The post will take around three to four minutes to read. It is important, and will help you understand what is coming and what you may need to prepare for.

I wanted to give you a straight, honest overview of what is happening across the umbrella and payroll world ahead of the Autumn Budget. There are meaningful changes on the the way that will affect how recruitment businesses manage their supply chains, their payroll models, and their responsibilities to workers. My ain here is simple. I want you to have the facts, the likely timelines and the areas that will need early attention before anything becomes law.

The shake-up has started, and agencies must get their supply chain in order before April.

Recently, an umbrella company collapsed owing more than £2 million after advancing money to recruitment clients on extended credit terms. When those clients did not repay the funds, the umbrella could not meet its liabilities. The result was contractors left unpaid and agencies exposed.
(Source: Freelance Informer) 

This is not a one off. It reflects the wider pressure in the market and why the Government is now moving quickly. The direction is clear. The market is being pushed towards financial stability, real transparency, and full compliance. 

What is happening on 26 November
The Autumn Budget is expected to set out the next stage of changes to umbrella legislation and the Employment Rights Bill. This will likely be the clearest picture yet of how the new compliance framework will work and how responsibility will be shared, monitored, and enforced. 

A first for the industry
For the first time ever, REC, APSCo, FCSA and HMRC have sat at the same table to help shape this legislation. Together, they are focused on three things:

• stopping the hundreds of millions lost each year through non-compliant payroll models
• improving protection for everyday workers
• removing non-compliant payroll and recruitment businesses from the market permanently

This level of collaboration has never happened before. It signals a real shift in how the sector will operate in the future. 

Timescales to implementation
Current expectations are:

• The big announcements will be made on 26 November.
• More detail will follow in the months after.
• The transition period will run throughout 2025.
• Full enforcement is expected from April 2026.

This gives everyone roughly 12 to 16 months to prepare properly. (Would probably leave this information out. If someone gets done, could quote it OR might slow down decision making) 

What this means for recruitment businesses
One of the biggest areas under consideration is joint and several liability. Agencies OR end clients will be held responsible for PAYE failures or non-compliance carried out by any umbrella in their supply chain.

There is also strong expectation that the Employment Rights Bill will introduce day one rights for many workers. This will not only affect umbrella users, it will also impact agencies running their own PAYE. Processes, documentation, internal capacity, and onboarding workflows may all need to change. 

Changing market behaviour
Depending on their setup, agencies will respond differently:

• Many will continue using umbrella providers
• Some will change how they work with them
• Some will bring payroll in-house
• Many will outsource their in-house payroll for extra support and protection

If you are thinking about changing your payroll structure, especially bringing PAYE in-house, or outsourcing it, the planning needs to start before the Employment Rights Bill takes effect in April. 

What we will be doing
Over the next couple of weeks, we will keep a close eye on everything released by Government, HMRC, industry bodies and legal advisers. As soon as confirmed information is available, we will share it in a clear, easy to understand way so you can prepare with confidence.

In the final days before the Budget, we will also share a five-day countdown. Each message will focus on one key part of the reforms and what agencies should be thinking about ahead of the announcement. 

New Red Planet holds dual FCSA accreditation for umbrella and PAYE. This means we already work to the standards that will be expected once the new framework is in place. If at any point you want clarity on what the changes could mean for your setup, or you simply want to talk through the likely impact, you are always welcome to reach out. I am here to help where needed.

Contact Steve McDermott if you would you like to know a little more about the risk and benefit of outsourcing you contractor payroll, and have No-obligation chat:

steve.mcdermott@newredplanet.com or 07854 881 220 or 0161 713 1730

A recent feature in The Recruiter by law specialists Brabners has underlined the growing risks facing recruitment agencies that use non-compliant umbrella companies. As the sector evolves these risks are becoming harder to ignore.

HMRC estimates that more than £500 million in tax was lost in 2022/23 through umbrella non-compliance. As a result the Government will introduce new joint and several liability rules from April 2026.

These will allow HMRC to pursue agencies and end clients for unpaid PAYE if any umbrella within their supply chain fails to meet its responsibilities.

The Autumn Budget is now just 15 days away. By the afternoon of 26 November, we will know the final details of the Umbrella Legislation and the Employee Rights Bill.

Recruitment agencies should be using this time to review their supply chains and ensure every partner they work with meets the highest compliance standards. 

At New Red Planet (NRP), we already have those safeguards in place. As one of the UK’s leading FCSA-accredited umbrella organisations, we help recruiters streamline, protect and future proof their businesses through a comprehensive range of compliant workforce solutions.

Solutions:

👉 Umbrella PSL
👉 Bureau (in-house PAYE setup)
👉 Outsourced payroll bureau (for recruiters who want internal control with external support)
👉 CIS and Limited Company solutions
👉 Back Office Support
👉 PSL and ASL advice and setup
👉 HR and tax advice
👉 Full accountancy support

This means NRP are in the very envious position of being able to manage as much or as little as you wish in the build-up to, during, and after the legislation is passed and becomes a new reality for everyone on 6 April 2026.

In short our model provides the flexibility agencies need as the industry moves into a stricter compliance era.

Our integrated approach provides transparency, efficiency and peace of mind at every stage of the labour supply chain. As a result, it protects agencies and end clients well ahead of the 2026 reforms.

To discuss how NRP can strengthen and future proof your payroll and compliance setup, contact our team today for a no-obligation chat.

Contact Steve McDermott if you would you like to know a little more about the risk and benefit of outsourcing you contractor payroll, and have No-obligation chat:

steve.mcdermott@newredplanet.com or 07854 881 220 or 0161 713 1730