Unfortunately, due to unscrupulous practices employed by certain operators, the umbrella sector often receives negative press, and all umbrella companies are unfairly tarnished by the same reputation. To address these concerns over perceived non-compliance in the umbrella company market, the government recently announced in the policy paper ‘Tackling Tax Non-compliance: Umbrella Company Market’ .
Starting in April 2026, agencies will be held responsible for accounting for PAYE when providing workers employed through umbrella companies. HMRC has also issued guidance in April 2025 outlining suggested actions umbrella companies can take to promote compliance and best practices within the temporary labour market. It is important to note that this guidance does not encompass all legal obligations of umbrella companies, nor does it impose new legal requirements.
HMRC will continuously review this guidance to ensure that necessary updates are made. The examples provided can also be used by workers, recruitment agencies, or others in the supply chain to help decide which umbrella companies to engage with.
The examples fall under the following categories, and umbrella companies should:
- Operate responsibly
- Be managed by fit and proper individuals
- Remain financially viable
- Adhere to statutory requirements that apply to all employers
- Accurately administer payroll for their employees
- Compete based on lawful practices
- Provide clear, open, and honest information to their employees
- Offer employee care
- Provide recruitment agencies with the necessary information to meet their legal obligations.
A link to the HMRC publication is provided here.
As new legislation comes into effect, it will become increasingly important to engage with compliant umbrella companies.
Please feel free to reach out to the HaysMac Employment Taxes team if you have any questions or need assistance.
