How to avoid payslip fraud
Check that the tax and National Insurance shown on your payslip or deduction statement has been paid correctly if you’re an agency worker, temporary worker or contractor, or you work through an umbrella or payroll company.
Organised labour fraud is when businesses or criminals use labour supply chains to avoid paying tax they owe to HMRC.
One way this can affect workers is through payslip fraud. This is when a payslip or construction industry scheme (CIS) deduction statement shows deductions that have not been paid to HMRC.
You may not realise there’s a problem until you try to claim a benefit or tax repayment, check your National Insurance record, or access your pension. Checking your payslips regularly can help you spot problems early and protect yourself from fraud.
Affects of payslip fraud
Payslip fraud stops your tax and National Insurance contributions from helping to fund important public services that people rely on every day, such as the NHS, schools and the police.
What is payslip fraud
Payslip fraud happens when a worker is given:
- a payslip showing tax deductions that have not been paid to HMRC
- a CIS deduction statement showing deductions that have not been paid to HMRC
- incorrect information about pay or tax deductions
- no payslip at all
Fraudulent payslips may look genuine, even if the tax deducted has not been paid.
Why avoiding payslip fraud matters
If tax, National Insurance or CIS deductions are not paid correctly to HMRC on your behalf, you could:
- miss out on benefits such as Universal Credit
- have problems claiming Statutory Sick Pay
- have problems claiming maternity or paternity pay
- receive less State Pension than expected
- face unexpected tax bills in the future
- be unable to claim tax repayments you’re entitled to
How to avoid payslip fraud
Check if the tax on your payslip is correct regularly. Make sure:
- you receive a payslip for every pay period
- your name and personal details are correct
- the employer or payroll provider details are correct
- your tax code is correct
- tax and National Insurance deductions look reasonable
- any pension deductions are accurate
If you stop receiving payslips, lose access to a payslip portal, or notice unexplained changes to your payslip, this could be a warning sign.
If you’re paid under the Construction Industry Scheme (CIS)
If you’re self-employed and paid under the Construction Industry Scheme (CIS), make sure you check your CIS deduction statements carefully. If deductions are not paid to HMRC correctly, this may affect any CIS repayment or offset you expect to receive.
The construction sector can be at greater risk as large construction projects often have multiple tiers of contractors, subcontractors, labour agencies, payroll providers, and self-employed workers. This can make it harder to see who is responsible for paying Income Tax, National Insurance and CIS deductions.
Check the deductions in your payslip match HMRC’s official records
To check deductions, you can use your:
- Personal Tax Account
- HMRC app
- National Insurance record
- Student Loan repayment account, if you have one
If your payslip shows pension contribution deductions, check they’ve been received by your pension provider. You should receive an annual pension statement. Compare it with the deductions shown on your payslips.
Warning signs of organised labour fraud
Be cautious if:
- your payslips or CIS deduction statements regularly change format or show different employer names
- you’re frequently moved between payroll companies or contractors
- your payslip includes vague deductions, like ‘admin adjustments’
- your take-home (net) pay does not match the hours you worked
- you’re promised your full pay without tax being deducted
- you receive no payslips
- you payslips appear incorrect or inconsistent
- you can no longer access your payslip portal
- you’re asked to set up your own limited company or personal service company
- you’re suddenly moved to a different umbrella, payroll, or employment company without a clear reason
- you have problems accessing company benefits, like pension or voucher schemes
- you’re not given a Key Information Document each time your employer changes
Understand how you’re being paid
Before accepting work, make sure you ask your main contact about and understand:
- who your employer is
- who will pay you
- whether you’re employed directly, or through an agency or umbrella company
- what deductions will be taken from your pay
- how and when you’ll receive payslips
Know your employment rights
Make sure you understand your rights if:
- you work through an employment agency
- you’re paid through an umbrella company
- your employment is transferred to another company
- you’re a temporary worker or contractor supplied through a labour provider
Knowing your rights can help you identify arrangements that may put you at risk of labour fraud.
If you think you’re affected
You should report suspected payslip fraud to HMRC if:
- you do not receive payslips
- you receive fake or false payslips
- the deductions shown on your payslip do not match HMRC’s records
- you believe tax, National Insurance or CIS deductions are not being paid correctly on your behalf
Reporting fraud can help protect you and other workers from exploitation.
If you’re a CIS sub-contractor and have concerns, send HMRC your Self-Assessment tax return as usual, and include:
- the full amount from your invoices as income
- any CIS deductions in the ‘CIS deductions’ field
HMRC may ask you to provide evidence of these CIS deductions.
Reporting fraud to HMRC
Find out how to report fraud to HMRC