From April 2026, HMRC’s new Joint & Several Liability (JSL) rules will come into force. These changes will place recruitment agencies directly on the hook if tax goes unpaid in their supply chains.
It might sound like a technical detail, but in reality it will completely reshape the umbrella company market — and the contractors working within it.
Construction Agencies will take full control
Recruitment agencies already nudge contractors towards preferred umbrella companies, but JSL takes things much further. With agencies facing direct liability for unpaid tax, they will simply refuse to deal with umbrellas they don’t fully trust.
Expect agencies to shrink their lists to just a handful of “safe” umbrellas. For subcontractors, this means far less freedom and a lot more red tape.
Contractors will lose choice
Many contractors have stuck with the same umbrella for years — whether for continuity of employment, workplace pension benefits, or just familiarity. From April 2026, that loyalty may count for nothing.
If your agency doesn’t approve your current umbrella, you’ll be forced to switch.
Multi-agency subcontractors will face payroll headaches
The picture gets even more complicated for those subcontractors juggling more than one agency. Each agency is likely to insist on its own approved umbrella, meaning subcontractors could end up running multiple payrolls at once.
That creates messy admin, extra hassle — and tax complications.
Pressure on subbies’ pockets
Here’s where it really hurts: tax coding. Your personal allowance can only be applied once. Any additional umbrella roles are automatically taxed at 20% from the first pound earned.
That means lower take-home pay in the short term — even if things eventually balance out at year-end.
Umbrella scheme users hit the hardest
The biggest cliff-edge will come for those using umbrella schemes that promise inflated take-home pay. Under JSL, agencies won’t take the risk of engaging with these providers.
For subcontractors caught in these schemes, the impact could be brutal: up to a 30% drop in take-home pay overnight once they’re forced back into compliance.
In short, it’s going to be messy. Choice will disappear, pay packets may shrink, and the market will face a huge shake-up as agencies scramble to protect themselves.
Why EEBS clients can relax
While umbrella contractors face disruption, EEBS clients are shielded from all of it.
That’s because EEBS is not an umbrella. Our model is different. We take on your subcontractors as ours, handling CIS , payroll, compliance and HMRC obligations. Agencies are not liable in the same way, which means you — and your subcontractors — avoid the fallout coming in 2026.
For our clients, it’s business as usual:
- No agency restrictions
- No multiple payroll confusion
- No sudden 30% pay cuts
- No HMRC risk
EEBS Managing Director, Nick Pilgrim says, "The new Joint & Several Liability rules will cause real disruption for umbrella contractors. Agencies will close ranks, and subcontractors will see their freedom and take-home pay squeezed. At EEBS, our clients don’t need to worry about any of that. Our model keeps them clear of these risks, so they can carry on working without the headaches. We offer certainty at a time when the industry is heading for major change.”
