L-Day 2025: What Recruitment Agencies Need to Know

What We Know So Far About Proposed Umbrella Company Regulation.

Legislation Day (L-Day) has been confirmed for 21st July 2025, when the government will publish the draft Finance Bill 2026. For recruitment agencies and umbrella companies, this date marks a pivotal moment that will shed light on the future of the associated industries.

On the 21st, it is widely expected that the draft legislation will:

• Confirm the introduction of Joint and Several Liability (JSL) for unpaid PAYE and NICs.
• Clarify potential licensing or registration requirements for umbrella companies.
• Introduce regulatory oversight, likely under the Fair Work Agency.
• Solidify the position that recruitment agencies (or end clients) will be liable for tax shortfalls if an umbrella fails to meet its obligations.

These changes will directly impact agencies, their supply chains, and contractor engagement models.

What can we expect from the draft legislation?

The draft legislation should offer clarity on the specifics of JSL and HMRC's enforcement powers. It's expected to confirm that umbrella companies will retain the ability to process PAYE, but with oversight increasing and liability passing up through the supply chain.

For agencies, this draft will be the first opportunity to understand the full scope of compliance requirements set to take effect from April 2026.

What should agencies consider now?

Until the specific details of the draft Finance Bill are revealed on the 21st, we recommend that agencies hold off on taking any specific action.

However, there are several things that agencies can begin to consider and prepare for.

• Review your PSL – Agencies should consider conducting a due diligence exercise on their umbrella partners to ensure financial and regulatory compliance.
• Update contracts – Contracts will need to be reviewed once the details of the legislation have been confirmed.
• Educate internal teams – Agencies would be well advised to educate their employees on the emerging risks and compliance expectations following the L-Day update.
• Stay informed – Once L-Day passes, seek expert advice and carefully interpret and fully understand the new rules before implementing operational changes.

L-Day, 2025, is a moment of significant change. Agencies that act early and prioritise compliance will be best placed to protect their business, contractors, and clients.

As an FCSA-accredited and SafeRec-certified umbrella company, Champion remains committed to protecting our contractors, agency clients, and the wider supply chain from risk. We are eagerly awaiting L-Day and keen to understand the details surrounding the legislative updates. However, due to the strategic importance of these changes, Champion will be thoroughly digesting the draft legislation before providing an update.

If you require clarification on what this means for your agency, please call us on 0161 703 2549 or email info@championcontractors.co.uk.