are being implemented gradually, with the initial phase commencing on 6th April 2026. These reforms affect family leave rights, Statutory Sick Pay (SSP), collective redundancy exposure, and employment rights enforcement. Further changes are scheduled for late 2026 and 2027, subject to commencement regulations. If you prepare early, implementation will be manageable. If you leave it until the final quarter, compliance risk increases significantly. What’s Actually Changing in April 2026 The following measures are confirmed for implementation from 6 April 2026: Further reforms are scheduled for implementation in October 2026 and January 2027 (subject to commencement regulations), including new restrictions on “fire and rehire” practices and changes to the qualifying period for unfair dismissal claims. Day-One Paternity and Parental Leave Currently, employees must have 26 weeks of continuous service to qualify for statutory paternity leave. Effective from 6th April 2026, this requirement will be abolished pursuant to the Employment Rights Act 2025, thereby permitting eligible employees to avail themselves of paternity leave from their first day of employment. In a similar vein, the one-year qualifying period for statutory unpaid parental leave has been eliminated, allowing employees to take unpaid parental leave from the commencement of employment, subject to the existing statutory limit of 18 weeks per child. It is imperative to distinguish between the right to leave and the right to pay. For further detail on eligibility criteria, refer to the official GOV.UK guidance on Statutory Paternity Pay and Leave. This legislative reform broadens access to time off but does not inherently ensure paid leave. Statutory Sick Pay: Key Changes from April 2026 Statutory Sick Pay (SSP) is undergoing significant reform under the Employment Rights Act 2025, with changes taking effect from 6th April 2026. Removal of Waiting Days Currently, SSP is not payable for the first three days of sickness absence. Effective from April 2026, these waiting days will be abolished, and SSP will be payable from the first day of sickness. Employers experiencing frequent short-term sickness absences may incur increased SSP costs, as payments will now commence on the first day of absence rather than after a 3-day waiting period. Removal of the Lower Earnings Limit Currently, employees need to earn more than the Lower Earnings Limit to qualify for SSP. Starting in April 2026, this earnings threshold will be eliminated, allowing lower-paid workers who were previously ineligible to qualify. This change is particularly relevant for part-time, casual and variable-hours staff. Revised SSP Calculation SSP will no longer operate solely as a flat-rate payment. Instead, it will be calculated as the lower of: Average weekly earnings will be calculated over the statutory reference period prior to the sickness absence, in line with secondary legislation. This introduces additional payroll complexity, especially for employees with fluctuating earnings. Transitional Position Employees already receiving SSP before 6th April 2026 will remain subject to transitional provisions set out in the commencement regulations. Employers should review the final regulations to ensure correct treatment of ongoing absences that span the implementation date. The Fair Work Agency The Employment Rights Act 2025 provides for the establishment of a Fair Work Agency (FWA) to consolidate and strengthen the enforcement of employment rights. Its implementation is being phased, with operational powers introduced through secondary legislation from 2026 onwards. The Agency is expected to assume and expand certain labour market enforcement functions currently carried out by bodies, including HMRC. Subject to final regulations, the FWA will have powers to: Enforcement time limits and penalty frameworks are set out in regulations and may allow recovery of historical underpayments, subject to statutory limitation rules. Record-Keeping Risk With increased enforcement oversight, it is essential to maintain accurate records. Employers must keep proper documentation to prove compliance with: Failure to maintain compliant records may result in enforcement actions, even if the underpayment is unintentional. What Employers Need to Do Review and Update Payroll Systems Payroll systems must be updated prior to April 2026 to incorporate SSP reform. Ensure your system is capable of: It is advisable to engage with your payroll provider well in advance and to conduct testing using real workforce data rather than generic examples. Update Contracts and Policies Review and update: Ensure that employee handbooks and template contracts are aligned with the new statutory framework. For practical guidance, please consult ACAS. Train Managers Line managers should have a clear understanding of: This training should encompass structured sessions with practical examples and scenario discussions, rather than merely circulating policy emails. Engage with Staff Employees are likely to learn about the reforms through media reports. Proactively disseminating information can help reduce confusion and prevent conflicts. Consider: Initiating communication early assists in setting expectations and guarantees consistent implementation across the organisation. Getting Ready: Your Timeline February 2026: Contact your payroll provider to verify when the software updates reflecting the SSP reforms under the Employment Rights Act 2025 will be available. Confirm how day-one SSP, the 80% average weekly earnings calculation, and the statutory weekly cap will be implemented. Test these updates thoroughly using real employee data where possible. February to March 2026: Review employment contracts, staff handbooks, and internal policies. Remove references to SSP waiting days and Lower Earnings Limit thresholds. Update family leave policies to include day-one paternity and unpaid parental leave rights. Ensure all language aligns with final commencement regulations and official guidance. March 2026: Conduct structured training sessions for HR, payroll, and line managers. Provide practical examples of SSP calculations and leave scenarios. Distribute written reference guides for ongoing use. March 2026: Distribute company-wide communications explaining the confirmed changes. Keep messages clear, factual, and consistent with statutory provisions. Prepare FAQs to address common questions and set expectations. From April 2026 (Commencement): Carefully monitor payroll outputs to ensure SSP calculations are accurate. Ensure that leave requests are processed consistently and in accordance with new policies. Verify record-keeping compliance and enforcement standards. April to July
HMRC Withdraws RTI Hours Reporting Requirement for April 2026
HMRC has announced that it will not move forward with its plan requiring employers to report detailed employee working hours via Real Time Information (RTI). The draft regulations have been officially withdrawn and will not be enforced. This outcome benefits employers, particularly given the ongoing management of significant regulatory changes such as Making Tax Digital, the shift to real-time payrolling of benefits, and the escalating costs of National Insurance. The requirement for detailed hours reporting, alongside these modifications, would have introduced further administrative and operational difficulties, especially for small and medium-sized enterprises. The cancellation of this proposal reduces a considerable reporting burden and allows payroll teams to concentrate on compliance activities that are both essential and appropriate. What Was Originally Proposed Under the original proposal, employers would have been required to submit precise working hours for each employee on every pay run, replacing the current banding system. This would have meant: In practice, this would have created substantial operational challenges. Many payroll systems are not configured to capture or transfer hours data in the format HMRC envisages. Time and attendance systems often do not integrate smoothly with payroll software, which would have required new processes, manual data entry, and additional software costs. For many employers, especially those paying fixed salaries or employees above the National Minimum Wage, the extra reporting would have offered minimal practical benefit but would have considerably increased administrative tasks. Research by the Chartered Institute of Payroll Professionals revealed the extent of the problem, with over 65% of payroll professionals stating they would need to gather entirely new data to comply, and nearly 40% expecting a substantial rise in administrative workload. The Current System Remains Unchanged There are no modifications to the existing reporting framework under Real Time Information (RTI). Employers are obliged to continue selecting one of the designated “normal hours worked” categories when submitting a Full Payment Submission (FPS) to HMRC: This categorisation requirement has been in effect since the introduction of RTI in 2013 and was established to facilitate the administration of Universal Credit. It affords HMRC a broad overview of working patterns without necessitating the submission of exact hours data. Crucially, this stance remains unaltered. Employers are not mandated to modify payroll procedures, update software systems, or implement additional training as a consequence of the withdrawn proposal. Current reporting practices should remain unchanged. Why the Proposal Was Withdrawn Feedback from payroll professionals, software providers, and business groups consistently underscored that the proposal would impose a disproportionate compliance burden. Notable concerns included: After consulting and considering industry representations, HMRC acknowledged that the costs and complexities outweighed the advantages and decided not to proceed with the proposal. This outcome exemplifies a pragmatic response to authentic operational concerns within the payroll sector. What Employers Must Still Do Although the proposed RTI reporting requirement has been withdrawn, employers must continue to maintain appropriate working hours records to meet existing statutory obligations. In particular, accurate records remain necessary for: National Minimum Wage compliance – maintaining sufficient records for workers paid at or near statutory minimum rates. Working Time Regulations – demonstrating compliance with limits such as the 48-hour average working week and rest requirements. Holiday pay calculations – particularly for workers with variable hours or irregular earnings. Employment tribunal or dispute proceedings – where documented working hours may form important evidence. The key distinction is that these records are retained for regulatory and employment law compliance, rather than submitted to HMRC via RTI. Employers should therefore continue their existing record-keeping practices to ensure compliance, but without the additional reporting burden that had been proposed. Other Changes Still Proceeding While the detailed RTI hours reporting proposal has been withdrawn, other significant payroll reforms remain on the legislative timetable. From April 2027, employers will be required to payroll most Benefits in Kind in real time through PAYE. This will affect items such as company cars, private medical insurance and beneficial loans. Organisations will need to ensure their payroll systems and internal processes can handle real-time benefit reporting and associated tax deductions. In addition, from April 2026, strengthened PAYE accountability measures within labour supply chains are expected to take effect. These provisions are designed to address non-compliance in agency and umbrella company arrangements and may introduce joint and several liability for unpaid tax in certain circumstances. Businesses engaging temporary workers or contractors through intermediaries should therefore review their contractual arrangements and compliance procedures carefully. The overall compliance landscape remains active. Although one proposed requirement has been removed, employers should continue planning for the reforms that are proceeding. How The Infinity Group Can Help Keeping up with changes from HM Revenue & Customs can be time-consuming. We monitor developments for you and explain clearly what applies to your business — and what does not. If a proposal is withdrawn or updated, you will know straight away. We review your payroll processes to identify risks before they become costly problems. This includes checking working hours records, National Minimum Wage compliance and benefits handling. With mandatory payrolling of Benefits in Kind arriving in April 2027, we help you prepare in a structured and manageable way. If payroll system changes are needed, we guide you towards practical solutions that suit how your business operates — without unnecessary complexity. For straightforward advice and reliable support, contact The Infinity Group. We help you stay compliant with what truly matters. 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Small Employers’ Relief set at 9% for 2026-27: What Employers Must Know
Good news for small businesses: the Small Employers’ Relief (SER) rate will increase to 9% commencing 6 April 2026 (tax year 2026-27). If eligible, you may recover 109% of statutory family-related payments, encompassing 100% of statutory pay along with an additional 9% compensation, to assist in offsetting employer National Insurance contributions and administrative costs. What Is Small Employers’ Relief? Small Employers’ Relief assists eligible small employers in recouping the costs associated with specific statutory family-related payments made to employees during periods such as maternity, paternity, adoption, shared parental, bereavement, or neonatal care leave. Employers are legally obligated to disburse these statutory amounts via payroll. If your business qualifies, you are entitled to reclaim 100% of the statutory payments, along with an additional compensation percentage to help offset employer costs, including employer National Insurance contributions and administrative expenses. Effective from 6 April 2026, this compensation rate will increase to 9%, allowing for the recovery of 109% of the statutory pay. Who Can Claim This Relief? Your business qualifies if it paid ÂŁ45,000 or less in Class 1 National Insurance contributions during the last complete tax year. This eligibility threshold remains unchanged. Importantly, the ÂŁ45,000 limit is based on the previous tax year’s NICs, not the current year’s. For example, if you claim relief in 2026-27, HMRC will review your 2025-26 Class 1 NICs to determine qualification. Eligibility depends solely on your total Class 1 NIC liability, not on the number of employees. Which Payments Are Covered? Small Employers’ Relief applies only to statutory family-related payments. If you qualify, you can reclaim these payments at 109% (from April 2026): If you meet the eligibility criteria, you can reclaim 100% of these statutory amounts plus the additional compensation percentage. Not covered: What the 9% Increase Actually Means From 6 April 2026, eligible employers can reclaim 109% of qualifying statutory family-related payments under Small Employers’ Relief through HM Revenue and Customs. This means you recover: The additional percentage helps offset employer costs associated with administering these payments, such as employer National Insurance contributions and payroll processing. Example Your employee receives ÂŁ2,150 in Statutory Maternity Pay (SMP). You can reclaim: So, you receive ÂŁ193.50 more than the statutory amount paid, improving short-term cash flow. How Do You Actually Claim It? You claim Small Employers’ Relief through your normal payroll reporting process: there is no separate application form. If you use payroll software Most payroll software calculates the reclaim automatically. It reports the statutory payments and the Small Employers’ Relief through your payroll submissions and offsets the amount against your PAYE and National Insurance liability. If you calculate payroll manually You must: Record-keeping Keep clear payroll records for each employee, including: These may be required during an HMRC compliance check. When Your Reclaim Is More Than You Owe If your reclaim exceeds your PAYE/NIC liability for that period, you can: (Processing times for refunds vary.) Getting Ready for April 2026 The new Small Employers’ Relief compensation rate of 9% takes effect from 6 April 2026. Preparing in advance will help ensure your payroll calculations and reporting remain accurate from the start of the new tax year. Essential steps Consider Cash Flow Timing Although eligible employers are permitted to reclaim an amount exceeding the statutory payment, there may be a brief delay between disbursing payments to employees and offsetting or recovering the reclaim through payroll. If multiple employees are on leave concurrently, it is advisable to ensure sufficient funds are available initially until the reclaim is processed or offset against your PAYE/NIC liability. Mistakes Small Employers Often Make Avoid these common errors when claiming Small Employers’ Relief: How The Infinity Group Can Help Managing payroll legislation, statutory payments, and reclaim rules can prove to be time-consuming and complex endeavours. The Infinity Group provides support to small and expanding companies by offering expert guidance, timely compliance updates, and comprehensive outsourced payroll services. Our services encompass: Whether you require complete payroll outsourcing or continuous technical assistance, we offer dependable, compliant solutions tailored specifically to your business. Subscribe to Our Newsletter for Weekly Updates!
Border Security, Asylum and Immigration Act 2025: Penalties for Unauthorised Employment
The rapid growth of the gig economy has transformed how organisations source and allocate labour. As flexible working models expand—covering delivery drivers, private‑hire operators, freelance contractors, and on‑demand workers—businesses must ensure their compliance frameworks evolve accordingly. The Border Security, Asylum and Immigration Act 2025 marks a significant shift in the UK’s illegal working regime. For the first time, right‑to‑work obligations extend beyond conventional employment and apply to a wider range of “working arrangements”, including platform workers, subcontractor networks, and intermediary‑facilitated services. Once implemented, any organisation that allocates, facilitates, or enables the provision of work will be required to carry out fully compliant right‑to‑work checks before engagement. Failure to do so exposes businesses to civil penalties of up to £60,000 per breach, operational disruption, and reputational harm. To stay ahead of enforcement, businesses must strengthen their onboarding processes, implement robust verification controls, and maintain compliant records. Implications of the 2025 Act for Gig Economy and Platform Operators Previously, the statutory right‑to‑work regime focused primarily on traditional employer‑employee relationships. The 2025 Act significantly broadens this scope, capturing: This means that right‑to‑work checks are no longer optional safeguards—they are mandatory compliance requirements for any business model involving distributed or flexible labour. The Act received Royal Assent on 2 December 2025. Secondary legislation will introduce commencement dates and operational guidance throughout 2026–27. Early preparation is strongly recommended to avoid financial and operational risk. Financial Exposure and Enforcement Risk The updated civil penalty regime introduces substantial liabilities: Up to £60,000 per illegal worker for repeat offences When operating at scale, particularly in gig‑economy environments, cumulative penalties can be severe. Additional consequences may include: Establishing a statutory excuse is the only defence against civil penalties. This requires organisations to perform right‑to‑work checks correctly, consistently, and prior to engagement. Five Key Actions to Safeguard Your Organisation 1. Conduct compliant right‑to‑work checks at onboarding Checks must be completed before any individual performs paid or unpaid work. To ensure accuracy, scalability, and audit readiness, organisations should incorporate digital verification systems using Home Office‑certified Identity Service Providers (IDSPs). Individuals cannot accept work until verification is complete. This supports the statutory excuse. 2. Conduct follow-up checks for time-limited permission Right to work is not permanent in all cases. Businesses must monitor expiry dates and carry out repeat checks where permission is time-limited. Systems should track visa end dates, trigger re-verification, and suspend access where updated evidence is not provided. 3. Maintain Fully Compliant Records The statutory excuse depends on retaining clear evidence of compliance. Keep secure records of: Records should be retained for the duration of the working relationship and for two years after it ends. 4. Ensure Staff Are Trained and Processes Are Consistent All personnel involved in onboarding, operations or compliance should understand prescribed check requirements and internal controls. Clear procedures reduce the risk of errors, exceptions or non-compliant engagement. 5. Strengthen Compliance Across Subcontractor and Intermediary Chains Where agencies, partners or subcontractors supply labour,businesses should ensure third parties operate compliant onboarding and verification processes and apply appropriate contractual controls to require adherence to immigration and illegal working requirements. How The Infinity Group Can Help Complying with the Border Security, Asylum and Immigration Act 2025 requires clear procedures, effective controls and ongoing due diligence. The Infinity Group provides an all-round compliance framework for platforms, intermediaries and subcontractor models. As part of our commitment to preventing illegal working, we have applied compliant right-to-work checks across all working arrangements — including workers and subcontractors — even prior to the introduction of these extended legal requirements. This proactive approach aligns with Home Office guidance and ensures audit readiness ahead of legislative commencement. Our support includes: Partnering with The Infinity Group helps ensure compliance is maintained at every stage, from right-to-work verification through to payroll and reporting obligations. Subscribe to Our Newsletter for Weekly Updates!
IR35 Financial Liability: The Set-Off Rule Fails to Fully Remove Responsibility
If your business engages contractors, you may be aware of HMRC’s set-off rules, introduced to address long-standing concerns about double taxation in IR35 cases. While these changes are a positive step, there is a common misconception that they significantly reduce the financial risks of incorrectly applying IR35. Although the revised calculation is more equitable, the core liabilities remain firmly with the engaging companies. Penalties, interest, Employer’s National Insurance Contributions, and, where applicable, the Apprenticeship Levy continue to apply and can result in substantial costs. What Is the Set-Off Rule Over many years, businesses expressed concerns regarding HMRC’s management of IR35 compliance. The primary issue was straightforward: if a contractor was inaccurately classified as outside IR35, the hiring company might incur the obligation to pay the full PAYE and National Insurance contributions, even if the contractor’s personal service company had already remitted these taxes. Essentially, this situation led to double taxation of the same income. The set-off rule, effective from April 2024, was introduced to address this concern. It permits HMRC to deduct certain taxes already paid by the contractor or their company when assessing the PAYE liability resulting from an IR35 determination, thereby reducing the overall tax liability. For instance, if HMRC establishes a PAYE liability of ÂŁ50,000 and the contractor’s company has already paid ÂŁ30,000, the employer’s liability amounts to only ÂŁ20,000. Although this represents an advancement over previous regulations, numerous businesses mistakenly believe their risk is entirely mitigated — a misconception that could prove costly. Changes in IR35 Enforcement: Prior to April 2024, HMRC maintained a stringent stance on non-compliance. When a contractor was considered to have been improperly classified as an independent contractor rather than an employee, the employing company was liable for the full amount of PAYE Income Tax and National Insurance contributions, irrespective of whether the contractor’s personal service company had already remitted tax on the same income. In effect, the company bore the total tax liability. Currently, under the revised regulations, HMRC evaluates ‘Potential Lost Revenue.’ This methodology accounts for taxes previously paid by the contractor or their company, including Corporation Tax, Income Tax, and employee National Insurance contributions, and subsequently deducts these amounts from the company’s PAYE obligations. Where the Risks Remain Despite the implementation of a set-off mechanism, certain areas continue to expose businesses to substantial financial risks. HMRC retains the authority to impose penalties for a lack of reasonable care. This represents a common point of vulnerability for companies. HMRC expects companies to exercise due diligence when determining whether a contractor falls within or outside the scope of IR35. If HMRC establishes that reasonable care was not exercised, penalties of up to 30% of the unpaid tax may be levied. Careless behaviours encompass failing to maintain proper records, relying solely on contractual terms without considering actual working practices, or neglecting to reassess arrangements as roles evolve. Essentially, any indication that the decision was not thoroughly contemplated could result in penalties. The penalty amount varies depending on how the issue is identified. Should a business disclose the problem voluntarily, penalties may be reduced to a range between 0% and 15%. Conversely, if HMRC discovers the issue during a compliance review, penalties generally range from 15% to 30%. For instance, if ÂŁ20,000 remains payable after set-off, a 20% penalty would amount to an additional ÂŁ4,000 to the total liability. Interest Is Charged and Can Accumulate Quickly In addition to taxes and penalties, HMRC imposes interest on overdue PAYE and National Insurance payments, commencing from the original due date. When HMRC reviews previous cases, interest may accrue over multiple years. Given that current interest rates are substantially higher than in recent years, this can substantially augment an IR35 settlement, potentially amounting to several thousand pounds depending on the age of the liability. You’re Still Liable for Employer National Insurance This is the part that often causes confusion. The set-off rule only applies to the worker’s tax and does not reduce your Employer National Insurance Contributions or the Apprenticeship Levy if applicable. These costs are separate, and you are fully responsible for paying them. Employer NICs are currently at 15% on earnings above a certain threshold. For example, paying a contractor ÂŁ60,000 in a year could result in about ÂŁ8,280 in Employer National Insurance costs. If your total payroll exceeds ÂŁ3 million, the Apprenticeship Levy is also due, charged at 0.5% of total payroll, which would add an extra ÂŁ300 to the same ÂŁ60,000 contractor payment. None of these additional employer costs is covered by the set-off; they are neither reduced nor refunded, and must be paid by your business. Even if the tax liability appears lower on paper, these extra costs can make an IR35 assessment very costly. How to Minimise Your Exposure Businesses can take practical measures to lower the risk of IR35 non-compliance and its potential financial impact. Evaluate Each Contractor Accurately HMRC offers the Check Employment Status for Tax (CEST) tool as a helpful starting point. Nevertheless, it should not be used as the sole criterion. An accurate assessment must align with the actual working arrangements, not just the written contract. Important factors include the level of control exercised over the contractor, the existence of a genuine right of substitution, and whether the individual is running an independent business. These elements are crucial to HMRC’s evaluation and should be considered with care. Keep Clear and Detailed Records If HMRC reviews your IR35 decisions, it will expect evidence showing that you exercised reasonable care. This includes keeping records such as Status Determination Statements, notes on assessments, records of working practices, and relevant correspondence. Maintaining thorough records is crucial not only for defending a status decision but also for proving that your company has followed a proper, thoughtful process. Review Arrangements on a Regular Basis Employment status isn’t static. A contractor initially outside IR35 can later fall inside it as roles evolve and working practices change. Regular reviews ensure that assessments stay accurate and aligned with actual working conditions. Periodic reassessments can
Employment Law, CIS & IR35: Navigating the 2026 April Reforms
If you run a business, work as a contractor, or manage a workforce, April 2026 is a crucial date to remember. Significant updates are upcoming in employment law, payroll regulations, and contractor rules. This guide aims to assist in understanding forthcoming changes and their practical implications. It emphasises the most critical points and actions to consider to remain prepared. 1. The Employment Rights Act 2025: What Is Changing? The Employment Rights Act 2025 received Royal Assent in December 2025 and signifies one of the most consequential amendments to the employment legislation in recent years. Although it has now been enacted, the majority of the changes will be introduced gradually from April 2026 through 2027. The following outlines the primary modifications for your preparation. Statutory Sick Pay Is Changing Effective from 6 April 2026, the regulations concerning Statutory Sick Pay will be amended. Previously, employees were required to wait 3 days before becoming eligible for sick pay; however, this waiting period will be abolished, and SSP will be payable from the first day of illness. Furthermore, the Lower Earnings Limit will be eliminated, enabling more workers to qualify for SSP. Additionally, the SSP calculation method will also be revised: employees will receive either 80% of their regular earnings or the standard SSP rate, whichever is lower. Employers are advised to update their payroll systems accordingly and conduct early testing to ensure the smooth processing of staff sick pay claims. For official guidance on SSP rates and eligibility, visit the UK Government’s Statutory Sick Pay page. Day One Rights for Parents Starting April 2026, paternity leave and unpaid parental leave will be accessible from the first day of employment. Employees will no longer need to fulfil a specific period of employment prior to being eligible to apply for these benefits. Read our full blog for a detailed breakdown: The Employment Rights Bill: What Employers Need to Know 2. Umbrella Companies: New Liability Rules This change impacts companies using umbrella companies. Starting on 6 April 2026, new shared responsibility rules will apply to PAYE and National Insurance. If an umbrella company fails to pay the correct taxes, HMRC will not only pursue the umbrella company, but may also take action against the recruitment agency or end client. HMRC has made it clear that businesses must verify their supply chains. It is essential to review your providers, request proof of compliance, seek FCSA accreditation, and document your checks. This proactive approach will help protect you in case any issues arise in the future. Read our full blog for a detailed breakdown: Tackling non-compliance in Umbrella market – Understand the upcoming changes in 2026 3. Payrolling Benefits in Kind: Extra Time Given Good news regarding benefits in kind: HMRC has deferred the payroll reporting obligation from April 2026 to April 2027. This extension grants an extra year for preparations. Use this period to review your systems and plan any requisite adjustments. Refrain from delaying until the last moment. Read our full blog for a detailed breakdown: Mandatory Payrolling of Benefits in Kind and Expenses: How the 2027 HMRC Payrolling Reform Will Affect Employers 4. IR35: Revised Small Company Criteria and SDS Obligations Changes to IR35 regulations will take effect from 6 April 2026, as the criteria for defining a small company are being widened. Previously, a business qualified as small if it met two of these conditions: a turnover of ÂŁ10.2 million or less, a balance sheet total of ÂŁ5.1 million or less, or 50 or fewer employees. The new thresholds are higher, with turnover increasing to ÂŁ15 million and the balance sheet total to ÂŁ7.5 million, while the employee limit remains at 50. This change means more companies will now fall within the “small company” definition. Where a client qualifies as a small company, the off-payroll working rules do not apply to the client, and responsibility for IR35 compliance shifts back to the contractor operating through their Personal Service Company (PSC). For comprehensive information about IR35 and off-payroll working rules, refer to HMRC’s official IR35 guidance. Contractors should verify if their clients now qualify as small companies, and businesses should review whether they still need to issue Status Determination Statements. Read our full blog for more details: Navigating IR35: How to Ensure Your Business Stays Compliant 5. Construction Industry Scheme: Stronger Action Against Fraud From 6 April 2026, HMRC will have enhanced enforcement powers to tackle fraud under the Construction Industry Scheme (CIS). Under the new measures, HMRC will: The changes significantly increase the compliance risk for contractors and place greater responsibility on businesses to monitor their supply chains. Read our full blog for more details: How Gross Payment Status Works in the Construction Industry Scheme What Should You Do Now? April 2026 is approaching. Here is an outline of the required actions at this time: How The Infinity Group Can Help Managing regulatory changes while running a business can be challenging. Employment and payroll regulations frequently evolve, making it easy to overlook critical updates. At The Infinity Group, compliance is fundamental to our operations. Our CIS payroll and umbrella solutions are meticulously designed with compliance at their core, helping you adhere to HMRC standards while minimising risks across your workforce and supply chain. We proactively identify potential issues, implement comprehensive verification procedures, and ensure that payments and deductions are accurate and transparent. Subscribe to Our Newsletter for Weekly Updates!