Regulation of umbrella companies

Implementation date: To be confirmed

On 4 March 2025, the Government issued its response to a consultation launched by the previous Government: Tackling non-compliance in the umbrella company market. The consultation sought views on "the most effective way to address issues of tax and employment rights non-compliance by umbrella companies".

In its response, the Government confirms that it intends to legislate to define umbrella companies and to allow for their regulation (ultimately under the Fair Work Agency's remit) through an amendment to the Employment Rights Bill. It is not yet known when these measures will take effect.

Additionally, in its Autumn Budget 2024, the Government announced that it would address issues of tax non-compliance in umbrella companies by requiring the agency that supplies the worker to the hirer (rather than the umbrella company) to account for PAYE for the worker. In the absence of an agency, the responsibility for PAYE will be transferred to the hirer at the end of the supply chain. This arrangement will come into force on 6 April 2026.