Umbrella Company Reforms: What’s Changed, What We’re Seeing, and Where It Goes Next

What changed on 6 April 2026: joint and several liability for PAYE

The headline change is now live. Where an umbrella company sits in a labour supply chain, HMRC can hold a “relevant party” jointly and severally liable for the PAYE and National Insurance that should have been accounted for on the workers’ pay.

“Joint and several” means HMRC can pursue the full amount from any liable party and leave them to recover from the others. In practice the order is clear:

• Where a recruitment agency supplies the workers, the agency closest to the end client it’s the one holding the client contract – is the relevant party HMRC pursues.
• Where there is no agency in the chain, the liability falls on the end client receiving the workers’ services.

The point of the reform is to close down a long-running problem: non-compliant umbrellas that deduct tax from workers’ pay and simply don’t hand it to HMRC, then disappear. By putting a solvent, identifiable party on the hook, HMRC gains someone to collect from.

The uncomfortable part is that this is effectively strict liability. There is no statutory safe-harbour that says “we did proper due diligence, so we’re off the hook.” Good due diligence is essential and will materially reduce your commercial risk, but if an umbrella in your chain fails to pay, the relevant party can still be pursued. Contracts and warranties help you recover from others; they don’t change who HMRC comes to first. Engagements through a worker’s own personal service company are not caught — those stay under the IR35 / off-payroll rules.

What we’re seeing in practice — and why a “trusted umbrella list” isn’t the fix

Predictably, the first market reaction has been defensive. Agencies and engagers are rationalising their Preferred Supplier Lists, cutting them back to a shortlist of umbrellas they’ve decided to “trust.” On paper that looks like taking control. In practice it has two problems.

The first is that it pushes friction onto freelancers. A crew member who works across several clients can find themselves told to move to a different umbrella for each one, depending on whose approved list they’re on. Every switch means new onboarding, new starter paperwork, a fresh tax code headache, and often a temporary hit to their pay while it all settles. People get bounced between providers for reasons that have nothing to do with them, and it costs everyone time. In a market where good crew are already stretched, that friction is a retention risk, not just an admin one.

The second, and bigger, problem is that a supplier list doesn’t safeguard nearly as much as people assume. The liability is strict and ongoing. Putting an umbrella on your approved list is a snapshot judgement; the risk is a moving target. What is that umbrella actually giving you as evidence – beyond a logo and a signed warranty? What independent proof do you have that the PAYE it deducted this month has actually reached HMRC? And what, concretely, stops it from running into trouble the month after you approved it? An approved list tells you an umbrella looked compliant on the day you checked. It tells you very little about whether it will still be standing, and paying its tax, when the liability crystallises.

Accreditation is a signal, not a safety net

Much of the comfort around umbrellas rests on accreditation, so it’s worth understanding what the main schemes actually are – and what they don’t do.

Broadly, there are two types. Membership accreditations, such as those run by the FCSA (the Freelancer and Contractor Services Association) and Professional Passport, assess a provider against a published code of compliance – no offshore, loan or trust schemes, pay and tax processed correctly – usually through an independent annual assessment by regulated accountants or solicitors, with the power to suspend or remove members who breach the rules. 

Then there is real-time audit certification, most prominently SafeRec, which takes a different approach: it connects directly to an umbrella’s payroll system and forensically audits every payslip as it is generated, checking it against HMRC records and sending workers a weekly audit report, rather than relying on a once-a-year review.

Both are genuinely useful, and real-time auditing is a real step forward on annual box-ticking. But neither is a guarantee, and it’s worth being clear why.

A membership accreditation is a point-in-time assessment against a code, and the scheme is voluntary self-regulation funded by the members it accredits – which is part of why it has drawn criticism, including over a Charter change that was seen as softening the line on offshore arrangements (Computer Weekly). A real-time payslip audit, meanwhile, verifies that the payslips are right and the PAYE has been calculated correctly – but it doesn’t underwrite the company’s overall solvency or its wider tax position. A provider can be certified and still fail: one recent case saw a SafeRec-certified umbrella enter administration owing HMRC around £2.5m, the bulk of it VAT rather than payslip PAYE (Recruiter).

The point isn’t that accreditation is worthless – it’s a reasonable filter, and the right one tells you something real. It’s that no badge, membership or audit removes the joint and several liability from you. When an umbrella collapses, its logos don’t travel with the debt. That is precisely why the government is moving to statutory regulation rather than leaving the sector to accredit itself  and why accreditation plus a static approved list is a long way short of a defence.

What’s coming from April 2027: umbrellas become regulated

The 2026 change is a tax measure. The bigger structural shift is an employment one, expected from April 2027.

Under the Employment Rights Act 2025, the legal definition of an “employment business” is expected to be extended to include umbrella companies for the first time. That brings umbrellas inside the Employment Agency Standards framework, and in time under the remit of the new Fair Work Agency being established to enforce employment rights. For the first time, umbrellas would be regulated entities with defined legal obligations, rather than a lightly governed corner of the labour market.

The direction of travel is towards a more transparent, accountable umbrella sector. But the detail – the exact obligations, the commencement dates, and how enforcement will work – is still being worked through in secondary legislation and consultation. Treat April 2027 as the expected direction, not a finished picture, and watch the guidance as it firms up.

Impact on broadcast and production freelancers

Broadcast and live production sit right in the middle of this. The sector runs on freelancers, many paid through umbrellas, often across long, layered chains involving one or more agencies. That combination of high umbrella usage plus complex chains is exactly where the new liability is most likely to bite.

The specific risk depends on how you engage. Book crew through an agency and the agency closest to you generally carries the first liability, though you’ll still care deeply about the compliance of the whole chain. Engage umbrella-paid workers directly, with no agency in between, and you may be the relevant party yourself. Either way, “we didn’t know which umbrella they used” has stopped being an acceptable answer.

Where this could go: our prediction

Nobody has a crystal ball, but the incentives now point in fairly clear directions. Here’s where we think this lands over the next couple of years.

The umbrella market consolidates. Strict liability plus 2027 regulation makes it commercially irrational to work with small, opaque or marginal umbrellas. Volume flows to a shrinking number of large, demonstrably compliant providers, and a chunk of the current market simply exits. That’s largely the point of the reform.

Static lists give way to continuous monitoring. The smarter engagers will realise that an annual PSL review is a snapshot against a moving risk, and shift towards ongoing evidence with real-time checks that tax is actually being remitted, not just that a warranty was signed eighteen months ago. Approved-list thinking gives way to always-on assurance.

More engagers reduce their umbrella dependence altogether. Faced with carrying the liability either way, a growing number will ask why the umbrella is in the chain at all for crew they use repeatedly and trust. Expect a drift towards agency-PAYE and towards directly engaging core freelancers on compliant terms – cutting the umbrella middleman out of the relationships that matter most, and keeping it only where it genuinely adds value.

The winners are the ones who can see their supply chain. Every one of these shifts rewards visibility: knowing exactly who is engaged, through which route, on what basis, with what documentation, at any moment. The organisations that can answer that instantly will adapt cheaply. The ones relying on a spreadsheet of “approved” umbrellas and good intentions will find every one of these changes expensive.

What broadcast engagers should do now

None of this requires panic, but it rewards getting organised:

• Map your supply chain. Know which umbrellas your freelancers are actually paid through, and where agencies sit in each chain.
• Move from a list to a process. Do real, documented due diligence – accreditation checks, yes, but also ongoing evidence – rather than treating an approved list as a one-off tick.
• Get the paperwork right. Ensure contracts allocate risk sensibly down the chain and give you recovery rights if an umbrella fails.
• Question the umbrella’s role. For crew you use regularly and trust, ask whether direct engagement or agency-PAYE is cleaner than routing them through an umbrella at all.
• Keep records, retrievable on demand. Maintain a clear, current picture of who is engaged how, through whom, and on what basis.

The theme running through all of it is visibility. You cannot manage a risk in a supply chain you cannot see, and most organisations’ view of which umbrellas their crew actually use is patchy at best. This is exactly what a freelancer management platform is built to make visible: recording the supplier and engagement type behind every booking, capturing due-diligence documentation, and enabling clean direct engagement where that’s the better route. We built Hive 25 around that need, because at Frame 25 we were living it.