Umbrella Company Reforms - Frame 25 Guide

Why umbrella companies matter to broadcast production

The broadcast and media sector has long relied on flexible workforce models to meet the demands of project-based production. From camera operators and sound engineers to production coordinators and editors, thousands of freelancers work through umbrella companies to access opportunities across multiple clients while avoiding the administrative burden of running their own limited company.

Umbrella companies sit between recruitment agencies and workers, acting as the legal employer. They handle payroll, deduct tax and National Insurance at source, and provide benefits like statutory sick pay and holiday entitlement. At their best, they offer a straightforward solution for both workers and agencies.

However, the sector has attracted bad actors. Some umbrella companies have used disguised remuneration schemes or failed to properly account for PAYE, leaving workers facing unexpected tax bills and enabling fraud that costs the Treasury hundreds of millions annually.

The problem: a market plagued by non-compliance

HMRC estimates that umbrella company non-compliance costs the Exchequer around £500 million per year. The scale of the problem has grown as unscrupulous operators exploit the ease with which new umbrella companies can be established, often disappearing before HMRC can act and reappearing under different names.

For workers, the consequences have been severe. When umbrella companies fail to remit tax properly, HMRC has historically pursued individual workers for the shortfall, even when those workers had no knowledge of any wrongdoing. Tax bills running into tens of thousands of pounds have destroyed lives and pushed families into financial hardship.

The current regulatory landscape has proven inadequate. While membership and accreditation bodies have worked to drive up standards, non-compliant models persist. Agencies have been able to distance themselves from the umbrella companies in their supply chains, claiming they cannot control how those businesses operate.

What's changing: joint and several liability

From 6 April 2026, new legislation will fundamentally alter the compliance landscape. Under the Joint and Several Liability (JSL) rules, recruitment agencies will become legally responsible for any PAYE and National Insurance that umbrella companies in their supply chain fail to remit to HMRC.

Where workers are engaged directly by an umbrella company without an agency intermediary, this liability will fall to the end client organisation.

In practice, this means that if a broadcast production company uses an agency to supply crew, and that agency allows workers to be paid through a non-compliant umbrella, the agency will be liable for any unpaid tax. HMRC can pursue the agency for the full amount, regardless of whether the umbrella company still exists or has any assets.

The government's policy paper, published at Autumn Budget 2024, makes clear that this represents a deliberate shift in enforcement strategy. Rather than continuing to chase individual workers or attempting to shut down non-compliant umbrellas one by one, HMRC will target the businesses with the power to control labour supply chains.

Who will be affected?

The legislation will impact approximately 30,000 recruitment agencies across all sectors, around 400 umbrella companies, and the 700,000 workers who currently rely on umbrella company arrangements.

Within broadcast and media production, the implications are particularly significant. The sector's project-based nature means that agencies frequently supply freelance crews to productions, with many workers moving between different productions and different agencies throughout the year.

Demographic patterns suggest younger workers are particularly affected. HMRC data indicates that workers aged 18-34 are overrepresented among those using umbrella companies, making up around 50% of the population compared to 25% of the UK working population overall. In the broadcast sector, where entry-level positions and junior crew roles often operate through umbrella arrangements, this age group may face disproportionate disruption during the transition period.

The recruitment agency response: expect tighter controls

Agencies will respond to their new liability exposure by implementing significantly more rigorous due diligence on the umbrella companies they work with. One-off familiarisation costs are estimated at around £10 million across the industry, with ongoing due diligence adding approximately £22 million in annual administrative costs.

For broadcast freelancers, this will likely manifest in several ways. Agencies will maintain shorter approved lists of umbrella providers, favouring those with established accreditations, regular independent audits, and transparent pay structures. Some agencies may choose to bring payroll in-house entirely, eliminating umbrella companies from their supply chains.

The transition period may prove particularly disruptive. Workers could find themselves moved from their current umbrella to a different provider, or switched to direct agency PAYE. Each change of employer triggers a leaver/starter process with HMRC, potentially leading to incorrect tax codes, temporary over or under-payments, and complications with workplace pensions.

Will umbrella companies disappear?

Despite the increased regulatory pressure, umbrella companies are unlikely to disappear entirely from the broadcast labour market. Compliant operators already implement the practices that the legislation is designed to encourage, and they provide genuine value to both workers and agencies.

However, the market will consolidate. Smaller umbrella companies without the resources to demonstrate compliance through regular audits and transparent reporting may struggle to secure agency partnerships. Larger, established operators with robust compliance frameworks will likely see increased market share.

Some industry observers predict that the legislation will finally eliminate the race to the bottom that has allowed non-compliant operators to undercut legitimate businesses. By removing the cost advantage that comes from failing to properly account for tax, the reforms should enable compliant umbrella companies to compete on service quality rather than price alone.

The end client perspective: production companies take note

While most attention has focused on recruitment agencies, production companies that engage workers directly through umbrella companies should take careful note of their own potential exposure. Where there is no agency in the supply chain, the end client becomes jointly and severally liable for any PAYE shortfall.

For broadcast production companies, this has implications for both permanent umbrella arrangements and ad-hoc bookings. Companies that directly engage freelancers through umbrella providers will need to implement their own due diligence processes, verify compliance regularly, and maintain detailed records of their checks.

The legislation may encourage more production companies to engage workers through established agencies rather than contracting directly with umbrella companies, effectively outsourcing the compliance risk even at the cost of higher agency margins.

Alongside JSL: mandatory tax adviser registration

The umbrella company reforms do not operate in isolation. From 1 April 2026, HMRC will also implement mandatory registration for tax advisers, creating minimum standards for those who provide tax advice or operate payroll services.

The interaction between these two reforms remains unclear. Umbrella companies process payroll as employers, suggesting they may fall outside the scope of tax adviser registration. However, some also provide accountancy services and promote particular pay structures, which could bring them within scope.

If umbrella companies must register as tax advisers and fail to meet the requirements, they could temporarily lose the ability to interact with HMRC, including making payroll submissions. This would create immediate operational chaos for workers, agencies, and production companies.

At the time of writing, HMRC has not yet clarified which umbrella companies will need to register. Further guidance is expected at Autumn Budget 2025.

Frequently asked questions

When do the changes take effect?

The Joint and Several Liability rules will apply from 6 April 2026. The new tax year provides a clean break for agencies and umbrella companies to implement necessary changes.

Will I still be liable for tax if my umbrella company fails to pay HMRC?

In most cases, no. The JSL rules are designed to shift liability away from workers and onto agencies or end clients. However, some exceptions may still apply, particularly where HMRC can demonstrate that a worker actively colluded in tax avoidance or deliberately provided false information. Further HMRC guidance is expected to clarify these circumstances.

What should I look for in a compliant umbrella company?

Key indicators include membership of recognised industry bodies, regular independent audits, clear and itemised payslips showing exactly what has been deducted and why, and straightforward contact with knowledgeable payroll staff. Be wary of any provider offering unusually high take-home pay, confusing documentation, or schemes that sound too good to be true.

Will I be forced to change umbrella company?

Potentially. Your agency may review its approved supplier list and remove providers that cannot demonstrate compliance. If your current umbrella is not on the revised list, you will need to move to an approved alternative or potentially transfer to direct agency PAYE.

What happens if I have to change employer?

You will go through a leaver/starter process. Your old employer will issue a P45, and your new employer will inform HMRC of your new employment. HMRC may issue a new tax code, which could be incorrect in the short term, potentially causing temporary over or under-deduction of tax. You may also need to re-enrol in workplace pension schemes and set up new payment arrangements.

Will my take-home pay change?

If you move from a compliant umbrella to another compliant umbrella or to direct agency PAYE, your take-home pay should remain broadly similar, subject to minor differences in employer costs and margins. If you were previously with a non-compliant umbrella offering artificially inflated take-home through tax avoidance, you will see a reduction to the correct, legal amount.

How can I protect myself during the transition?

Keep detailed records of all contracts, payslips, correspondence with agencies and umbrella companies, and any communications from HMRC. Check your payslips carefully each month to verify that tax and National Insurance are being deducted correctly. Stay informed through reputable sources about changes in the market, and seek professional advice if you receive unexpected tax bills or communications from HMRC.

What should Frame 25 clients do?

Production companies and broadcasters should review their contractor engagement models now, before the April 2026 deadline. Verify the compliance status of any umbrella companies used directly, implement due diligence processes for ongoing monitoring, and consider whether changes to workforce models might better serve their operational needs. Frame 25 can advise on compliant workforce solutions tailored to broadcast production requirements.

The wider implications: towards a more transparent market

Beyond the immediate compliance requirements, these reforms signal a broader shift in how temporary labour markets operate. The government's Plan to Make Work Pay emphasises raising standards across all forms of work, and the umbrella company changes form part of this wider agenda.

For the broadcast sector specifically, the reforms arrive at a time of significant structural change. The growth of streaming platforms, the evolution of production models, and ongoing debates about freelancer rights and working conditions all intersect with these tax compliance questions.

In the long term, a cleaner, more transparent umbrella market should benefit everyone. Compliant businesses will compete on a level playing field, workers will have confidence that their tax is being properly handled, and HMRC will collect the revenues owed. The transition period may prove uncomfortable, but the destination is worth reaching.

Resources and further information

• HMRC policy paper on umbrella company market changes
• Low Incomes Tax Reform Group (LITRG) guidance for contractors
• ContractorUK umbrella company guides

Frame 25 specialises in recruitment for broadcast, media and technology sectors. We work with compliant workforce solutions and can advise on contractor engagement models that meet both operational needs and regulatory requirements. For guidance specific to your production or organisation, contact our team.