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Umbrella companies – future changes and enhanced compliance
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What to expect from the government’s new legislation and how it will impact contractors

From April 2026, the UK government will implement significant changes to the regulation of umbrella companies that are aimed at targeting non-compliant standards in the sector and protecting workers’ rights. These changes will affect how recruitment agencies work with umbrella companies.

If you’re an interim worker, engaging with non-compliant umbrella companies can lead to unexpected tax bills, loss of rights or financial uncertainty.

 

Recruitment agencies will be required to ensure correct Income Tax and National Insurance contributions are deducted from all payments made via umbrella companies, in a bid to reduce avoidance schemes. To navigate these changes effectively and lower the risk of harm to workers, recruitment agencies will only be working with fully compliant umbrella companies.

 

What to look for when choosing a compliant umbrella company:

  1. Accreditations: make sure the umbrella company you decide to work with is accredited by professional bodies such as FCSA (Freelancer & Contractor Services Association), APSCo (Association of Professional Staffing Companies) or certified by SafeRec.

  1. Reputation: search for reviews/testimonials and seek feedback from other contractors. A solid track record can be an indication of reliability.

  1. Payslips: a trustworthy umbrella company will provide a clear breakdown of all deductions, including full transparency of their margins and no unlawful payments.

  1. T’s & C’s: a clear employment contract will be provided with no hidden fees for joining or leaving, or minimum contract lengths.

  1. Pension & insurance: auto-enrolment pension schemes and insurance cover (professional indemnity, employer, public liability) will be provided by a compliant umbrella.

 

HMRC regularly update their list of identified tax avoidance schemes, promoters, enablers and suppliers; the Park Avenue Compliance team routinely checks this to ensure we only work with reliable umbrella companies - https://www.gov.uk/government/publications/named-tax-avoidance-schemes-promoters-enablers-and-suppliers/current-list-of-named-tax-avoidance-schemes-promoters-enablers-and-suppliers#v-to-x.

 

From 1st April 2026, Park Avenue will only partner with umbrella companies on their PSL (Preferred Suppliers List), to prevent any possibility of insufficient compliance and harm to workers. These will be companies that adhere to all compliance points above and that are trusted within our industry.

 

If you would like to know more about this matter or see Park Avenue’s PSL, please email compliance@park-avenue.co.uk.

 

Photo by Su Kamal on Unsplash