In response to widespread tax evasion in the labour sector, the UK government is changing who pays PAYE and NICs in umbrella company structures to ensure accountability.
Rachel Reeves highlighted in the Autumn Budget that from April 2026, PAYE and NICs responsibilities shift from umbrella companies to the recruiting agency or end-client, aimed at reducing non-compliance.
The government's initiative targets the temporary labour market, striving to 'close the tax gap' and 'make the tax system fairer,' ensuring workers are not unexpectedly burdened with tax bills.
Despite existing compliance requirements, the umbrella company market continues to suffer from non-compliance, necessitating government intervention to clarify responsibilities and improve standards.
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