Umbrella company round-up

In this article, we’ve pulled together the key developments for umbrella company workers to be aware of—starting with fundamental new rules that could reshape the way the sector operates and how workers are treated.

Joint and several liability 

The Finance Act 2026 (now in force) brings in a new umbrella company tax regime. This is in response to ongoing concerns about tax non-compliance, including disguised remuneration.

From 6 April 2026, recruitment agencies (or, if there is no agency, the end client) can be held responsible for PAYE that should have been accounted for on payments to workers supplied through an umbrella company. This is called joint and several liability. In practice, it means HMRC may be able to recover unpaid PAYE from other parts of the supply chain, not just the umbrella company (or you as the worker).

We have updated our umbrella company web page with the basics of the new regime. The aim is to improve compliance and protect workers, but the changeover may bring restricted choice, changes, and disruption. Here are some practical things to watch for:

• You may have fewer umbrella company options, because agencies may tighten checks and be more cautious about which umbrellas they will use.
• Your agency may change how you are hired or paid to reduce risk (for example, moving some workers onto the agency’s own PAYE payroll).
• If you have to change payroll/umbrella company, there can be extra admin (for example starter/leaver issues) and, in some cases, breaks in employment continuity.

Pay and tax issues – some of our commentary

Over the last few months, we have written several articles for ContractorUK on the topic of umbrella companies and pay and tax, which we summarise here. These may help you understand more about the position in the 2026/27 tax year. 

New umbrella company JSL rules: a 2026 guide for contractors

Our article from October 2025, goes into more detail on the joint and several liability rules, as outlined above, and the main implications for workers.

Statutory Sick Pay (SSP) for umbrella company contractors: an April 2026 explainer

From 6 April 2026, up to 1.3 million more people will become eligible for Statutory Sick Pay. Our February 2026 guide explains the new Statutory Sick Pay rules and what they mean for umbrella workers, along with some practical issues to watch out for. 

National Minimum Wage increase: operational for most umbrella staff, but brace for impact

For most professional contractors, National Minimum Wage (NMW) rises are more mechanical than financial. However, as we explain in this article from March 2026, they can still have knock on effects – from altering pay structures to reducing salary sacrifice flexibility. 

Elective deduction model

The elective deduction model is an engagement model that is often aimed at lower-paid workers in the temporary labour market. It tries to take advantage of differences between employment-law status and tax-law status.

We have raised concerns about this for many years. We are particularly worried that it could become more common, even though HMRC has indicated the model is not compliant.

We have published a dedicated guidance page explaining how the model works, why it appears to be increasing, why it may be non-compliant, and what could be done about it. If you work through an umbrella company (or are considering one), please take a look and share it with others who might be affected.

Employment rights more generally 

A long-awaited government consultation on regulating umbrella companies is now open.

The Conduct of Employment Agencies and Employment Businesses Regulations (the ‘Conduct Regulations’) set standards for recruitment agencies and employment businesses.

Right now, umbrella companies are not directly covered by these rules, but that could change. The government says this could help tackle problems such as hidden costs, unclear deductions, and a lack of clarity about rights and pay for around 700,000 umbrella company workers.

Final thought 

There is a lot going on to help protect workers from unscrupulous umbrella companies. However, it is still really important that you stay alert, do your own checks and take steps to protect yourself! You can check if your umbrella company is dealing with your pay and taxes correctly, by requesting a free ‘payslip audit’ via our website.