How to start a recruitment agency in the UK

You can start most UK recruitment agencies without a licence. You register a business, usually a limited company at Companies House, follow the Employment Agencies Act 1973 and the 2003 Conduct Regulations, pay the ICO data protection fee and get insured. The big early decision is whether you'll place permanent staff, supply temps, or both.

This is a plain English guide, checked against gov.uk and the legislation in October 2026. It isn't legal or tax advice. We're Bare, a two-person web studio that builds websites for recruitment agencies, so only the website part at the end is our trade. For everything else, ask a solicitor who works with recruiters and an accountant who knows agency payroll, or ring the pay and work rights helpline listed on gov.uk.

Do you need a licence to start a recruitment agency?

Usually not. There's no general licence for recruitment in Great Britain, but two kinds of agency do need one.

• Food and farming. If you supply workers for agriculture, horticulture, shellfish gathering, or food processing and packaging, you need a gangmaster licence from the Fair Work Agency.
• Nursing and home care. Nursing and domiciliary care agencies in England may need to register with the Care Quality Commission. Wales, Scotland and Northern Ireland have their own regulators.

The regulator changed this year, and plenty of guides haven't caught up. The Fair Work Agency began operating on 7 April 2026 and replaced both the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority. It now regulates employment agencies and businesses in England, Scotland and Wales. Northern Ireland has its own rules.

No licence doesn't mean no consequences. Under section 3A of the 1973 Act, an employment tribunal can ban someone it finds unsuitable from running an agency for up to ten years.

Will you be an employment agency or an employment business?

It depends on who pays the worker. In the law's terms, an employment agency finds people permanent jobs with the hirer, and the hirer employs and pays them. An employment business supplies temps who work under the hirer's supervision, and you pay them. If you do both, you follow both sets of rules.

	Employment agency (permanent)	Employment business (temps)
Who pays the worker	The hirer	You, for every hour worked, even if the hirer hasn't paid you
Documents for the worker	Written terms before you start finding them work	A Key Information Document, then written terms, before you start
How you earn	A fee per placement	A margin on hours worked, plus transfer fees in some cases

The first row is the one to think hard about. Gov.uk is clear that an employment business must pay temps for all the hours they work, even when the hirer hasn't paid or the timesheet hasn't been signed off. A temp desk needs cash in the bank before it needs clients.

What rules do recruitment agencies have to follow?

Mainly the Conduct of Employment Agencies and Employment Businesses Regulations 2003, which sit under the 1973 Act. Gov.uk's guide for employment agencies and businesses is the best short version. The parts that catch new founders:

• No fees to candidates for finding them work. The exceptions, in Schedule 3 of the Regulations, are performers, some film and TV crew, photographic and fashion models, and professional sports people. You can charge for separate services such as CV writing, on separate written terms, but never make them a condition of finding someone work.
• Terms before you start. You agree written terms with each candidate before you start finding them work. An employment business also gives each temp a Key Information Document first: no more than two sides of A4, setting out who pays them, the minimum rate and an example of take-home pay. You can't hand that job to an umbrella company.
• Information from the hirer. Before you place anyone you need the hirer's details, the start date, the work and its risks, and the qualifications the role needs.
• Vulnerable people. For work with vulnerable people, as in schools or care, you get two references and check the person is suitable. Some roles need a DBS check.
• Job adverts. Every advert must carry your agency's full name and say whether the job is temporary or permanent, and you can only advertise a role the hirer has confirmed. If you show the pay, you also show the nature of the job, the location and the minimum experience.
• Transfer fees. An employment business can charge a temp-to-perm fee only in set circumstances, and only if it's in your contract with the hirer.

One correction: several guides say the law makes you agree terms of business with hirers. That rule, regulation 17, was removed in May 2016. You'll want written client terms anyway, because without them there's no transfer fee and nothing to point to when a placement fee goes unpaid.

How do you register a recruitment business?

Most founders set up a limited company. Registering online with Companies House costs £100 and is usually done within 24 hours. You may need to verify your identity first, and each director needs their own Companies House personal code. You can also trade as a sole trader, and an accountant will tell you which suits your plans.

Register with HMRC as an employer if you'll pay anyone through PAYE, including temps you employ; the Companies House service lets you do that at the same time. VAT registration becomes compulsory once your taxable turnover goes over £90,000 in any 12 months. Open a separate business bank account from day one.

One thing we'd check before any of that: if you're leaving another recruitment firm, read your current contract for clauses that limit approaching its clients and candidates after you leave. An employment solicitor can tell you what yours actually stops you doing.

What checks do you need before your first placement?

Two that apply to every agency: data protection and right to work.

Data protection

Recruitment runs on personal data, so expect to pay the ICO's data protection fee. Since 17 February 2025 it's £52 for tier 1 and £78 for tier 2; the ICO's self assessment tells you which applies. You also owe candidates privacy information: at the point you collect their details, or within a month if you found them elsewhere, such as on LinkedIn.

Right to work

Who checks depends on who employs the worker. The Home Office's employer's guide to right to work checks (1 October 2026) says an employment business that engages temps does the check itself. For a permanent placement, the client is the employer, and it can't rely on a check a recruitment agency did for it, unless the check was done through a registered digital verification service provider. The civil penalty is up to £60,000 per illegal worker.

What insurance does a recruitment agency need?

The only cover gov.uk makes compulsory is employers' liability insurance, as soon as you become an employer, and that can include temps you employ. It must cover at least £5 million and come from an authorised insurer. Going without can cost £2,500 for every day you're not insured, and you must display the certificate where staff can see it.

Professional indemnity and public liability are the other covers recruiters talk about. Ask a broker, and check what your client contracts ask for before you sign them.

What changes if you supply temps?

More rules and a lot more cash. If we were starting an agency, this is the part we'd pay an adviser for before the first temp starts.

• Agency Workers Regulations 2010. From day one, temps can use the hirer's shared facilities, such as the canteen and car park. After 12 weeks in the same job they qualify for equal treatment: the same pay as a permanent colleague, paid annual leave and automatic pension enrolment.
• Off-payroll working (IR35). If a contractor works through their own limited company, the client usually decides their employment status for tax. For a small client outside the public sector, the contractor's own company decides. HMRC says every agency, whatever its size, has some responsibilities where the rules apply, especially when it's the deemed employer.
• Umbrella companies. From 6 April 2026, if an umbrella company employs your temps, the agency holding the contract with the end client is responsible for making sure PAYE is operated correctly. HMRC's guidance on the new rules says it can recover any underpayment from you. Where there's no agency in the chain, it falls on the end client.

HMRC's guidance for employment businesses using umbrella companies lists the checks it expects, from the umbrella's Companies House and VAT details to payslips collected straight from workers, and says you should keep a record of each one. It also says claiming you didn't know is, in most cases, no defence.

How much does it cost to start a recruitment agency?

There's no official figure, and the ranges you'll see online are mostly from firms selling finance or software. Permanent recruitment can start lean. Temp recruitment can't, because you pay workers weekly while clients pay on their own terms. These are the costs we could check:

Item	Cost	Source, checked October 2026
Register a limited company online	£100	Companies House on gov.uk
ICO data protection fee	£52 or £78 a year for most small firms	ICO
Employers' liability insurance	Quoted by insurers; at least £5 million of cover	gov.uk
A website with a jobs board, from us	£995 or £95 a month for five pages; jobs board £495 one off or £49 a month for 12 months; Google for Jobs fast indexing £25 a month	Bare, excluding VAT, no setup fees

For funding, a government-backed Start Up Loan is £500 to £25,000 at a fixed 7.5% a year, repaid over one to five years, with up to 12 months of free mentoring. It's an unsecured personal loan with a credit check, for UK businesses trading for less than five years. The other option you'll hear about for a temp desk is invoice finance, which advances money against invoices you've raised so you can run payroll while clients pay. Get the total cost of a facility in writing, including any minimum term, before you sign.

Do you need to join the REC?

No. Membership of the Recruitment and Employment Confederation is voluntary. The REC offers members legal support and training, and runs a start-up hub for new agencies. Join if you'll use the legal support. Trading doesn't depend on it.

What else do you need before you launch?

A niche and a small set of tools. On the niche, we'd pick the market where you can already name the people who hire, because that's who your first placements come from. The sector you've recruited in for years usually beats the one that looks busiest from outside.

The tools are simpler than software sales pages suggest: a recruitment CRM to hold candidates, clients and placements, email on your own domain, the job boards your candidates actually use, and later a multiposting tool such as Broadbean or idibu, which sends one advert to several boards. Then the website.

What should a new recruitment agency's website do on day one?

Less than you'd think, but the right things, because a lot of the rules above show up on the website first. The advert has to name your agency and say temp or perm. The privacy notice sits where a candidate uploads a CV. The vetting statement is what a school reads before it books you. We've built sites for six education recruiters (Premier Education, BrightMinds, Create Education, Education Supply Pool, Teachers 4 U and Pioneer People), and their own sites show what that looks like.

• Vetting where the buyer looks. Premier Education's homepage says every candidate is "interviewed, referenced and DBS-checked" before they reach a classroom. That's the vulnerable people rule, written for a head teacher.
• The weekly admin in the menu. Teachers 4 U puts Submit Vacancy, Vetting Policy, Download Timesheet and Submit Timesheet in its main navigation. A temp desk lives on timesheets, because you pay for every hour worked.
• Roles grouped the way candidates search. Pioneer People splits its work into nursery, primary, secondary and SEND. Create Education has a Graduate Hub for graduates who want to work with children.
• A route for each audience. BrightMinds sends schools and candidates their separate ways from the top of the page.
• Adverts with the detail. Premier, which has placed staff in North West schools since 2001, shows the pay, the town and the posting date on its live roles. The vacancies come straight from its own system and go to Google for Jobs; our Premier Education case study covers how.

For a new agency, we'd start small: a five page site that says who you place and how you vet them, plus a jobs board once you have live roles to post. Our recruitment website design includes a jobs board consultants add roles to in minutes, applications that arrive with your team rather than a third party, and connections to Broadbean and idibu so roles you multipost reach your own site too. If you're starting a supply agency, our page on websites for education recruiters covers what supply agencies need on top.

What we leave to you: your terms of business, your Key Information Document, your privacy policy wording and your safeguarding statement. We'll make sure people can find them on the site, but the words come from you and your adviser.

If your first clients come from people you already know, you don't need a big site to begin, just one that looks like a careful business when they check you out. Our article on websites built for candidates and clients goes further. When you're ready, see what's in a recruitment website from us and tell us what you're setting up.

Frequently asked questions

Can I start a recruitment agency from home?

Yes. Nothing in gov.uk's guidance for employment agencies says you need an office. If you plan to meet candidates in person, work out where that happens before you need it.

Can I start a recruitment agency with no experience?

Gov.uk's guidance doesn't list any qualification for running an agency, so you can. The rules are the same either way, which is why a new founder with no agency background needs an adviser more than most. Clients will judge you on whether you know their market.

How long does it take to set up a recruitment agency?

The company itself is usually registered within 24 hours online. Leave more time for the parts that need an adviser: terms of business, a Key Information Document and, if you're supplying temps, payroll and umbrella checks.

Sources

All checked October 2026.

• Gov.uk, Employment agencies and businesses. Agencies and employment businesses, fees, licences, hirer information, vulnerable people, job adverts, transfer fees, terms, extra services.
• Legislation.gov.uk, Employment Agencies Act 1973, section 3A (prohibition orders up to ten years) and section 6 (fees).
• Legislation.gov.uk, Conduct of Employment Agencies and Employment Businesses Regulations 2003: regulation 13A (Key Information Document), regulation 17 (omitted 8 May 2016), Schedule 3 (occupations where fees are allowed).
• Fair Work Agency, About us. What it regulates.
• Gov.uk, Providing a Key Information Document for agency workers, updated 7 April 2026. The Fair Work Agency replaced the Employment Agency Standards Inspectorate on 7 April 2026.
• Gov.uk, Gangmasters and Labour Abuse Authority. Replaced by the Fair Work Agency.
• Gov.uk, Register your company. £100 online, usually within 24 hours.
• Gov.uk, VAT registration. £90,000 threshold.
• ICO, Changes to the data protection fee (from 17 February 2025) and Right to be informed.
• Home Office, Employer's guide to right to work checks, 1 October 2026. Employment businesses and agency checks, penalties.
• Gov.uk, Employers' liability insurance. £5 million minimum, £2,500 a day, certificate.
• Gov.uk, Your rights as an agency worker. Day one rights and equal treatment after 12 weeks.
• HMRC, Understanding off-payroll working (IR35), updated 26 February 2026.
• HMRC, PAYE rules for labour supply chains that include umbrella companies from 6 April 2026, updated 19 June 2026.
• HMRC, Responsibilities for employment businesses working with umbrella companies, updated 17 September 2025.
• Gov.uk, Apply for a Start Up Loan. £500 to £25,000, 7.5% fixed, 1 to 5 years.
• REC, REC memberships and Starting an agency.
• Client sites: Premier Education, Teachers 4 U, Pioneer People, Create Education, BrightMinds, Education Supply Pool.
• Bare: recruitment website design, websites for education recruiters and the Premier Education case study (prices, jobs board, Google for Jobs, Broadbean and idibu).