Form

2026 update to the ACS self-assessment workbook

Updated 1 July 2026

This text supersedes the text in the relevant sections of the ACS Self-Assessment Workbook published in April 2022.

2.4.1 Use of subcontractors is agreed with customers and subject to defined quality assurance procedures

Required achievement level

Point 3. Subcontracted organisations used to deliver a security service are SIA approved contractors (exceptions apply – please see the definition of ‘subcontractor’), and the regulated individuals of the subcontractor hold a valid SIA licence which the organisation verifies by checking the SIA’s register of licence holders.

Point 4. Relevant individuals of the subcontractor are vetted and screened.

[All other points remain the same.]

Clarification

Note that reference should also be made to 3.1.1 (‘Effective purchasing procedures are implemented’) and 3.1.2 (‘The organisation work in partnership with its suppliers to improve performance’) for requirements around improving supplier performance, which includes labour providers, subcontractors and other suppliers.

Some applicant organisations do not use subcontractors in the provision of services to customers. These applicant organisations should indicate that this indicator is not applicable. This will be tested as part of the review of staff records and discussions with staff.

Approved contractors can only subcontract provision of a security service (for which they are approved) to other approved contractors. This does not apply in cases where a subcontractor solely supplies labour, that is, ‘subcontracted labour’. Labour suppliers are not required to be approved and may not be eligible for the ACS. This exception covers agencies supplying temporary staff whose licensable activities are directed and supervised by the approved contractor. If in doubt about an agency then check what the contract requires – if it specifies provision of a security service then the agency must be ACS approved but if it specifies supply of labour and nothing more, then ACS approval is not required.

Subcontractors are not permitted to subcontract further to non-ACS businesses without SIA approval and the approval of the customer to whom the organisation is supplying the service.

Direct supervision in this context is taken to mean that the security company delivering the security service has full responsibility for the induction, training, direction, monitoring of performance, welfare etc. of the subcontract’s operative. Supervision may be provided in person, for example, by daily or weekly supervisory visits, or remotely, for example, by telephone, email, text, as appropriate.

4.2.1 Clear and effective management of the payroll can be evidenced

Required achievement level

The organisation complies with all the relevant tax and national insurance legislation concerning people they deploy.

This requires complying with all of the HMRC guidance, including operating real time information correctly and on time.

All the organisation’s people must be employees or employees for tax purposes.

1. Payroll is managed to legislative standards.
2. Tax codes are checked and correctly applied in a timely manner and in compliance with HMRC guidance.
3. Staff are paid through a PAYE compliant system.
4. People who are subject to PAYE receive full employment of an employee or worker rights in accordance with UK employment law.
5. Month-end and year-end procedures are run within deadlines.
6. There is a direct link between the hours worked and the wages paid, and organisations do not make unlawful deductions from staff pay – this also applies where staff are paid by others (for example, a factoring company, an umbrella payroll company, an agency, or subcontractor).
7. Payments to staff are made on time within the contractual payment cycle. Where payments are made to labour providers/agencies (who then pay individuals), the business should undertake due diligence to ensure individuals are paid within an agreed period.
8. All queries relating to payroll are handled effectively and lessons learned are fed back to improve procedures.
9. There is clear information for staff on their pay, deductions and the payroll system in use.
10. Personal service companies: approved contractors cannot use operatives working through their own intermediaries (commonly referred to as personal service companies) to deliver regulated activity whether directly or as part of the wider supply chain such as through labour providers or other entities.

Clarification

Where applicants buy in labour from other organisations (such as other security companies, or agencies) to enable them to deliver their contracts, the applicant must carry our sufficient due diligence to be able to demonstrate that the standard is being met throughout the supply chain (All of the requirements that apply to employees, also apply to those sourced from other organisations.). This is likely to require some form of supply chain audit including periodic on-site sampling or testing.

Applicants should also refer to the requirements of 3.1.1 (‘Effective purchasing procedures are implemented’). Requirements around purchasing and preferred suppliers apply.

Similarly, where applicants subcontract all or part of their services to other organisations, then they should carry out sufficient due diligence to provide confidence that the subcontractor is operating to the ACS standard. Even where the subcontractor is an approved contractor, some due diligence would be required, although this may be more limited, depending on the risk.

Applicant companies should also refer to the requirements of 2.4.1 (‘Use of subcontractors is agreed with customers and subject to defined quality assurance procedures’). All applicant organisations must evidence that they adhere to all relevant legal requirements such as PAYE, National Insurance etc. The assessor will track a selection of staff through the payroll system to ensure that the requirement is met. Any deductions from pay must be clear to staff.

People who are subject to PAYE must benefit from full employment rights or where relevant, worker rights (e.g. workers engaged by an agency and supplied as labour to the organisation) in accordance with UK employment law.

Employment requirements and prohibition of personal service companies

This is linked to the eligibility requirement for all those undertaking licensable activities to be employees or employees for tax purposes, and the indicator requirement that prohibits the use of operatives working through their own intermediaries, commonly referred to as personal service companies.

What this means for directors

The following refers to directors of approved contractors who are also shareholders, not a worker working through their own intermediary.

All directors (including those that are also shareholders) are considered under the Companies Act 2006 to be office holders for tax and National Insurance purposes. Payments in respect of office holders’ duties are subject to PAYE and National Insurance.

Directors that are shareholders may receive dividends in respect of their shareholdings. It is important to distinguish between a payment for the directorship and a payment in respect of the shareholding and the appropriate tax and National Insurance consequences. An exemption (from PAYE and National Insurance) applies in relation to the shareholding payments.

There will be circumstances where a director, in addition to their role as a statutory director, also carries out a separate role (such as front line licensable activities), in which case that part of their role should be as an employee and subject to PAYE.

Examples:

1. Where the approved contractor has a statutory director that is also a shareholder, is non-front line licensable, and their only payment is as dividends – PAYE and National Insurance does not need to be operated on dividends.
2. Where the approved contractor has a director that is working through their own company, is also a shareholder, and who undertakes regular front line licensable activity and takes a salary in addition to dividends through that company – the director would not be exempt from PAYE and National Insurance for the work undertaken as a front line operative and should be considered an employee. Operating through their own personal service company is prohibited under the ACS.
3. Where the director is an office holder but not a shareholder and undertakes regular front line licensable activity – the director would not be exempt from PAYE and National Insurance for the work undertaken as a front line operative and should be considered an employee. PAYE would apply for director’s duties in addition to front line licensable activities.
4. Where a director that is also a shareholder receives payment in respect of the directorship – payments in respect of the directorship are subject to tax and National Insurance. PAYE and National Insurance would not operate for any payments in respect of the shareholding.

Deductions

Where the business offers other services or benefits to staff, or has arrangements such as charging for the ‘hire of uniform’, they may make a charge to staff, and this may appear as a deduction on their pay slip. How the business does this is for the business to decide, but the business must ensure that staff fully understand what this means to them. This should be part of their agreed contract/terms and conditions and should be fully documented (both the agreement and the way it appears on the pay slip). The business must be able to evidence this.

Note: Before deductions from pay are made, it should be benchmarked against national minimum wage rates. If an employee has paid for certain things related to their job out of their wages, the employer should deduct these payments to determine if the actual pay rate is above/below the national minimum wage. It makes no difference whether the employee has agreed to the deduction. In any event pay after these deductions should/must not fall below national minimum wage.

These payments or deductions are:

• payments for the employer’s own use or benefit, for example, if the employee has paid for travel between work sites;
• payments for things the employee needs for the job but are not refunded for, such as tools, uniform, equipment or training;
• benefits such as medical insurance/loss of earnings insurance/ life assurance.

All other payments made out of the employee’s wages, such as tax and National Insurance, and certain accommodation expenses where applicable should be included in the employers’ calculations when determining the national minimum wage has been paid.

Glossary (A-N)

This update adds two new definitions to this section of the glossary.

Employee

An employee is someone who works under an employment contract. See Employment status: Employee.

A person may be an employee in employment law but have a different status for tax purposes.

Employee for tax purposes

See Employment status: Employee and Check employment status for tax.

Glossary (M-R)

This update replaces the existing definition of ‘people’ with the following revised definition. It also adds a new definition (‘personal service company’) to this section of the glossary.

People

All individuals employed/deployed by the organisation (full time and part-time individuals, agency workers, volunteers) including leaders at all levels.

Personal service company

A type of managed service company. In effect this enables individuals to work through an intermediary company - the significant factor being the use of the intermediary company to lower the overall tax the worker pays. See Managed Service Companies (Spotlight 67).

Glossary (S-Z)

This update replaces the existing definition of ‘subcontractor’ with the following revised definition. It also adds a new definition (‘worker rights’) to this section of the glossary.

Subcontractor

A subcontractor can be:

• a limited company responsible for delivering the customer contract on behalf of the ACS company;
• another type of business that is contracted to provide service delivery on behalf of the applicant/ACS business.

Agency staff, labour providers or individuals provided as labour, (see definition of labour provider) are not considered to be subcontractors.

An approved contractor can only subcontract work to another approved contractor.

There are some exceptions to this requirement, including:

• subcontractors not providing designated security services;
• by special arrangement with SIA (subject to application and agreement under our exceptional circumstances policy for subcontracting)

Worker rights

All employees are workers, but an employee has extra employment rights and responsibilities that do not apply to workers who are not employees. For example, workers are entitled to most types of statutory pay, but only employees get statutory sick pay and leave. See Employment status: Worker and Employment status: Employee.