Umbrella company rules changed in April 2026: what to check

On 6 April 2026, new rules on joint and several liability for umbrella company supply chains took effect. They change who HMRC can pursue if an umbrella company does not pay the PAYE and National Insurance it should.

What changed

Before the change, HMRC could pursue only the umbrella company for unpaid PAYE. Now it can also recover the shortfall from other parties in the chain. That is usually the recruitment agency that holds the contract with the end client. If there is no agency in the chain, it can be the end client.

The rules apply to money paid to contractors on or after 6 April 2026, including in existing arrangements. The parties who inherit the liability cannot rely on a reasonable care defence, which makes this different from the off-payroll (IR35) rules.

What it means for you

Contractors are not the main target of the change, but it can still affect you.

• Agencies may tighten their approved umbrella lists and add checks.
• Changing umbrella may take longer, because new providers face more scrutiny.
• Some agencies or clients may move workers onto their own payroll. It is not yet clear how widespread that will be.
• The number of umbrella companies may fall as the market consolidates.

The rules are separate from IR35, though they may influence how some clients choose to engage contractors.

What to check

• Is your umbrella company on your agency’s approved supplier list, and is that list changing?
• Do your payslips show your gross pay, deductions, employer National Insurance and margin clearly?
• Do the figures match what you expected from your contract?
• Is your umbrella accredited by a recognised industry body, and can you confirm it?
• If you are thinking of moving to a limited company, have you checked your IR35 position first? Leaving an umbrella can bring off-payroll risk back into play.

Keeping your own record

Keep your payslips and your contract. If anything looks wrong, raise it early with your umbrella and your agency. The Paylift app lets you compare your actual take-home with what you expected across routes, which helps you spot a payslip that does not add up.

General information, not legal or tax advice. Check gov.uk and your agency’s guidance for the current rules.