The Umbrella Reforms

In the Autumn Budget 2024, the Government stated its intentions to change who the deemed employer was in the labour supply chain from the umbrella company to the agency or employment business.  This was Option 3 in the 2023 consultation on Tackling Non-Compliance in the Umbrella Industry. If there is no agency in the labour supply chain, the end client will become the deemed employer.  This measure is to be implemented in April 2026 and that hasn’t changed.

In June 2025, HMG held a meeting with various representatives in the labour supply chain concerning the umbrella company tax policy.  At that meeting HMRC announced that the direction of travel for the tax policy is going to be ‘joint and several liability’.

On 21 July 2025, the Government published the draft Finance Bill 2025-26 which contained a new Chapter 11 on joint and several liability for umbrella companies.

I was commissioned by the FCSA and others to draft an independent review of the tax policy of deemed employment in Option 3 and come up with recommendations.   Here is my independent review:

[RSH] – The Umbrella Reforms – Interim Review – 2nd ed 050625

I have also published a briefing on the draft Finance Bill legislation on how the new legislation will work including the ‘purported umbrella’:

[RSH] – Umbrella Reforms – Ch 11 JSL Briefing – 070825