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New guidance: HMRC publishes updated guidance on umbrella companies

Author: Atom Content Marketing

Published: 01 Apr 2023

People employed by umbrella companies will welcome updated HMRC guidance on how such companies work, their employment rights and other key issues.

The government describes an umbrella company as a business used by recruitment agencies to pay temporary workers. In most cases, the umbrella company employs a worker and pays their wages through PAYE. The recruitment company then finds work for the employee from its clients, often on a short-term basis.

The updated ‘Guidance: Working through an umbrella company’ better describes how umbrella companies work in practice, which employment rights apply to umbrella company employees, and the way pay is calculated and paid.

Employees of umbrella companies may also wish to check out HMRC’s Spotlight 60 report from August 2022, ‘Guidance: Warning for agency workers and contractors employed by umbrella companies’. This sets out HMRC’s approach to what it describes as ‘contrived arrangements’ claiming to allow agency workers and contractors to keep more of their earnings, which it says are mostly tax avoidance schemes that do not work.

Operative date

  • Now



This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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