Future articles in this series will cover developments relevant to other types of taxpayer, such as employees and businesses. Some of the measures discussed in those articles may also be of interest to employers. Links to those articles will be provided in due course.  

Umbrella companies 

An umbrella company is an intermediary that typically employs workers on behalf of an employment business (agency). The temporary workers are then supplied to end clients. The workers are employees of, and have an employment contract with, the umbrella company; however, they do not provide any services to the umbrella company itself.  

The umbrella company is responsible for invoicing the agency or client, operating payroll and taking deductions (eg, for pay as you earn (PAYE) and national insurance contributions (NIC)) and paying the worker). However, from 6 April 2026, the liability for accounting for PAYE and NIC will become joint and several between the end client, agent and umbrella company. The responsibility will be moved from the umbrella company to the recruitment agency. If there is no recruitment agency involved in the supply chain, then the end client will become responsible.  

The purpose of this change is to encourage more due diligence in labour supply chains and for agencies to be more selective in the umbrella companies they contract with – in many ways bringing the tax position for umbrella company workers in line with other agency workers. 

Draft legislation providing for the changes is included in Finance Bill 2025-26 and is subject to change. Further legislation will also be introduced to implement the equivalent changes for national insurance purposes. 

Further information 

• PAYE changes for the umbrella company market - GOV.UK 
• The rise and possible fall of umbrella companies | ICAEW 
• Review supply chains for mini umbrella companies, says HMRC | ICAEW

National minimum wage 

From April 2026, the national living wage (NLW) will increase by 4.1% and the national minimum wage (NMW) will increase by as much as 8.5% depending on the category of the worker. 

*Apprentices aged 19 or over who have completed the first year of their apprenticeship are entitled to the NLW/NMW applicable to their age group.

Further information

• National Minimum Wage and National Living Wage rates - GOV.UK

Small employers’ relief

Employers can usually reclaim 92% of employees’ statutory maternity pay, statutory paternity pay, statutory adoption pay, statutory parental bereavement pay, statutory neonatal care pay and statutory shared parental pay.

However, employers can claim a higher amount if they qualify for small employers’ relief. To qualify, the business must have paid £45,000 or less in class 1 national insurance contributions (ignoring the employment allowance) in the last complete tax year. 

For 2025/26, a business that meets the criteria for small employers’ relief can claim 108.5%. HMRC has informed ICAEW that this will increase to 109% for 2026/27.

Further information

• Get financial help with statutory pay: What you can reclaim - GOV.UK

New student loan plan type

Repayments are due to begin for student loan plan type 5 on 6 April 2026. HMRC set out the key details of plan type 5 in Agent Update in October 2025. 

The thresholds and rates of deduction for student and postgraduate loans are as follows: 

At the Autumn Budget 2025, the government announced that it would maintain the plan 2 annual repayment threshold at £29,385 for three years from April 2027. 

Further information 

• Repaying your student loan: How much you repay - GOV.UK
• Issue 138 of Agent Update - GOV.UK 
• Budget 2025 (HTML) - GOV.UK

Enterprise management incentive scheme 

There may be tax advantages where shares are provided to employees under an enterprise management incentive (EMI) scheme.  

Legislation included in the Finance Bill 2025-26 increases the maximum values for:  

• company options, from £3m to £6m;
• gross assets, from £30m to £120m; and
• number of employees, from 250 to 500. 

The changes apply to EMI contracts agreed on or after 6 April 2026.  

In addition, the maximum exercise period is extended from 10 years to 15 years for EMI contracts granted on or after 6 April 2026 and can also apply retrospectively to existing EMI contracts (unless already expired or exercised). Special rules apply to companies in Northern Ireland, as explained in the policy paper for this measure published by the government. 

The government hopes that the changes will “enable larger companies and companies which are growing to offer tax-advantaged EMI schemes” allowing them “to better reward their employees, which helps them to attract and retain high-calibre candidates”.