Warning: 2026 Umbrella Company Tax Changes

Legislation
Written By Cheryl Bygrave

From April 2026, a major change in tax law means companies can no longer “outsource” their tax risk to umbrella companies. If an umbrella provider fails to pay the correct PAYE or National Insurance, HMRC can now pursue the end client or agency for the debt.

  • What’s at stake: Liability for unpaid Income Tax, NICs, and student loans.

  • Who is affected: Any business using umbrella companies or third-party labour

  • providers.

  • IR35: Stays separate, but only if applied correctly.

  • Action: Review your supply chain due diligence. HMRC has released a webinar and guidance to help businesses manage this new financial risk.

Additional Information:

PAYE rules for labour supply chains

Webinar on Labour supply chains featuring umbrella companies

Check how to reduce your risk of using an umbrella company who operates a tax avoidance scheme

Cheryl Bygrave
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