Important Update: Umbrella Company Reform

IMPORTANT UPDATE: UMBRELLA COMPANY REFORM – TAX LIABILITY SHIFTS TO AGENCIES & END CLIENTS (APRIL 2026)

From 6 April 2026, the UK government will introduce major changes to how PAYE tax and National Insurance liabilities are managed across labour supply chains involving umbrella companies.

Under the new rules, tax liability will shift away from umbrella companies and onto recruitment agencies or the end client where no agency exists. This means that if an umbrella company fails to pay the correct PAYE and NICs, HMRC can now pursue the recruitment firm or end-user directly.

What does this mean for businesses?

If you currently engage temporary workers via umbrella arrangements, this reform materially increases your financial, legal, and reputational risk. Businesses should now:

• Review their temporary workforce engagement models
• Assess exposure across supply chains
• Ensure compliance, transparency, and auditability
• Consider alternative, compliant engagement structures that remove tax liability risk

This legislation is designed to tackle non-compliance and tax avoidance in the umbrella market, but it also places a far greater duty of care and due diligence responsibility on agencies and end clients.

How Orion Can Help

Orion supports organisations in redesigning their temporary worker engagement models to ensure:

• Full compliance
• Zero tax liability exposure
• Supply chain transparency
• Robust governance and assurance

If your organisation would like guidance on compliant, no-liability supply arrangements, our specialists would be happy to support.

Please contact myself, Ross MacRae, to discuss your current model and future-proof your workforce strategy.