What the April 2026 Umbrella Changes Mean for You

From 6 April 2026, new rules will change who is responsible when an umbrella company fails to pay PAYE and National Insurance correctly. If the umbrella does not pay HMRC, the debt can be recovered from other parties in the supply chain under joint and several liability.

What ‘Joint and Several Liability’ actually means

This is not a debt transfer. HMRC does not have to pursue the umbrella first for overdue debt- it can come directly to the agency or possibly the end client, for the full amount. Due diligence remains essential to reduce risk, but it does not eliminate liability once it is triggered.

When you, as the end client, can be liable

In most cases, the agency contracting with you carries the joint liability. However, liability falls directly to you in the following circumstances:

• You contract directly with the umbrella with no agency in the chain.
• Your agency is connected to the umbrella it uses - a 5% or greater ownership link between an agency and an umbrella is enough to shift liability to you. You need to ask your agencies directly whether they have any financial stake in the umbrellas they work with.
• Your agency employs its workers under a contract of employment rather than a contract for services- an agency that directly employs its workers meets the legal definition of an umbrella company under the new rules, making you the liable party. It is the nature of the employment relationship, not the company's name or description, that determines this.

Purported umbrella companies

The legislation is deliberately broad. It does not only catch businesses that call themselves umbrella companies. It also covers consultancies, employers of record, hire-to-deploy suppliers, and MSPs where workers are employed or where it is reasonable to assume they are. Ignorance of the arrangement is not a defence.

What you should do now (quick checklist)

• Map your labour supply chain: which agency, which umbrella, and who actually employs the worker.
• Ask your agency for written confirmation of (1) who is responsible for PAYE/NIC from April 2026, and (2) whether they have any ownership connection to any umbrella they use.
• Ask your agency what due diligence they do on the umbrella companies they use
• Check that your agency contracts with workers under a contract for services, not a contract of employment.
• Tighten contracts: audit rights, PAYE compliance obligations and transparency on how workers are paid. 
• Audit your supply chain regularly so you have clearer visibility over who employs the worker and how payroll is being operated.

How Daniel Owen approaches this

Still unsure and want to check your current arrangements? 

Whether you're with us or not, speak to tour team and we can help understand and advise on your best next steps:

0345 810 1020