Key Information Documents (KID) were introduced on the 6th April 2020 to provide a breakdown of the deductions that temporary workers will see to their pay and provide essential information regarding their assignments. Continue reading as our article outlines what information should be included in a KID and who should give it to you.
Overview of a Key Information Document
Regulation 13A of the Conduct Regulations 2003 was enacted back in April 2020. It meant that recruitment agencies were legally required to provide each of their workers with a KID before they agreed to the terms of their engagement. The KID was introduced to improve pay transparency for temporary workers and highlight critical information such as the pay rate, payment terms, and deductions made to the workers pay.
It is important to understand that the KID is not intended to fully represent the final contractual terms that you may ultimately agree to. It is intended to provide an overview of how your pay is affected by deductions made throughout the supply chain. For example, the KID should show the gross amount paid by your recruitment agency to the intermediary or umbrella company and the net amount you can expect to receive after all deductions have been made.
Who should provide a Key Information Document?
Your recruitment agency’s responsibility is to provide each temporary worker with a KID to ensure the worker has all the necessary information to hand before deciding whether to accept the assignment. A KID should be provided regardless of whether you are going to be paid via agency PAYE, an umbrella company or are going to be paid through your own personal service company (PSC).
When should a Key Information Document be produced?
A KID should be provided to you before the terms of your contract are agreed upon and before you accept an engagement to ensure you understand the deductions made to your pay. If you take on consecutive assignments with the same recruitment agency, they are only required to issue a revised KID if the payment terms differ from the terms agreed to in your previous assignment.
What information should a Key Information Document include?
The government has published detailed guidance on their website, which states the information which must be listed on a KID. You can also view and download example KID’s. However, you should expect to see the following information listed on KID provided to you by your agency if you are considering being paid via an umbrella company.
Always ask for a Key Information Document if it is not provided to you
Aside from being a legal requirement, KIDs provide crucial information to help you decide whether the take home pay is satisfactory after all deductions have been made. They can also give a good indication as to whether the provider is operating in a legal and compliant manner and is processing tax deductions in line with HMRC’s regulations.
Sadly, the off-payroll legislation has prompted a rise in unscrupulous tax avoidance schemes posing as complaint umbrella companies as more and more contractors operate inside IR35. Many recruitment agencies recommend contractors use an umbrella company to process their payments. Regardless of whether the umbrella company is on your agency’s Preferred Supplier List (PSL) or you found the umbrella company yourself, you must make sure the umbrella operates compliantly and as per UK tax law.
Please take a look at our recent blog for more information about how to spot the warning signs of a tax avoidance scheme and the associated risks of using one.
Check out our top 10 umbrella companies
There are over 500 umbrella companies in the UK. With so many to choose from, how do you know which is compliant and which is a tax avoidance scheme?
Here at Umbrella Company Calculator, we have collated a top 10 umbrella companies list to help you narrow down your search. Every umbrella company in our top 10 are accredited by either the Freelancer & Contractor Services Association (FCSA) or Professional Passport. By choosing one of the companies on our list, you can rest assured that your pay will be processed legally and compliantly.
