As reported by OnRec, businesses that hire contractors are being urged to review their arrangements ahead of major changes in 2026

From April, HMRC can hold not just umbrella companies but also recruitment agencies and end clients liable for unpaid PAYE and National Insurance, increasing the responsibility for businesses that engage contractors.

The umbrella sector is also set for formal regulation in 2027, meaning small businesses will need to be more diligent when selecting providers to avoid risks from non-compliant companies. Meanwhile, contractors operating through limited companies will face higher taxes, including a rise in dividend tax, which may affect contractor rates and take-home pay.

Experts warn that small businesses must act now to ensure compliance, check supplier credentials and plan for the financial impact.