The contracting landscape is about to change significantly. With HMRC’s proposed Joint & Several Liability (JSL) legislation set to take effect from April 6th, 2026, we understand that many contractors are feeling uncertain about what lies ahead. While final details are still pending, the direction is clear. As your trusted umbrella company partner, we’re here to cut through the complexity and help you navigate these changes with confidence.
What’s Actually Changing?
The proposed legislation places direct liability for unpaid PAYE tax on recruitment agencies when they work with non-compliant umbrella companies. This isn’t just a regulatory tweak – it’s a fundamental shift that will reshape how the entire supply chain operates.
For agencies, there’s no wiggle room. They’ll be fully liable with “no statutory excuse” to shift responsibility elsewhere. This means they’ll be extremely selective about which umbrella companies they’ll work with going forward.
The Reality: Your Choices Will Narrow (But Quality Will Improve)
Let’s be honest – your freedom to choose any umbrella company is likely to diminish. Agencies will develop tightly controlled partnerships with a small number of vetted providers. While this might feel restrictive initially, there’s a significant upside: the days of competing against tax avoidance schemes promising unrealistic take-home pay are coming to an end.
We’ve always believed that sustainable, compliant contracting is the only viable long-term approach. Now, the entire market is moving in this direction.
Critical Timing: Don’t Get Caught Mid-Assignment
Here’s something many contractors haven’t considered: assignments that span across the April 2026 implementation date could create serious complications. As we get closer to the deadline, more assignments will cross this boundary.
The last thing you want is to be forced to switch umbrella companies halfway through a contract. This could disrupt your employment continuity, affect your workplace pension contributions, and create unnecessary administrative headaches.
Start planning now to avoid mid-assignment migrations by securing your position with compliant providers well before April 2026.
If You’re Currently Using a Tax Avoidance Scheme: Act Now
This is your wake-up call. Contractors currently using schemes that promise inflated take-home pay could see their income drop by as much as 30% when forced back into compliance. That’s not a scare tactic – it’s mathematical reality.
The time for 11th-hour planning is over. Start conversations with your agencies now to understand their approved provider lists and begin transitioning before you’re forced into a cliff-edge situation.
Important: Don’t rely on insurance policies or contract clauses to protect you from JSL implications. You won’t know how effective these are until you need them – and by then it’s too late to manage the risk effectively.
Working Directly with End Clients? You Need to Know This
If you work directly with end clients (without going through an agency), be aware that the liability chain changes. Where there’s no recruitment agency in the supply chain, the end client could become liable for tax compliance issues with non-compliant umbrella companies.
This means clients may become even more selective about which umbrella companies they’ll accept, potentially limiting your choices further. Consider discussing this with your direct clients to understand their JSL risk management strategy.
Multi-Assignment Contractors: Here’s Your Action Plan
If you work across multiple agencies, you’re facing the biggest changes. Each agency may require you to use their preferred umbrella company, potentially meaning separate payrolls for different assignments.
Your immediate steps:
- Audit your current arrangements – List all your agencies and current umbrella relationships
- Initiate conversations – Contact each agency to understand their JSL compliance strategy
- Understand the tax implications – Multiple employments mean only one can use your personal tax allowance; others will use BR coding
- Plan your finances – Budget for potential short-term cash flow impacts while year-end tax balances sort themselves out
Why We’re Confident You’ll Want to Stay With Us
At SmartWork, we’re not just preparing for April 2026 – we’ve been ready for years.
We have been an FCSA (Freelancer and Contractor Services Association) Accredited member and APSCo (The Association of Professional Staffing Companies) Trusted partner for the last decade, undergoing yearly audits and compliance checks.
Our compliance framework, transparent operations, and established relationships with major agencies position us as a natural choice for their approved provider lists.
Here’s what sets us apart:
Proven Compliance Track Record – We’ve never engaged in tax avoidance schemes, and our audit history demonstrates consistent HMRC compliance.
Professional Expertise – Our compliance team includes qualified accountants and tax specialists who understand the complexities of contractor taxation and regulatory requirements.
Agency Relationships – We’re already working closely with recruitment agencies to understand their JSL strategies and ensure seamless transitions.
Continuity Promise – We’re committed to maintaining your employment continuity and protecting your workplace pension participation wherever possible.
Transparent Communication – No surprises, no false promises. You’ll always understand exactly how your pay is calculated and what deductions apply.
Your Next Steps: Don’t Wait for Clarity
HMRC is expected to release draft legislation details in mid-July, which will provide more clarity on the final form these proposals will take. However, smart contractors are already preparing based on HMRC’s clearly signalled direction. Here’s your action checklist:
This Month:
- Review your current umbrella arrangements
- Identify which agencies you work with
- Start conversations about their JSL preparations
By September 2025:
- Confirm which umbrella companies will be on your agencies’ approved lists
- Understand any required transitions
- Plan for potential short-term financial impacts
- Ensure assignments crossing April 2026 won’t require mid-contract umbrella changes
By January 2026:
- Complete any necessary umbrella company changes
- Ensure all paperwork and employment continuity is sorted
- Adjust your financial planning for the new tax year
The Bigger Picture: A Healthier Market for Everyone (If Proposals Become Law)
While change is never easy, if these proposed reforms are implemented as expected, they will create a more sustainable, transparent contracting market. Compliant umbrella companies like us will succeed, and contractors will benefit from:
- Greater certainty and stability
- Protection from aggressive tax schemes
- Clearer, more transparent pay arrangements
- Reduced risk of future tax liabilities
We’re Here to Support You Through This Transition
Change can feel overwhelming, but you don’t have to navigate this alone. Our dedicated support team is available to discuss your specific situation and help you plan for the transition.
Whether you’re currently our client or considering switching to a compliant provider, we’re committed to making this transition as smooth as possible. We’ve weathered regulatory changes before, and we’ll help you emerge stronger from this one as well.
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