New HMRC rules on umbrella companies ‘won’t be set until Autumn Budget 2025’

‘On the hook’ recruitment agencies have time to prepare for the ‘new reality’, which requires the chancellor’s ‘sign-off’ in the next quarter.  

Nothing is set in stone.  

The chancellor still has to give her approval.  

And HMRC is going to issue guidance very shortly. 

These three facts were asterisked yesterday to Kingsbridge – and by the leading insurer itself – about joint and several liability (JSL) rules on umbrella companies in Finance Bill 2025-26. 

The three facts are being emphasised the most to recruitment agencies, which are anxious that the bill makes them jointly liable for unpaid PAYE and NICs where umbrella companies fall short.  

‘Umbrella company tax rules require Rachel Reeves’ sign-off’ 

Besides the draft rules being “subject to change” (Orca Pay Group’s Rob Sharp), requiring Rachel Reeves’ “sign-off” (Kingsbridge’s Andy Robinson), and set to be the focus of “soon-to-be-published” HMRC guidance (APSCo’s Tania Bowers), there is another reassuring factor. 

“Agencies, or end clients where an agency isn’t in the chain, will be jointly and severally liable for the PAYE only in relation to the ‘qualifying umbrella payment’. 

“This suggests”, continued My Digital CEO Daniel Moss, “a level of proportionality/apportionment of the liability, per agency. [That’s] pragmatic and logical.” 

‘Qualifying umbrella company payment’ 

Published on July 21st 2025, the draft rules for umbrella companies in Finance Bill 2025/26 contain a definition of a ‘qualifying umbrella company payment’. 

Such a payment is a payment “made in respect of the employment of the worker to the extent that it is not in respect of the provision of services to a person other than the client”, states the bill. 

At Kingsbridge, “practical guidance and tools” for agencies seeking to reduce risk and ensure compliance under the rules, which take effect from April 6th 2026, are already being readied, the insurer says.  

‘First, the OPW rules, now another compliance pressure faces agencies’ 

And with opaque wording such as the definition of a “qualifying umbrella payment” (see Chapter 11, 61Y[3] of ITEPA 2003), such resources for agencies appear vital – not least because recruiters already have it tough enough thanks to the off-payroll working (OPW) legislation. 

“In a post-IR35 world already full of complexity, the Joint and Several Liability rules add another compliance pressure for agencies placing contingent workers”, says Kingsbridge’s Mr Robinson. 

‘Finance Bill 2025-26, a disappointment’ 

He added: “Many of the recruitment agencies we work with have chosen to partner with umbrella companies to reduce their compliance and administrative burden. And to ensure that PAYE and National Insurance Contributions are dealt with by experts.  

“So draft Finance Bill 2025-26 will be a disappointment to those companies who are already struggling under the compliance burden of IR35.  

“In addition, while the intent behind the legislation – to reduce non-compliance and protect workers – is understandable, the risk of JSL places further pressure on agencies and end clients, who may not have visibility or control over umbrella company practices.” 

‘Level of transparency needed to protect recruitment firms’ 

Following publication of the draft bill on Monday evening (21st July 2025), the Association of Professional Staffing Companies (APSCo) said lack of visibility wasn’t a new concern. 

And the rub seems to be that if a brolly is truly determined to skew the PAYE due to HMRC, even the most inquisitive, interrogating agency could still be ‘on the hook’. 

APSCo says: “There was a recognition [before the bill’s publication] that the [JSL] legislation would create additional administrative burdens for recruiters that engage umbrella companies. 

“[And post-publication] there are [still] concerns as to the level of transparency that will be needed to protect recruitment firms.” 

‘HMRC guidance on tackling umbrella company non-compliance must include…’ 

Appealing to the taxman, the association’s Tania Bowers urged: “The guidance soon to be published by HMRC must outline not only its own approach, but also clear information to help staffing companies implement best-practice strategies.  

“The details published so far don’t provide recruiters with the additional tools to manage the new requirements; they simply put the responsibility on staffing firms to know the details of their umbrella supply chain. Or face financial penalties.” 

Bowers spoke of APSCo preparing to “leverage its close relationship with HMRC” to guide and inform recruitment agencies on how to best prepare for JSL from April 6th 2026. 

The Joint and Several Liability rules are officially expected to raise almost £3billion over five years, peaking in 2026-27 with an annual yield of £800million. 

‘Pursue an agency for any non-compliant payroll taxes an umbrella owes’ 

Fortunately, then, it’s not just APSCo and Kingsbridge standing by recruiters ahead of HMRC vowing on Monday to “pursue an agency in the first instance for any payroll taxes that a non-compliant umbrella fails to remit to HMRC on their behalf”. 

Umbrella companies are stepping up as well. 

Nasa Group says it’s helping agencies “get ahead” of the rules by encouraging them to demystify ‘the risks, plan ahead, and tighten up the supply chain’. 

The umbrella company recommends staffing firms consider taking “tailored” advice, ‘getting it right’ with their brolly (“together as a team”), and even undertaking JSL training sessions. 

‘Early engagement is key’ 

Kingsbridge’s Andy Robinson believes “early engagement is key” too.  

In fact, as the insurer’s boss, Mr Robinson says he is now encouraging “all businesses that rely on umbrella arrangements to use this draft period to review their supply chains”. 

However, until further detail is known, and the rules are signed off – probably five months before their April 6th start date – investing in JSL training may be a bit premature. 

‘No exact date yet for Autumn Budget 2025, but expect late October, early November’ 

Speaking yesterday, Mr Robinson said: “Currently, this is a draft bill and as such could be subject to change. 

“And according to a statement made on July 21st by the financial secretary to the Treasury, Lord Livemore, ‘The final contents of Finance Bill 2025-26 will be decided by the Chancellor at the next Budget’.”  

“Well, the next budget is likely to be in late October or early November. 

“But at the time of writing, no exact date for Autumn Budget 2025 has been provided. And it is then that the JSL rules will still need the chancellor’s sign-off.” 

‘The government’s intent on umbrellas, ahead of the legislative process’ 

In a statement to the Kingsbridge Blog, legal expert Roger Sinclair explained that the five pages of draft clauses for the new JSL rules aren’t set in stone. 

The clauses will next need to be incorporated into the Finance Bill, which will then have to “make its way through the legislative process”, said Mr Sinclair, Founder at Egos Legal. 

“What we see now represents the government’s intent”, the legal expert said. 

“It seems likely that it will represent the final form when it comes into force in April 2026, save only for addressing any unintended consequences that may come to light in the next few months.” 

‘Umbrella company clients accountable for any unpaid PAYE payments, and potentially NICs too’ 

Cue, Mr Robinson bottom-lining it on the Kingsbridge Blog yesterday by saying those ‘currently engaging umbrella company contractors, where the umbrella is responsible for paying out correct PAYE and NICs’, should know that they stand to “be affected”. 

“Once the new Finance Bill is law, you will need to ensure that this process is compliant, otherwise you could end up accountable for any unpaid PAYE payments”, the insurer’s Managing Director advises.  

“There is also a hint that a similar regulation could…be coming to cover National Insurance Contributions too.” 

Robinson was referring to a new HMRC policy paper ‘Umbrella companies — tackling non-compliance in the umbrella company market’, stating: 

“Further legislation will be introduced to amend section 4A of Social Security Contributions and Benefits Act 1992, to provide HM Treasury with the power to make regulations imposing an equivalent joint and several liability for NIC purposes.” 

‘HMRC liability if a payslip is fabricated’ 

Partly as a result, the clients of umbrellas are now being widely encouraged to speak with their umbrella representatives to understand how payroll compliance is being managed. 

Already anxious to get a reply, some of those affected are taking to social media. 

One agency asked online: “Just playing devil’s advocate, what if an agency is provided with a fabricated payslip to deceive?  

“Does liability still remain with the agency in that event?” 

‘Use of fraudulent documents won’t transfer the debt back to the contractor’ 

In light of no responses, Re Legal Consulting’s Rebecca Seeley Harris (who recommended JSL to HM Treasury), provided the answer yesterday, exclusively for the Kingsbridge Blog: 

“See ‘Fraudulent Documents’ at 61Z1 (3) & (4) of the draft,” she said.  

“It states that s.44(5) ITEPA AND S.61Y Chapter 10 ITEPA have been amended, so the use of fraudulent documents won’t transfer the debt back to the contractor.” 

‘Checking correct PAYE application on payslips is only one aspect’ 

Professional Passport CEO Crawford Temple sounds like he’s already fielding questions about payslips under next year’s JSL legislation as well. 

He says: “With joint and several liability [now] confirmed to take effect from April 2026, it is vital to recognise that just checking the correct application of PAYE on payslips is only one aspect. 

“The changes demand much wider attention.  

“And umbrella companies face broader risks that can undermine their overall compliance and create shortfalls in PAYE owed to HMRC.” 

‘Sensible for agencies and clients to fully grasp PAYE regulations’ 

From his Tewkesbury office in Gloucester yesterday, Kingsbridge’s MD Mr Robinson signalled he’s pleased at all the proactivity on show. 

“Even though this draft bill isn’t yet law, it is sensible for agencies – and clients – to spend these months endeavouring to fully understand the PAYE regulations, and how these might differ from worker to worker.  

“This will help you to engage in discussions with your umbrella companies”, he said. 

‘New reality’ 

Preferring the short, sharp shock treatment for any agencies thinking April is too far away to need to act, We-Contract’s Director Dave Wilde said: “There’s no safe harbour. If your umbrella slips up, you’re on the hook.” 

Perhaps Alex Hough, Managing Director at Rocket Paye, summed it up best. “[We’ve got a] new reality. Very important not to put this off until April”, he says. “There is a lot of work to be done in the supply chain between now and then.” 

How can Kingsbridge help? 

Navigating tax legislation and ensuring compliance can be challenging for every point of the supply chain. Kingsbridge offers tailored support, including expert guidance on IR35 status assessments, compliance strategies, and risk mitigation. Our team is dedicated to helping businesses understand and adapt to the evolving tax landscape. 

Kingsbridge also offers a range of flexible business insurance options to support contractors and the businesses that engage them, including Professional Indemnity, Public Liability, and Employers’ Liability cover, as well as add-ons like Cyber Insurance and Director and Officer’s Liability. 

To find out more, contact us today.