Are laws changing regarding businesses having to carry out greater checks on those providing services to them via umbrella companies?
One of the outcomes of the recent Autumn Budget 2025 was the government confirming that from 6 April 2026, all end clients taking on workers via umbrella companies must ensure that PAYE and NICs obligations for these workers are being carried out correctly. In other words, the ultimate responsibility for ensuring that PAYE/NICs is operated correctly by the umbrella company will move to the end client, who will require payroll information from the umbrella company for this purpose. The umbrella company will still be the employer and therefore responsible for paying their worker correctly.
This additional compliance obligation is likely to place further strain on businesses, many of whom are already facing various pressures. Where HMRC finds that an umbrella company has not paid the correct amount of PAYE, they can recover it from the end client. As a result, the government has provided guidance notes for businesses on how to reduce the risks of using an umbrella company.
An umbrella company is an intermediary that engages individual workers, who are normally their employees, to provide services to end clients, usually through an agency or employment business. The government anticipates that the change may impact approximately 700,000 individuals who work through umbrella companies and has set up an email address for any questions on the matter: umbrellacompanyevidence@hmtreasury.gov.uk. HMRC has also updated its best practice guidance for engaging with umbrella companies.
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