Recruiters show high confidence in compliance, despite limited awareness of upcoming umbrella legislation

New data from Sapphire’s Contractor Census 2025 shows most recruitment agencies say they lack clarity about imminent umbrella company legislation, even though nearly all remain confident their umbrella partners will meet compliance expectations.

The annual report, which surveys the recruitment and contractor market on the latest trends and challenges they face, focuses on upcoming umbrella legislation changes coming next year. 

From 6 April 2025, new umbrella company legislation will introduce joint and several liability across the supply chain. Under this, umbrella companies, agencies, MSPs and in some cases the end client, can share legal liability for unpaid PAYE dependent on the supply chain. If the umbrella fails to pay the correct PAYE tax, HMRC can pursue payment from any liable parties.   

The Census found only one in five feel very informed about the changes, while 42% say they are only fairly informed and 26% say they need more detail. Despite this, 90% of agencies rated their confidence at 7 out of 10 or higher in their umbrella provider’s expected compliance performance.

While recruiters express strong trust in their umbrella partners, the research suggests clearer, shared guidance will help agencies and providers prepare smoothly for the April 2026 tax and liability changes.

Alex Moore, Chief Sales Officer at Sapphire, said: “These findings show a sector that trusts its partners but still needs support. Recruiters are relying on umbrella providers to get the detail right, yet many feel they do not have the depth of information they need to make fully informed decisions. Agencies that act now to strengthen supplier checks will reduce risk and protect their contractor supply chains.”

Preferred Supplier List (PSL) practices are already shifting. Ninety-two per cent of agencies operate a PSL and 65% actively review it. Compliance credentials drive selection – 66% require FCSA membership and 28% cite SafeRec accreditation – while service reliability, responsiveness and accurate payments remain the top operational priorities.

“Recruiters are seeking reassurance given the scale and complexity of this new legislation,” said Alex Moore. “With guidance and verified compliance across the supply chain, the changes are more than manageable – they present a clear commercial advantage.”

Recruiters also flagged several concerns about the Employment Rights Bill, including increased supply chain liability (27%), the planned regulation of umbrella companies from 2027 (25%) and higher compliance costs (25%). Views on umbrella use are mixed, with 30% expect usage to increase, 23% expect little change and 35% are unsure.

For the full Contractor Census 2025 and guidance for recruitment agencies, read the report at: https://wearesapphire.co.uk/contracting/contractor-census/

Press contact
Amy Hall, MC2
Amyh@thisismc2.com 

About Sapphire
Sapphire is a contracting and accountancy business that exists to unlock ambition. We support recruitment agencies and contractors with compliant umbrella, CIS and accountancy services, plus back-office technology to simplify pay and bill processes. For more information visit www.wearesapphire.co.uk.