Sam Cox reports on what the umbrella market can expect when new legislation comes into effect in April 2026.
When the Government finally published draft legislation detailing tax reforms to the umbrella industry, it brought a long period of uncertainty to an end.
It was back in June 2023, when the previous Conservative administration was still in charge in Westminster, that a consultation had been launched on plans to tackle non-compliance in the umbrella company market.
Although still consisting of draft legislation and subject to change, the L-day measures – published on 21 July in the Draft Finance Bill 2025-2026 – provide some much-needed clarity.
Due to come into effect in April 2026, the reforms materially impact the relationships of parties in the contingent labour supply chain, bringing in a joint and several liability model. This measure will be introduced via a new chapter, Chapter 11, in the Income Tax (Earnings and Pensions) Act 2003 (ITEPA).
Joint and several liability will mean multiple parties in a supply chain can be held liable for unpaid tax. The draft legislation confirms that focus will be primarily on the party closest contractually to the client.
Download the full article below: