What's Happening?
The forthcoming joint and several liability (JSL) provisions within umbrella legislation, effective April 6, 2026, will change how UK contingent labor is engaged. The new rules place direct tax liability on clients
and recruitment agencies if an umbrella company fails to remit PAYE or national insurance contributions. HR leaders must anticipate these changes and develop contingency plans to avoid disruptive workforce model redesigns. The legislation flips the risk landscape, making umbrellas riskier than IR35, which has seen reduced risk due to recent legal clarifications.
Why It's Important?
The JSL legislation introduces significant tax liability risks for businesses using umbrella arrangements. HR teams must act promptly to avoid exposure to catastrophic tax risks and ensure workforce continuity. The legislation's complexity requires HR professionals to understand its implications, engage with leadership, and plan operational changes. The shift in risk dynamics highlights the need for strategic planning and proactive compliance to mitigate potential disruptions and financial liabilities.
What's Next?
HR leaders should study the legislation, engage with their boards, and plan for operational impacts. They must consider alternative workforce models and ensure compliance with the new rules. The legislation's rolling liability window poses ongoing risks, requiring diligent monitoring and contingency planning. HR professionals must prepare for April 2026 to avoid irreparable damage to their firms and ensure smooth transitions in workforce management.
