Understanding Joint & Several Liability Reforms for UK Umbrella Payroll

F rom 6 April 2026, HMRC will extend its ability to recover unpaid PAYE tax and National Insurance Contributions (NICs) beyond umbrella companies to other parties in the supply chain, such as recruitment agencies or end clients. This measure addresses long-standing concerns over tax avoidance in the umbrella sector and ensures genuine businesses remain accountable for their umbrella partners' compliance.

Failing to prepare for JSL could expose your agency to significant liabilities—even if you have conducted diligent checks—because the proposed rules do not include a “reasonable care” defense.

What Is Joint & Several Liability?

Joint & Several Liability means multiple parties in a contractual chain can each be held responsible for the entire amount of any unpaid tax debt. Under the proposed model, if an umbrella company fails to account for PAYE tax or NICs, HMRC can demand the unpaid amount from the recruitment agency or, in the absence of an agency, the end client.

Key Points

Umbrella companies remain the primary PAYE processor.
Agencies & end clients become backup debtors if the umbrella defaults.
No “reasonable care” defence means liability applies regardless of due diligence.

Why Is HMRC Introducing JSL?

In its Autumn Budget 2024 response, the government highlighted the need to clamp down on non-compliant umbrella operators and recover an estimated £500 million by 2029–30 from unpaid liabilities.

By making agencies and clients jointly liable, HMRC aims to:

Level the playing field for compliant providers.
Deter tax avoidance schemes in temporary labour markets.
Protect workers from unexpected tax bills if an umbrella company collapses

How ASA Pay Solutions Protects You

ASA Pay Solutions offers specialist consultancy—no portals or automated dashboards—focused on manual processes and expert support:

Expert Compliance Reviews
In-depth manual assessments of umbrella partners’ PAYE and NIC records.
Comprehensive Due Diligence
Detailed checklists and documentation to verify umbrella company legitimacy.
Contractual Safeguards
Customised contract clauses to cap or mitigate your liability in supply-chain agreements.
Dedicated Support
Direct telephone and email advice as legislation evolves, ensuring you stay ahead of deadlines.