Umbrella company contractors might like top know that the UK’s telephone and internet banking systems have been upgraded to allow same day payments.
As from the first of January, all electronic payments made in the UK and the Eurozone have to reach the recipient’s bank account within one business day. However, according to the Payments Council, the majority of UK payments will reach the recipient’s account within two hours.
For years, it has taken three working days for a payment to clear so this marks a major and no doubt welcome step forward.
The Payment Service Regulations are responsible for the change, which it is thought will create an extra 15 million transactions every month. Contractors will be able to settle their tax payments to HMRC quickly, pay their credit card bills and make one-off payments to businesses and friends.
Standing orders also fall under the new regulations and banks will take the funds from their customers’ accounts on the same day the payment becomes due, instead of several days earlier.
However, the new rules only cover accounts classified as a payment account. Whilst a credit card account fits the definition, an ISA does not. The timescale for making payments from such accounts will still depend on the terms and conditions of the individual account.
The Payments Council stressed that cheques are also not covered by the new regulations as they only govern electronic payments.
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