​If you are a supply teacher, teaching assistant, or education worker paid through an umbrella company, something important is changing on 6 April 2026. And if you are a school or education setting that uses agency staff, it affects you too.

The changes are significant, but the core message is straightforward: the rules around who is responsible for making sure your tax is paid correctly are shifting. Here is what you need to know.

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What Is an Umbrella Company?

An umbrella company is a business that acts as your employer when you work on temporary placements through a recruitment agency. Rather than being paid directly by the school or agency, the umbrella company employs you, handles your payroll, deducts Income Tax and National Insurance, and pays you your net wage.

Umbrella companies became increasingly common in education after the IR35 reforms in 2021, which changed how off-payroll workers are taxed. Many supply teachers and support staff were moved onto umbrella arrangements as a result.

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What Is Changing on 6 April 2026?

At present, the umbrella company is solely responsible for making sure your PAYE and National Insurance Contributions (NICs) are applied correctly. If something goes wrong, the liability sits with them.

From 6 April 2026, that changes. The client and the umbrella company will each be jointly and severally liable for the PAYE and NICs due on payments to the worker. This means HMRC may pursue either party for the full amount.

In plain terms: if your umbrella company fails to pay the right tax, the recruitment agency or school that placed you could now be held responsible for that unpaid tax by HMRC.

From April 2026, agencies that supply workers through an umbrella will carry the liability for any unpaid taxes if the umbrella company fails to meet its obligations. If no agency is involved, this responsibility falls to the end client.

This is a major shift. Schools and agencies can no longer simply assume their umbrella provider is handling everything correctly.

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Why Is the Government Doing This?

Non-compliance in the umbrella company market has been a growing problem. Evidence shows that non-compliant models continue to operate, causing harm to workers and funnelling taxpayers' money to organised crime groups.

The government estimates the changes will prevent around £2.8 billion being lost through non-compliant umbrella companies by 2030, generating £895 million in additional tax during 2026 to 2027 alone.

For education workers specifically, there has also been a long-standing issue with holiday pay. The practice of withholding accrued holiday pay has been particularly prevalent in the teaching sector, where temporary teachers and teaching assistants often move between schools and agencies. These reforms are intended to tackle that wider culture of non-compliance.

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What Does This Mean for Supply Teachers and Education Workers?

If you are currently paid through an umbrella company, you do not need to panic. If your umbrella is fully compliant, very little changes day-to-day. You will continue to receive your pay net of income tax and NICs as normal.

However, there are a few things worth checking:

Is your umbrella on an approved list? Many agencies and managed service providers are now introducing Preferred Supplier Lists (PSLs) of approved, compliant umbrella companies. For some roles, using an umbrella not on the approved PSL is not optional. Agencies are contractually required to comply with the PSLs set by managed service providers and clients. If your current umbrella is not on the list, you may need to switch.

Are you receiving your holiday pay correctly? You are entitled to holiday pay as an umbrella worker. If you are unsure whether it is being calculated and paid correctly, ask your umbrella or agency for a clear breakdown.

Are you on the right payroll arrangement? If you have concerns about your umbrella, it is worth asking your agency whether a direct PAYE arrangement is available instead. Many agencies offer this, and it removes the umbrella layer entirely.

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What Does This Mean for Schools?

Schools that use agency staff through umbrella arrangements need to be aware that their exposure to tax risk is increasing. Clients should map their supply chains to identify where they could now be liable for unpaid tax, and review their engagements with intermediaries to ensure they are properly registered with HMRC and are complying with PAYE and NIC obligations.

In practice, that means asking your recruitment agency the right questions. Are the umbrella companies they work with fully compliant? Do they carry out regular audits? Are they on accredited approved lists? A reputable agency will be able to answer these questions clearly and provide evidence.

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How Link3 Recruitment Approaches This

At Link3 Recruitment, compliance is not an afterthought. We work only with umbrella companies that meet strict HMRC requirements, and we are reviewing our supply chain arrangements ahead of the April deadline to ensure everything is in order for our workers and our school partners.

If you are a supply teacher or education worker who is uncertain about your current umbrella arrangement, or a school that wants reassurance about how agency staff are being paid, we are happy to talk it through.

Get in touch with the Link3 team today.