It's been a volatile twelve months for the umbrella payroll sector, with the UK government confirming plans to introduce joint and several liability (JSL) into legislation from 6 April 2026.
The move is a dramatic shift for the sector, and one that will reshape the future for umbrella companies, recruiters, end clients, and contractors alike.
In July, the government published draft legislation confirming that it would place new compliance obligations on recruitment supply chains, ensuring liability for non-compliant umbrella activity does not rest solely with umbrella companies. Instead, responsibility will be joint and several, a shift welcomed by many who have long called for stronger protections against tax avoidance and malpractice.
Industry Voices: What Happens Next for the Umbrella Payroll Sector?
The Freelancer and Contractor Services Association (FCSA) has been working closely with the government to determine the best way to regulate the industry and to develop effective means of driving compliance. Chris Bryce, CEO of the FCSA, has been vocal about the realities of the legislation throughout this process.
He explained that while some fear the new rules will create additional risks for recruiters and hirers, the reality is more straightforward:
“The government is not seeking to penalise compliant businesses, but rather to protect workers and the Exchequer by tackling those who seek to profit from non-compliance.”
According to Bryce, the legislation will not spell the end of umbrella working; instead, it is likely to consolidate the market around reputable providers.
“The effect of this legislation will be to strengthen the position of compliant umbrellas, not undermine them.”
Looking Ahead to 2026
Now that the countdown to April 2026 is underway, the focus will inevitably fall on supply chain due diligence in the umbrella payroll sector.
Recruitment agencies and end clients will need to demonstrate that their umbrella payroll supply chain partners meet PAYE and tax law requirements. JSL will put a far greater reliance on umbrella firms that can demonstrate compliance, transparency, and worker protections.
Umbrella companies with recognised industry accreditations such as FCSA accreditation and SafeRec certification are expected to be the real winners in the new regime. With independent auditing and established codes of conduct, these umbrellas will be best positioned to provide agencies and end clients with the assurances they need.
Bryce summed up the direction of travel clearly:
“Compliant, accredited umbrella companies will continue to prosper. Those who cut corners will find themselves edged out of the market.”
Conclusion
The past year has set the stage for a regulated future in the umbrella payroll sector. With joint and several liability on the horizon, 2026 promises a sector defined less by headlines about tax avoidance and more by trust, compliance, and accreditation. For workers, recruiters, and umbrella firms that already operate in a compliant manner and to the highest standards, this is a welcome change.
Champion Contractors is an FCSA-accredited and SafeRec-certified umbrella payroll company. Our accreditations ensure that we meet the highest standards set by the industry and operate transparently, compliantly, and legally with all UK tax legislation.
Partnering with Champion Contractors will eliminate any risk of non-compliance today and position your business perfectly in preparation for the legislative changes in 2026.
For more information, contact the Champion team on 0161 703 2549 or email info@championcontractors.co.uk.