We’ve posted before about concerns over some unscrupulous operators in the sector, planned Government regulation to address this, and how you can ensure the Umbrella Company you choose is fully accredited (which we’ll recap further in this blog). With the first major stage of legislation due, in this blog we’ll cover important discussions, developments, drafts and dates.
Umbrella Company Solutions- Recap
An Umbrella Company, or PAYE Umbrella, acts as an intermediary between the self-employed contractor, and the end client or agency, seamlessly dealing with all salary, payroll, accountancy and taxation administration across multiple contracts, and avoiding time-stealing admin and potential regulatory pitfalls. Offering a wealth of benefits, including smooth continuity of pay, tax deductions, pension contributions and statutory benefits, since their inception around 20 years ago, Umbrella Solutions are increasingly the preferred means of payment for companies and contractors alike.
Sadly, a minority of unscrupulous companies promote attractive but non-compliant solutions, in reality benefitting only themselves, and leaving the contractor at risk of ending up with a huge unpaid tax bill and potential HMRC litigation. Not only is ICS Umbrella fully compliant, accredited and independently audited, we are open and vocal about supporting contractors to make safe Umbrella choices, whoever they go with. We 100% support appropriate Government legislation to regulate the Umbrella market, and are proactive in keeping up with all developments, messaging, and communicating this to those affected.
Latest Umbrella Regulation Developments and Proposals
HMRC and Treasury officials recently met with a task force of Umbrella and recruitment industry representatives to discuss their proposals, initially including moving the liability of employee PAYE fully onto recruitment agencies. While we understand the ambition, and necessity, of removing bad players from the market, this was not considered a prudent solution (a hammer to crack a nut?), by either industry, removing the responsibility from those with the expertise, rigour and compliance to provide it, and putting it onto recruitment (not PAYE and taxation) specialists.
This was discussed in a laudably open, honest and positive meeting, with the likely outcome (excepting further changes) that PAYE administration will remain with the Umbrella companies, but the agreement of agencies to be equally accountable should a tax liability occur. This is a very sensible, effective and enforceable solution, capitalising on the specific strengths and competences of each sector, fostering closer working together and communication, and providing a clear regulatory framework designed to squeeze any bad actors out of the industry.
Next Steps
Publication in draft form is expected any day now. Following further discussion, refinement, committee, legal and voting stages, with further, we hope, industry involvement as it goes, it is proposed to come into effect April 2026.
As a 100% committed and compliant Umbrella provider, we’re very happy with any increased level of Umbrella scrutiny and regulation. Proud of both our long standing FCSA accreditation (the only provider to be approved for Umbrella, PEO, CIS and PSC/LTD), and our proactive SafeRec accreditation, which delivers real-time auditing, monthly reports and RTI checks.
This really is the time for recruitment agencies to ensure their supply chain is fully compliant. We’ve already started working with several new agencies to support them in doing so, and welcome all enquiries, even if it’s just for a sense check.
How do I Choose a Safe Umbrella Provider before the Legislation becomes Law?
Any reputable Umbrella Company should clearly display their certification, such as FCSA accreditation and SafeRec or similar forensic auditing, and these claims are very easy to independently verify:
Visit the FCSA website to find Umbrella Companies who have passed the FCSA’s rigorous and stringent, independently conducted annual Umbrella Company assessments. Use their search facility to confirm membership, what services that company is certified to offer, and what date next certification is due (ICS Accounting and ICS Umbrella have been FCSA accredited since 2017).
If a company states they are certified by a forensic payroll auditor like SafeRec, always check to confirm. For example, a search for ICS Accounting will confirm we are fully certified with SafeRec and in receipt of their four-stage auditing:
- Real-time Umbrella auditing
- Umbrella auditing at source
- Total transparency reporting
- Cross-referencing with HMRC’s Real-Time Information (RTI)
Want to learn more about ICS Umbrella?
Fully FCSA and SafeRec certified, ICS Umbrella will continue to provide contractors and independent workers with the simplicity, compliance and confidence of seamless payroll and tax administration, including employment rights, holiday and sick pay, and insurance.
Not only that, ICS Umbrella Employees unlock a huge range of members’ benefits, from huge discounts on shopping, travel and treats, tips and treatments in our Wellbeing Hub.
For more details and a personalised assessment to see if an Umbrella Solution would suit you, visit: www.icsuk.com/umbrella/, call one of our friendly team on 01524 580720, or email info@icsuk.com.
