Thousands of workers will have smaller pay packets this weekend after the new regulations for managed service companies (MSC) come into force.

Under the legislation, all payments received by individuals through MSCs will be subject to PAYE, and from August, national insurance contributions.

MSCs now encompass composite and single person companies, which means workers registered as single-person companies who have their affairs managed by a composite are now subject to the new regime. Unless workers have made alternative arrangements with their service provider, they are likely to have full tax deducted automatically.

As changes came into force on 6 April, the first pay difference will apply on 13 April.