The short version
- Rules apply to payments made from 6 April 2026.
- HMRC can recover unpaid PAYE from the agency or end client.
- Formal regulation of umbrellas is due in December 2027.
Since 6 April 2026, the agency that contracts with the end client must make sure PAYE is operated correctly in umbrella supply chains. If no agency is involved, the end client carries that duty. HMRC can recover any underpayment from them.1
Formal regulation of umbrella companies is planned for December 2027.2
What this means on site
Construction relies heavily on agency labour. If you are the end client with no agency in the chain, a failing umbrella's tax bill can reach you.
Practical checks
- Map your labour supply chain, end to end.
- Prefer a reputable agency that takes on the PAYE duty.
- Be suspicious of payslips that look too good.
- Put warranties and indemnities in your contracts.
- Review the arrangements each time you renew.
Sources
- PAYE rules for labour supply chains that include umbrella companies, HMRC. Accessed 11 November 2026.
- Employment Rights Act timeline update, GOV.UK. Accessed 11 November 2026.
General information only. This is not legal, insurance or financial advice. Your own policy wording decides what is covered.