Umbrella companies explained for agencies
An umbrella company employs the worker and is responsible for PAYE. From 6 April 2026, the agency that contracts with the end client can be jointly liable for PAYE the umbrella does not pay. Checked against GOV.UK on 23 October 2026. Shiftbrook does not operate PAYE.
What an umbrella company is
GOV.UK describes an umbrella company as a business that employs workers on behalf of an agency, or on behalf of the business the employees work for, the end client. The umbrella has the legal responsibilities of an employer for employment rights, and the liability to HMRC for PAYE Income Tax, student loan repayments, and employee and employer National Insurance. When the guidance says umbrella company, it includes any business supplying labour under a contract of employment.
The worker is typically an employee of the umbrella. There should be a contract between the umbrella and the agency, and a contract between the agency and the end client. Sometimes the umbrella contracts with the client directly. Sometimes there is more than one agency in the chain. Shiftbrook does not store those contracts, and it does not choose the umbrella.
Joint liability from 6 April 2026
The GOV.UK guidance on PAYE rules for labour supply chains that include umbrella companies, updated 19 June 2026 and read on 23 October 2026, says the rules are in force. They apply to new and existing chains, and to money paid to workers on or after 6 April 2026. HMRC can recover an underpayment from the agency that has the contract with the end client to supply the workers. If there is no agency, the end client is the party that can be pursued. The umbrella remains responsible for operating PAYE correctly. Joint and several means the amount has to be paid in full. It does not matter which of the liable parties pays it.
The same guidance lists situations where the rules do not apply, including some personal service companies under the off-payroll working rules, managed service companies, salaried members of a limited liability partnership, and some cases already treated as employed by an agency. Read that page before you assume a chain is in or out. If any part of the chain is outside the UK, the guidance points to the Employment Status Manual. This summary is not a ruling on a supply chain.
Where Shiftbrook stops
Shiftbrook records the shift, the clock-in at the site pin, and the client’s approval of the hours. It does not calculate pay, it does not deduct tax, and it does not pay HMRC. An approved week is not evidence that PAYE was operated. Download the CSV of hours and give that to whoever actually runs pay. Approved hours can be sent to Xero Payroll UK as draft timesheets on the paid plan. Shiftbrook does not approve a pay run.
The Agency Workers Regulations are a different set of rights, about equal treatment after 12 weeks, and Shiftbrook does not count those weeks either. The agencies page is the product. How to start a staffing agency and the Key Information Document are the surrounding reading. None of them is a substitute for the GOV.UK page.
Questions
Does Shiftbrook pay the umbrella worker?
No. It records hours. PAYE, and any joint liability from 6 April 2026, sits with the parties named in the GOV.UK guidance.
Who can HMRC pursue if the umbrella does not pay?
On the page checked on 23 October 2026, the agency that contracts with the end client, or the end client if there is no agency. The guidance lists exceptions. Read it for the chain you actually have.
Does an approved timesheet prove PAYE was done?
No. Approval agrees the hours between the agency and the client. It says nothing about tax.
Sources
Agency Workers Regulations · Agencies · How to start a staffing agency · Key Information Document