From April 2026, Joint & Several Liability (JSL) will fundamentally change how risk is shared across umbrella company supply chains, shifting liability for unpaid PAYE and NICs onto agencies and, in some cases, end clients. This blog explains what JSL is, who is affected, the practical impact on contractors, agencies and end clients, and how a compliance‑first partner like Riddingtons Payroll can help you prepare with confidence.
Joint & Several Liability (JSL) is a major reform to how umbrella company supply chains are policed, shifting the risk of unpaid PAYE and NICs away from contractors and firmly onto agencies and, in some cases, end clients from April 2026. For Riddingtons Payroll’s contractors, agencies and end clients, this is both a protection and a wake-up call to tighten compliance and supplier checks well before the new rules bite.
Under the new JSL rules, if an umbrella company fails to pay the correct PAYE tax or National Insurance on workers’ earnings, HMRC will be able to recover the unpaid amounts from others in the supply chain. In practice, that means the recruitment agency is next in line, and where there is no agency, the end client may become liable.
For contractors, the key point is that they should no longer be the first target for historic tax debts created by non‑compliant umbrellas using disguised remuneration or failing to pay over deductions. However, HMRC will still expect individuals to have exercised reasonable care and may pursue them if there is evidence of collusion or deliberate avoidance.
The reforms touch every party in a typical umbrella supply chain and change the risk profile significantly.
JSL is designed to squeeze non‑compliant umbrella companies out of the market and protect workers from surprise tax bills, but there will be practical consequences. Agencies are expected to become far more selective about which umbrella providers they will approve, tightening PSLs and insisting on clear compliance evidence and accreditation.
Contractors, especially those working across multiple agencies, may find they have to use different umbrellas for different assignments or move away from their preferred provider if it does not meet new compliance expectations. This could create short‑term disruption to pay, tax codes and budgeting as multiple employments are created and personal allowances are allocated across roles.
For agencies and end clients, a compliant, transparent payroll partner becomes essential rather than optional under JSL. Working with an accredited, audited provider like Riddingtons Payroll gives you a clear, documented line of sight over PAYE calculations, RTI submissions and payments to HMRC, helping you evidence reasonable governance when HMRC asks difficult questions.
For contractors, partnering with a recognised, compliance‑first payroll provider helps ensure that deductions are correct, paperwork is in order and there is no exposure to aggressive schemes that could trigger retrospective investigations. Riddingtons Payroll is already supporting workers in sectors such as healthcare and construction, where umbrella and CIS arrangements are common and scrutiny is increasing.
To show leadership and be ready for April 2026, agencies, end clients and contractors should start planning now rather than waiting for the final deadline.
Riddingtons Payroll is available to review existing arrangements, support PSL design, and onboard contractors into a robust, fully compliant payroll solution ahead of the JSL go‑live date.
