Legislation – Finance Act 2026

“Chapter 11Umbrella companies

61YUmbrella companies: joint and several liability

(1)

Subsection (2) applies if—

(a)

an individual (“the worker”) personally provides services, or enters into arrangements with a view to personally providing services, to another person (“the client”),

(b)

the worker is employed by a third person (“the umbrella company”)—

(i)

that carries on a business (whether or not with a view to profit and whether or not in conjunction with any other business) of supplying labour, and

(ii)

that is not a company in which the worker has a material interest, and

(c)

the umbrella company arrangements conditions are met.

(2)

Each relevant party (see section 61Z) is, along with the umbrella company, jointly and severally liable to pay any amount payable, in accordance with the PAYE provisions, by the umbrella company in relation to a qualifying umbrella company payment.

(3)

A “qualifying umbrella company payment” means a payment made in respect of the employment of the worker to the extent that it is not in respect of the provision of services to a person other than the client.

(4)

The umbrella company arrangements conditions are that—

(a)

there is a contract between the umbrella company and—

(i)

the client, or

(ii)

another person,

(b)

under or in consequence of the contract—

(i)

the services are provided, or

(ii)

the umbrella company is paid, or otherwise provided with consideration, for the services, and

(c)

if the contract is not between the umbrella company and the client—

(i)

there is a contract between the client and another person,

(ii)

the provision of the services or of payment or other consideration for the services is also a consequence of that other contract (whether directly or as a result of a series of contracts involving other persons).

(5)

For the purposes of subsection (1)(b)(ii)—

(a)

“material interest”, in relation to a company, means—

(i)

beneficial ownership of, or the ability to control, directly or through the medium of other companies or by any other indirect means, more than 5% of the ordinary share capital of the company,

(ii)

possession of, or entitlement to acquire, rights entitling the holder to receive more than 5% of any distributions that may be made by the company, or

(iii)

where the company is a close company, possession of, or entitlement to acquire, rights that would in the event of the winding up of the company, or in any other circumstances, entitle the holder to receive more than 5% of the assets that would then be available for distribution among the participators, but

(b)

the worker is to be regarded as not having a material interest in a company if that interest is a result, to any extent, of any arrangements the main purpose, or one of the main purposes, of which is to secure that subsection (2) does not apply.

(6)

And for the purposes of subsection (5)(a) “participator” has the meaning given by section 454 of CTA 2010.

(7)

In this Chapter—

“arrangements” include any agreement, understanding, scheme transaction or series of transactions (whether or not legally enforceable);

“the client”, “the umbrella company” and “the worker” are to be construed in accordance with subsection (1);

“employed”, in relation to an individual, does not include the individual being treated as employed as a result of any of—

(a)

Chapters 7 to 10 of this Part (deemed employment by intermediaries), or

(b)

section 863A of ITTOIA 2005 (deemed employment of partners in limited liability partnerships),

and “employer” is to be construed accordingly;

“PAYE provisions” means the provisions of Part 11 or PAYE regulations;

“the umbrella company arrangements conditions” means the conditions set out in subsection (4).

61ZRelevant parties

(1)

If the contract referred to in subsection (4)(a) of section 61Y is between the umbrella company and a person other than the client, the person referred to in subsection (4)(c)(i) of that section is a relevant party.

(2)

The client is a relevant party if—

(a)

the contract referred to in subsection (4)(a) of that section is between the umbrella company and the client, or

(b)

the person referred to in subsection (4)(c)(i) of that section—

(i)

is connected with the umbrella company, or

(ii)

is non-UK resident.

(3)

In a case where—

(a)

both the client and the person referred to in subsection (4)(c)(i) of section 61Y are non-UK resident,

(b)

the provision of the services or payment or other consideration for the services is a consequence of a series of contracts involving other persons (other than the worker), and

(c)

at least one of those persons is UK resident,

the person who is UK resident and is closest, by reference to that series of contracts, to the client is a relevant party.

61Z1Purported umbrella companies

(1)

Subsection (5) applies if any of the following cases applies.

(2)

Case 1 is that—

(a)

a person (“the purported umbrella company”) participates in arrangements that would, if an individual were employed by the purported umbrella company, result in the umbrella company arrangements conditions being met in relation to services the individual provides to the client,

(b)

either—

(i)

it is reasonable to suppose that one or more participants in the arrangements, other than the purported umbrella company or the individual, would assume that the purported umbrella company is the employer of that individual, or

(ii)

the purported umbrella company has taken any step that it is reasonable to suppose was intended to give the impression to any person (whether or not that impression is given) that the purported umbrella company is the employer of the individual,

(c)

the individual is not employed by the purported umbrella company, and

(d)

if the individual were employed by the purported umbrella company subsection (2) of section 61Y would apply.

(3)

Case 2 is that—

(a)

a person (“the purported umbrella company”) participates in arrangements that would, if an individual were employed by the purported umbrella company, result in the umbrella company arrangements conditions being met in relation to services the individual provides to the client,

(b)

the individual would, ignoring this section, be treated as employed by the purported umbrella company as a result of Chapter 7 of this Part,

(c)

if the individual were employed by the purported umbrella company subsection (2) of section 61Y would apply,

(d)

if it did apply accordingly, the contract referred to in subsection (4)(a) of that section would be between the umbrella company and the client, and

(e)

the provision of the services by the individual to the client was not as a result of services having been provided to the individual in connection with finding the client with a view to the individual personally providing services to the client—

(i)

by the purported umbrella company, or

(ii)

where the provision of services to the client is as a result of a series of contracts, by one or more of the parties to those contracts.

(4)

Case 3 is that—

(a)

a company (“the purported umbrella company”) in which an individual has a material interest, within the meaning given by subsection (5)(a) of section 61Y, participates in arrangements that would, if the company were the umbrella company, result in the umbrella company arrangements conditions being met in relation to services the individual provides to the client,

(b)

either—

(i)

it is reasonable to suppose that one or more participants in the arrangements, other than the purported umbrella company or the individual, would assume that a substantial proportion of amounts provided to the purported umbrella company in respect of the services will be paid to the individual as earnings, or

(ii)

the purported umbrella company has taken any step that it is reasonable to suppose was intended to give the impression to any person (whether or not that impression is given) that a substantial proportion of amounts provided to the purported umbrella company in respect of the services will be paid to the individual as earnings,

(c)

it is not the case that a substantial proportion of amounts provided to the purported umbrella company in respect of the services is paid to the individual as earnings, and

(d)

subsection (2) of section 61Y would apply if subsection (1)(b)(ii) of that section (requirement that the umbrella company is not a company in which the worker has a material interest) were omitted.

(5)

If this subsection applies—

(a)

the individual is to be treated for income tax purposes as holding an employment with the purported umbrella company, the duties of which consist of the services the individual provides to the client,

(b)

all relevant remuneration is to be treated for income tax purposes as earnings from that employment,

(c)

where there is any provision of relevant remuneration (by any person and to any person) that does not result (whether as a direct result of that provision, as a result of the onward provision of that remuneration or otherwise) in the payment of PAYE income of that remuneration, or any part of it, to the individual, the purported umbrella company is treated as making, and the individual is treated as receiving—

(i)

a payment of PAYE income in the relevant amount made at the time it was provided for the purposes of the PAYE provisions, and

(ii)

a qualifying umbrella company payment made in the relevant amount at that time for the purposes of section 61Y(3),

(d)

Chapters 7 to 10 of this Part (deemed employment by intermediaries) do not apply in relation to the provision of those services,

(e)

section 863A (deemed employment of partners in limited liability partnerships) of ITTOIA 2005 does not apply so far as it otherwise would apply in relation to the provision of those services, and

(f)

accordingly, section 61Y(2) will apply in relation to the purported umbrella company.

(6)

For the purposes of subsection (5)—

(a)

in paragraph (c) the relevant amount means so much of the remuneration provided as does not result in the payment of PAYE income to the individual, and

(b)

that paragraph only applies in relation to the initial provision of an amount of relevant remuneration (and not to any subsequent onward provision of that same amount).

(7)

If subsection (5) would, ignoring this subsection, apply in relation to more than one purported umbrella company in relation to services the individual provides to the client, that subsection only applies in relation to the purported umbrella company that—

(a)

is a person to whom PAYE regulations apply and is closest to the individual, by reference to the contract or series of contracts resulting in the provision of those services, or

(b)

if none of the purported umbrella companies is a person to whom PAYE regulations apply, is closest to the individual by reference to that contract or those contracts.

(8)

Where subsection (5) applies and there is a person who is an umbrella company in relation to the services the individual provides to the client, that subsection has effect as if—

(a)

paragraph (a) were omitted,

(b)

in paragraph (b), the reference to that employment were to the employment of the individual by the umbrella company,

(c)

in paragraph (c), the reference to the purported umbrella company were to the umbrella company, and

(d)

paragraph (f) were omitted.

(9)

Subsection (10) applies where subsection (5) applies and there is more than one person who—

(a)

is an umbrella company in relation to services the individual provides to the client, or

(b)

is a purported umbrella company in relation to those services (including a purported umbrella company in relation to which subsection (5) does not apply as a result of subsection (7)).

(10)

Where this subsection applies, each of the persons falling within paragraphs (a) or (b) of subsection (9) is (to the extent this would not otherwise be the case) jointly and severally liable to pay any amount payable, in accordance with the PAYE provisions, in relation to the relevant remuneration.

(11)

For the purposes of this section “relevant remuneration” means—

(a)

all remuneration receivable by the individual (from any person) in consequence of providing the services, and

(b)

any other amount that it is just and reasonable to attribute to provision of the services by the individual (for example, any amounts that would form part of any deemed direct employment payment or deemed direct payment if any of Chapters 8, 9 or 10 of this Part applied).

61Z2Disclosures to liable persons

(1)

Subsection (2) applies where an officer of Revenue and Customs considers that a person is, or may be, jointly and severally liable to pay an amount as a result of this Chapter.

(2)

The officer may at any time disclose to the person such information as the officer considers appropriate (whether or not such a disclosure would otherwise be permitted under section 18(2)(a) of CRCA 2005 or any other enactment) for the purposes of informing the person about that liability (“the joint liability”) including—

(a)

the identity of any person who is an umbrella company, a purported umbrella company or the worker in relation to the arrangements to which the joint liability relates, and

(b)

information about the nature and extent of the liability of an umbrella company or a purported umbrella company that (by virtue of this Chapter) results, or may result, in the joint liability.

(3)

Information disclosed in reliance on subsection (2) may not be further disclosed without the consent of the Commissioners for His Majesty’s Revenue and Customs (which may be general or specific).

(4)

Where a person contravenes subsection (3) by disclosing information relating to a person whose identity—

(a)

is specified in the disclosure, or

(b)

can be deduced from it,

section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation to the disclosure as it applies in relation to a disclosure in contravention of section 20(9) of that Act.

(5)

In this section “CRCA 2005” means the Commissioners for Revenue and Customs Act 2005.”

“(4A)

But where the fraudulent documentation condition would (ignoring this subsection) be met as a result of the provision of a fraudulent document intended to constitute evidence that section 61Y (umbrella companies) applies in relation to the services provided by the worker, that condition is to be treated as not met.”

1. “7ZA.

   Provision in connection with the recovery of amounts to which a person is jointly and severally liable as a result of Chapter 11 of Part 2 (umbrella companies).”

“(5A)

Where a person is jointly and severally liable to pay an amount as a result of Chapter 11 of Part 2 of ITEPA 2003 (umbrella companies)—

(a)

this regulation applies to that amount as it applies to an amount of tax payable by an employer (and the references to “the employer” in paragraphs (2) and (5)(b) are to be read accordingly),

(b)

in cases that operate by reference to a determination made, or that may be made, under this regulation in relation to the person, the references to “the employer” in the following provisions are to be treated as references to the person—

(i)

regulation 81(4) (employee liability if tax unpaid after regulation 80 determination), and

(ii)

regulation 97P(1) (persons from whom security for PAYE can be required), and

(c)

the references to “the employer” in regulation 72E(6) and regulation 72F (recovery from employee of tax that has been self-assessed etc.) are to be treated as references to the person for the purposes of making a direction under section 72F in relation to the person.”