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Out with the old: strengthening your umbrella PSL for 2026
Throughout 2025, umbrella company regulation remained a hot industry talking point. Now, as we look ahead into 2026, we now know what this reform looks like – and it’s a big shift.
From 6th April 2026, joint and several liability (JSL) will kick in where there is an umbrella company in the supply chain. This means that if the umbrella fails to pay the correct PAYE tax and NIC, HMRC can recover the unpaid amounts directly from the recruitment agency, or from the end client, where there is no agency involved.
JSL: what it means for recruitment agencies
For agencies, this is a legally enforceable responsibility that applies regardless of knowledge or intent (no statutory excuse).
With JSL now hanging over them, it’s only right that agencies are intensifying their scrutiny of payroll providers. This is far from a bad thing! The changes coming into force in 2026 finally give the industry the authority to remove poor practice for good, by kicking non-compliant umbrellas to the kerb.
Reviewing and streamlining your PSL
In preparation for this change, many agencies are already assessing their Preferred Supplier Lists to ensure that only fully compliant umbrella companies remain. While this process is necessary, it doesn’t have to be disruptive.
A refined PSL can actually improve control, reduce administration and give far greater visibility over PAYE processes, costs and the breakdown of the assignment rate. Just as importantly, it benefits contractors too, giving them greater confidence that their pay is accurate, their deductions are correct, and their employment rights are protected.
Fewer suppliers, stronger partnerships and tighter oversight will quickly become the norm.
Compliance is the baseline – what else should agencies look for?
For those umbrella partners that meet the higher bar for compliance, agencies shouldn’t neglect other areas of differentiation when it comes to making the cut.
Technology that delivers clear reporting and real-time access to information is a critical value-add. Stride’s compliance hub, for example, provides agencies with full visibility of PAYE and employment data, making oversight simple.
Strong service levels for both agencies and contractors, and meaningful contractor benefits also remain important. Compliance is now the baseline, while everything else builds the full picture of a solid PSL.
Communicating PSL changes to contractors
Agencies also have to consider carefully how they explain these changes to contractors. The message should be positioned positively; that regulation is being introduced to protect workers, strengthen transparency, and remove bad actors from the supply chain.
Communications to contractors should reinforce that enhanced due diligence is in place and that they can remain confident in the way their pay, deductions and employment rights are handled. Done well, this communication strengthens trust rather than unsettling it.
How Liquid Friday supports you
We’re here to support agencies through the transition to a streamlined, strengthened PSL, easing the process for internal teams and ensuring contractors experience minimal disruption.
Refining your PSL now isn’t just about preparing for the risks and obligations ahead, it’s about raising standards across the supply chain. With the right partners in place, 2026 can really be the year the industry moves “out with the old” for good.
Click below for a demo of Liquid Friday’s Stride technology.