Published on petlpay.com/blog | Category: Future of Work, Payments Technology | ~1,800 words
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Work is being restructured around outputs, not attendance.
Not gradually. Not theoretically. Right now, in every industry, from construction sites in Manchester to distributed creative agencies across London, Amsterdam and Cape Town, the financial unit of work is shifting. It used to be the salary. Monthly, predictable, tied to a person and a role. But as the world of work, the way we work, and the systems we work with rapidly change (thanks, AI…), this has changed entirely. Work is increasingly executed across a hybrid of humans and agents, across projects, with predominantly pop-up teams. These teams consist of small, full-time, in-house employees, augmented by independent contractors, freelancers, and fractional specialists.
Whether it's in professional services, consultancy, or building and construction, subcontracting and outcomes-based work is fast becoming the norm.
Traditionally, business owners and founders were required to run payroll. In some cases, small to medium-sized businesses have been forced to piece together a bunch of enterprise platforms like Deel, or Remote, multiple software solutions across time-tracking, invoicing, and payments, either slow, expensive SWIFT transfers, or varying payment services like Stripe or Wise.
Besides this being incredibly inefficient, it proves that the existing Payroll infrastructure was built for the old world. It simply has not caught up.
That gap- between how work is actually happening and the financial tools that are supposed to support it is where billions of pounds of value are being lost, delayed, and misrouted every year.
What was payroll actually designed for?
Payroll made sense when work looked like this: one employer, one employee, a fixed monthly salary, a single jurisdiction, a predictable tax calculation. The software that grew around this model- Sage, ADP, Paychex, even the newer players - reflects those assumptions at every layer.
It assumes most workers are in one country, on one contract, with one deduction rate. It assumes payment happens on a cycle, not on completion. And it’s these assumptions that have allowed payments for work to happen across very slow, clunky, expensive mechanisms, built around a way we simply no longer work.
For a 200-person office with permanent staff, that model still works fine…ish!
For a 15-person agency paying six contractors across three countries on four different projects, it falls apart immediately. For a general contractor trying to consolidate invoices, payments, and CIS tax across 50 subcontracted businesses and individuals, it’s a disaster.
So what does the new world of work actually look like in 2026?
The numbers are not subtle. In the UK alone, there are 4.2 million self-employed workers. Over 2.5 million people work in construction, almost all of them project-based, subcontracted, and paid per job rather than per month. Across professional services, creative agencies, and distributed tech teams, the shift is equally pronounced.
With companies like Rafiki Works proving new models around fractional specialists and modular teams executing quickly across multiple projects, it's no wonder so many agencies and consultancies are completely restructuring their teams and subsequent financial workflows.
These workers are not employees. They are not paid by payroll. They issue invoices, work across multiple clients simultaneously, and manage their own tax obligations, usually quite badly and retrospectively (enter the compliance risk) because the tools to do it simply don’t exist.
On the other side, for the businesses paying contractors, freelancers and subcontractors, the picture is equally as disjointed. A general contractor managing 28 subcontractors across two active sites is running payment admin across WhatsApp threads, PDF invoices, email chains, manual CIS deduction calculations, and a spreadsheet that is always out of date. An agency founder paying five freelancers in different currencies is using a combination of Wise, a bank transfer, and a hopeful prayer that they’re doing it compliantly and right.
Something’s gotta give?
The three structural problems that payroll cannot solve
1. Compliance is project-specific, not employment-specific
In UK construction, every payment to a subcontractor must pass through the Construction Industry Scheme. CIS requires the paying company to verify the subcontractor's status, calculate the correct deduction rate (0%, 20%, or 30%), deduct it at source, and file a monthly return with HMRC. From April 2026, Making Tax Digital adds another layer- every self-employed CIS worker with income over £50k must be on compatible digital software.
Payroll software does not handle this natively; it simply wasn’t built for it. The compliance layer in project-based work is fundamentally different from employment tax, and it needs to be encoded into the payment rail itself, not bolted on after the fact.
2. The payment flows in multiple directions
In a traditional employment model, money flows one way: employer to employee. In project-based work, money is multi-directional. A client pays a project fee. That fee needs to be split across a GC, three subcontractors, a materials supplier, and a platform fee. Each recipient may be in a different jurisdiction. Each payment may have a different compliance obligation.
No payroll tool handles this. Most payment tools handle point-to-point transfers, not multi-leg project disbursements with compliance attached.
3. The invoice is the unit of value, not the month
Payroll runs on time. Payments for project work run on completion. A subcontractor who finishes a job on a Thursday should be able to invoice on Thursday and receive payment within hours- not wait for the 25th of the month on a payroll cycle that was never designed for them.
The average subcontractor in UK construction waits 54 days to get paid. That is not a payment speed problem. It is an infrastructure problem. The tools to create, approve, route, and settle a project-based invoice- compliantly, automatically, from a phone- do not exist in any integrated form.
Why this matters now, in 2026, and why it will increasingly matter in the future
Three things are converging that make 2026-2027 the inflexion point:
- MTD April 2026.
- Making Tax Digital for Income Tax is live. Every self-employed worker above the income threshold must now use compatible digital software. The forcing function is regulatory, but the beneficiary is any platform that makes compliance automatic rather than painful.
- Making Tax Digital for Income Tax is live. Every self-employed worker above the income threshold must now use compatible digital software. The forcing function is regulatory, but the beneficiary is any platform that makes compliance automatic rather than painful.
- The Xero-Anthropic partnership.
- In March 2026, Xero announced a multi-year partnership with Anthropic, embedding Claude as the reasoning layer inside their accounting platform. This is significant, but Xero's JAX agent is built for a one-to-one financial relationship. One business, one ledger, one set of invoices. It does not understand the project as a financial unit. It does not handle CIS. It does not manage multi-party disbursements. The gap it leaves is exactly where project-based payment infrastructure lives.
- With platforms like Petl Pay built around MCP and being LLM-native, new-age agencies within professional services and general contractors within building and construction can benefit from the best-in-class AI, chat-based finance, and instant banking rails to effectively onboard contractors, freelancers, and other wage workers, automate invoices across individuals, businesses, and the project itself, automate contractor tax and CIS, and settle all invoices as and when they’re approved instantly, in bulk, wherever their contractors are based.
- In March 2026, Xero announced a multi-year partnership with Anthropic, embedding Claude as the reasoning layer inside their accounting platform. This is significant, but Xero's JAX agent is built for a one-to-one financial relationship. One business, one ledger, one set of invoices. It does not understand the project as a financial unit. It does not handle CIS. It does not manage multi-party disbursements. The gap it leaves is exactly where project-based payment infrastructure lives.
- AI agents are entering the workforce.
- This is not a 2030 prediction. It’s happening now. AI agents are being deployed on real projects- writing code, producing creative work, generating analysis- and they need to be paid. The financial infrastructure for paying AI agents does not exist. It will need to look exactly like the infrastructure for paying human subcontractors: project-based, output-verified, compliance-aware, milestone-triggered. The companies that build that rail now will own it when the wave arrives. Petl Pay recently released its MCP, and Agentic OAuth, allowing agents to access the platform via chat, log work, generate invoices, and initiate payments.
The project is the new financial unit
Here is the reframe that changes how you think about all of this:
The salary was the financial unit of the employment economy. Monthly, personal,and tied to a role.
The project is the financial unit of the new economy. Scoped, output-based, multi-party, compliance-dependent.
Every piece of financial infrastructure- invoicing, payments, tax, reconciliation, compliance- needs to be rebuilt around the project rather than the person. Not as an add-on to existing payroll or accounting tools, but as AI native invoicing and payments infrastructure. That’s Petl Pay.
That means:
- Invoice generation is triggered by work logged, not by a human sitting down to fill in a form
- CIS deductions are calculated and applied automatically at the point of payment
- Multi-rail settlement- open banking, local rails, stablecoin- routed based on jurisdiction and recipient preference
- Automatic reconciliation with accounting software
- An audit trail that satisfies HMRC without anyone having to build it manually
And it means all of this is accessible from a phone. On a building site. In 90 seconds.
What this looks like in practice
A subcontractor finishes a day's work. They send a WhatsApp, Slack, ChatGPT, or Claude message describing what they did and what they're owed. Petl generates a CIS-compliant invoice automatically, routes it to the general contractor for approval, calculates the deduction, and triggers the payment request. The GC approves this quickly, directly in their existing banking app. Payment is settled, Xero can be updated, and a compliant audit trail is complete.
For an agency founder paying five contractors across the UK, South Africa, and Portugal: one project workspace, one approval flow, multi-rail settlement to each contributor in their local currency, compliance handled per jurisdiction, Xero reconciled via Petl Pay’s MCP.
For an AI agent working on a client project: an MCP server call that creates the invoice, routes it for approval, and settles payment, sometimes without a human in the loop.
The bottom line
Payroll was the right tool for the employment economy. It is the wrong tool for the project economy.
The shift is structural, not cyclical. It is happening across every industry simultaneously- construction, professional services, creative agencies, distributed tech teams, and increasingly, AI-native workforces.
The infrastructure that serves this world does not need to be a better payroll tool. It needs to be something new: a payment rail built around the project, with compliance native rather than bolted on, accessible from wherever work actually happens.
That’s what we are building at Petl Pay.
FAQ
What is the difference between payroll and project payments?
Payroll is designed for recurring, employment-based compensation- fixed salaries on a monthly cycle. Project payments are triggered by completion of specific work, involve multiple parties and jurisdictions, and carry compliance obligations (like CIS in UK construction) that payroll software was not built to handle.
What is Making Tax Digital (MTD) and why does it matter for contractors?
MTD for Income Tax requires self-employed workers above the income threshold to use HMRC-compatible digital software to maintain records and file returns. From April 2026, this affects every self-employed CIS worker earning over £50k. It creates an urgent need for payment infrastructure with compliance built in.
What is CIS, and how does Petl handle it?
The Construction Industry Scheme (CIS) requires businesses paying subcontractors in the UK construction sector to verify status, deduct tax at the correct rate (0%, 20%, or 30%), and file monthly returns with HMRC. Petl automates the entire CIS workflow- verification, deduction calculation, filing- natively within the payment flow.
Can AI agents be paid through Petl?
Petl's MCP server exposes payment primitives- invoice creation, approval, routing, settlement- as callable tools for LLM clients. This means AI agents working on projects can trigger payment actions programmatically, positioning Petl as infrastructure for the emerging agentic workforce.
What payment rails does Petl support?
Petl supports open banking (UK and EU), local rails (South Africa, LatAm), and USDC stablecoin settlement- routed automatically based on jurisdiction and recipient preference.
How is Petl different from Xero or QuickBooks?
Xero and QuickBooks are accounting tools built around a single business's ledger. Petl handles the finances, from billable work, compliant invoices, and instant payment infrastructure, handling multi-party disbursements, compliance, tax, and settlement across the full project workflow. The two are complementary: Petl integrates with Xero for reconciliation.
Petl Pay is the ai-native payment infrastructure for project-based work. Sign up at petlpay.com.
