HMRC Publishes Good Practice Guidance for Umbrella Companies

On April 8, 2025, HM Revenue & Customs (HMRC) published a new guidance document titled Examples of Good Practice for Umbrella Companies in the Temporary Labour Market. The resource sets out clear recommendations aimed at improving compliance, transparency, and service quality across the umbrella payroll industry.

The notes highlight several key areas where umbrella companies are recommended to focus their efforts:

Responsible Operations for Umbrella Companies

Whilst much of the guidance is common sense, HMRC makes it clear that it expects umbrella companies to compete based on lawful practices.

Umbrella companies are encouraged to be managed by fit and proper individuals who understand the intricacies of the UK temporary labour market and the legal frameworks surrounding it. Maintaining financial stability, even in the face of delayed client payments, is also emphasised. HMRC reinforces the need for strict adherence to tax, employment, and company law.

Delivering a Quality Service

The document outlines the importance of concise and transparent communication with workers, particularly around pay and deductions. Timely and accurate payments, clear and detailed payslips, and accessible support services are cited as essential aspects of delivering a high-quality, compliant service.

These new examples of good practice aim to raise standards across the sector, helping to protect workers and maintain fairness throughout the temporary staffing supply chain.

Champion Contractors' Response
 As a leading provider in the umbrella payroll sector, Champion Contractors Limited fully supports HMRC's efforts to raise standards and eliminate unethical practices, including disguised remuneration and tax avoidance schemes. We welcome this latest guidance as a positive step towards improving trust and transparency in the industry.

Champion Contractors is confident that we have already met, and in many cases exceeded, the majority of the recommended practices outlined by HMRC. Our FCSA and SafeRec accreditations already demand that we meet exceptionally high quality and compliance standards, and stand us in good stead regarding the government's recommendations.

From clear worker communications to accurate, compliant payroll delivery and robust operational governance, we remain committed to supporting contractors and recruitment partners with a service rooted in integrity, compliance, and professionalism.

For a comprehensive understanding, the guidance notes are available on the GOV.UK website.

Alternatively, contact the Champion team at 0161 703 2549 or info@championcontractors.co.uk.