Budget reaction: Government confirms JSL from April 2026 – what it means for agencies and MSPs

By Anthony Stevens, Business Change Director

The 2025 Budget removed any doubt: Joint and Several Liability (JSL) is coming on 6 April 2026. The government published a policy paper alongside the statement confirming the new Chapter 11 in Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), with matching provisions to be built into National Insurance. The direction is set – and the timeline is clear.

What Government confirmed
The policy paper reaffirms the legislative route and start date. JSL will be enacted through a new Chapter 11 in ITEPA 2003 and will apply from 6 April 2026. Similar provisions will extend to Social Security (National Insurance contributions). We now await the final 2025–26 Finance Bill to see if any drafting tweaks land, but no material shift is expected.

Crucially, the government recognises that many umbrella companies operate diligently, support their employees and provide clear administrative benefits for agencies and MSPs. The measure’s purpose is explicit; to encourage increased due diligence when businesses choose to use umbrella companies and to raise standards across the market.

Why this matters after the Budget
From April 2026, agencies and MSPs may face recovery risk if PAYE or NICs have not been correctly operated within their umbrella supply chain. That risk does not exist in the same way today. The intent is not to transfer employment responsibilities to agencies – it is to drive better selection and monitoring of umbrella partners.
The JSL rules increase supply-chain risk for agencies and MSPs, making documented due diligence and audit trails important to mitigate potential recovery of tax by HMRC.

What good due diligence looks like now
Agencies and MSPs that standardise evidence today will be best placed for 2026. At minimum, expect to see:

• Independent assessment of processes and standards (for example, FCSA accreditation, which the government acknowledges as helping drive up standards).
• Independent reporting to validate that PAYE and NICs are calculated correctly (for example, real-time payslip checking via SafeRec).
• Clear proof that PAYE and NICs are paid in full and on time.
• Strong financial position and controls, evidenced routinely.

If your umbrella partners can demonstrate the above on demand, your theoretical liability should not become a real one. For compliant umbrellas – and the agencies and MSPs who already partner with them – it should be close to business as usual after 6 April 2026.

The fiscal context
The government expects higher receipts as compliance tightens. The Office for Budget Responsibility projects around £2.8bn by 2031. That aligns with the policy intent: clamp down on non-compliance while supporting well-run models that pay workers correctly and reduce admin in the system.

Our view
This Budget confirmation gives the market certainty and time. Agencies and MSPs should use the runway to codify due diligence, upgrade monitoring, and insist on independent reporting. That will protect your business, your contractors and your clients – and it will keep the focus where it should be: paying people accurately and on time.