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On 21 July, the HMRC’s Finance Bill 2025-26 confirmed a major legislative change that will reshape how temporary workers are hired and who is responsible when things go wrong.
From 6 April 2026, recruitment agencies and end-hirers will be jointly and severally liable if an umbrella company in their supply chain fails to correctly pay PAYE and National Insurance contributions. This isn’t a minor compliance tweak — it’s a strategic shift in how risk is assigned, and it puts HR, finance, and procurement leaders at the centre of that shift.
“By shifting the PAYE and NIC responsibility up the supply chain, the government is finally pulling the rug out from under non-compliant umbrella companies. Their tax avoidance schemes create a significant gap in the UK’s revenue each year and expose workers and honest businesses to unnecessary risk.” - Aneta Basiuk, Director of Compliance Programs at Worksome
New Rules Make Supply Chain Compliance a Shared Responsibility
This new Umbrella tax legislation gives HMRC the authority to recover unpaid tax and NICs from the recruitment agencies or end clients who engaged them.
It doesn’t matter if you weren’t directly involved in the error. If a contractor is paid through a supply chain you manage, your organisation could be liable.
Aneta Basiuk added, “Due diligence is no longer a ‘nice-to-have’—it’s mission-critical. Recruitment agencies and end-clients must map every labour route, conduct regular audits, and work only with umbrellas that can evidence real transparency. ”
Many umbrellas operate compliantly. But under the new rules, that assumption is no longer enough. Leaders need visibility, documentation, and clear processes that prove accountability at every step.
Aneta Basiuk explains further, “For the genuinely compliant umbrellas, this is a huge opportunity to demonstrate compliance and prove to clients value add in the supply chain. Those that can’t quickly find there is no longer anywhere to hide.”
How Worksome Keeps You Protected
Worksome is already helping organisations manage this shift. Whether you engage contractors directly or through agencies and umbrella companies, our platform gives you:
- Clear oversight into every engagement
- Confidence that contracts and payments are fully compliant
- A system of record that keeps pace with evolving legislation
We don’t just support a compliant model — we help build the operational muscle to manage contingent workforce risk with confidence, no matter the hiring path.
What Leaders Need to Do Now
This isn’t just a policy update. It’s a prompt to modernise how your organisation manages contingent workforce compliance. Here’s where to focus next:
1. Audit your supply chain
Get clarity on where umbrella companies are being used, how they’re selected, and who oversees those relationships. Many organisations uncover surprises when they map this out. Under the new rules, not knowing is no longer a valid excuse.
2. Assess internal gaps
Compliance touches multiple teams. HR manages hiring, procurement owns supplier contracts, legal advises on risk, and finance handles payments. If no one owns the full picture, accountability gets lost. Make sure these functions are aligned and clear on roles.
3. Centralise your documentation
When HMRC asks questions, you need to show your work. Contracts, payment records, and proof of PAYE compliance should be accessible and consistent. That means moving away from email chains, disconnected systems, or spreadsheets on someone’s desktop.
4. Shift from assuming to proving compliance
In the past, many organisations trusted their suppliers to manage the risk. That won’t be enough going forward. Build the internal processes that let you monitor and validate what’s happening across every contractor engagement. Compliance has to be visible, not just delegated.
Join our expert-led briefing to understand what’s changing and how to prepare
Thursday 14 August | 12:00–12:45pm BST | 💻 Virtual | 🎥 Recording provided
Legal Disclaimer: The information provided in this blog post is intended for general informational purposes only. It does not constitute legal advice or create an attorney-client relationship. While we strive to provide accurate and up-to-date information, the legal landscape is constantly evolving, and laws and regulations may vary by jurisdiction.
If you require legal advice or have specific legal questions related to contingent workforces, compliance, or any other legal matter, we strongly recommend consulting with a qualified attorney who can provide advice tailored to your individual circumstances and needs.
Any reliance on the information presented in this blog post is at your own risk. We disclaim any liability for any actions taken or not taken based on the contents of this post.