The future of umbrella company compliance in the UK
What is already law, what is expected in 2027, and what agencies and umbrella companies should do now.
Umbrella companies are moving from light-touch oversight to full regulation. Part of that is already in force; the rest is expected in 2027.
Already in force
- Since 6 April 2026: HMRC can recover unpaid umbrella PAYE from the agency, or the end client if there is no agency. See our April 2026 hub.
- Since 6 April 2020: agency workers must receive a Key Information Document before agreeing terms.
Expected in 2027
The Employment Rights Act 2025 changes the definition of "employment business" to include handling a worker's pay. According to the government's factsheet on umbrella companies:
- Umbrella companies are expected to come within the rules for the temporary labour market in 2027.
- The Fair Work Agency will regulate them, as it does other parties in agency supply chains.
- The government will consult on how the Conduct Regulations should apply to umbrella companies. The detail has not yet been decided.
What to do now
- Agencies: review every umbrella in your supply chain, keep records of your checks and move to a controlled preferred supplier list.
- Umbrella companies: make pay and deductions fully transparent and keep records that would stand up to inspection.
Frequently asked questions
Who will regulate umbrella companies?
Once the changes take effect, the Fair Work Agency is expected to regulate umbrella companies.
Is the 2027 date confirmed?
The government expects regulation to take effect in 2027. The detail depends on consultation and secondary legislation.
Need help with this? Our payroll and compliance team can talk it through with you. Talk to our team.
Last reviewed 9 October 2026. General information, not legal or tax advice.