Exhibition Girls are often asked why we are a PAYE agency and deduct tax, national insurance from our staff and also pay employers national insurance as a business.
The Pay As You Earn (PAYE) system is the United Kingdom method of paying income tax and national insurance contributions. The employer deducts tax and national insurance contributions from wages before payment. The employer is responsible for sending the tax on to HM Revenue and Customs (HMRC).
In the UK there have been changes how HMRC view agency and promotion staff. Prior to 2014 – tax and national insurance were the responsibility of the staff but it now lies with the agency.
Hiring staff as self employed could now expose clients and agencies to unpaid tax and fines. The following HMRC article explains this and our staffing platform provider watu have also written an excellent article for more information. We now urge any clients who are receiving quotations from agencies to ask if they pay their staff PAYE and are HMRC compliant.
The change in agency legislation
Promotional staff are viewed as employees by HMRC which means that if an agency isn’t deducting tax, national insurance and paying employers national insurance they aren’t a compliant agency. HMRC view that if staff are subject to supervision, direction and control that this is an employee relationship and therefore staff have to be treated as employees. Furthermore, HMRC have written the following directive that directly states that actors and models can remain self employed but not when engaged in promotional work.
Why are other agencies still paying staff self employed?
The promotion industry has and remains an open industry. There is no union or regulatory body or equivalent to Equity for the acting industry for example. With the increase of social media over the past 5 years, it has become much easier for agencies to access freelance, self employed actors, models and dancer who rely on flexible promotion work to pay their rent between jobs and for castings. This has seen the rise in Facebook bedroom agencies who are employing staff as self employed and aren’t registered as employers or running a legal payroll, paying staff directly with no intervention.
Running an agency properly is expensive. Employees need to be insured with a special event insurance for public liability and employers liability. The cost of running a PAYE payroll and also paying employers NI, sick pay, pensions etc is also expensive.
The benefits of using a PAYE agency
Hiring staff through a tax compliant agency means you know that the agency have a level of care to their staff and their clients. There is no guarantee that unpaid tax could potentially be viewed as liable from the client if there is seen as an employee / employer relationship between promotion staff and the hirer. Also using a PAYE agency means the staff hired are insured should there be an injury or accident. We advise all our clients to take out specialist exhibition and event insurance (this is usually offered via the organiser or Hiscox supply this) but knowing your agency has the level of care to protect their staff should be a reason to choose a PAYE agency.
We also pay our staff holiday pay and other benefits that self employed / freelance staff are unable to benefit from.
Perhaps most importantly using a PAYE agency, the legal working status of staff is always checked. Employers have to obtain a UK national insurance and a valid passport or visa copy. Hiring staff as employees and paying their UK taxes means there is no possibility of illegal employment which could also implicate the client.
Home Office regulations require employers to satisfy themselves that their employees are entitled to work in the UK and record pertinent documents showing that entitlement.
The future of promotional agencies in the UK
The unregulated nature of the industry and hiring staff as self employed to avoid tax will not be able continue and will be interesting to see how agencies respond to these changes in 2017. The UK charges amongst the lowest rates in Europe to clients for promotional staff and staff wages haven’t increased in over 10 years – it will be interesting to see if demand for PAYE staff increases rates.
Agencies in the UK are also currently competing on price rather than service. It’s often impossible to compete with the low rates that clients say they have been offered by non-compliant agencies. We have a fantastic team of employees at Exhibition Girls who are intelligent, smart, proactive and excellent who would love to be able to reward and become more involved in the industry. We can only do this if the industry works together with clients to make this a compliant industry.
Well rewarded staff = happy staff = happy clients
We look forward to supporting all our clients in 2017 and to continue our service and support to our staff, clients and the promotional industry in the United Kingdom.