No one enjoys paying tax, and talking about it isn’t exactly exciting. But if you’re a contractor, how you’re paid has never been more important. Changes to IR35, HMRC’s focus on non‑compliant schemes, and new Joint and Several Liability (JSL) rules mean that everyone in the supply chain — umbrella companies, agencies, and end clients — is under more scrutiny than ever.
A few years ago, aggressive tax “management” schemes were heavily publicised. Some were legal, many weren’t. Legislation tightened, and a lot of the more blatant schemes disappeared. But with more contractors now working via umbrella companies, a new wave of “too good to be true” offerings has emerged—often promising 80–90% take‑home pay. On paper, that can look incredibly tempting. In reality, it’s a serious risk. HMRC has publicly stated that tackling non‑compliant umbrella models is now a priority area, and JSL gives them far greater reach to enforce it.
Why ultra‑high take‑home pay is a red flag
Before you choose an umbrella company, it’s crucial to understand what ‘compliant’ really means — and why unusually high take‑home pay is almost always a sign of something unsafe.
There are rules about what a compliant umbrella company must, and must-not, deduct from your pay. If an umbrella company is offering you 80–90% take‑home pay, something isn’t right. Once you factor in taxes, national insurances, pensions, apprenticeship levy and margin there is simply no legal way to achieve those levels of net pay.
You may have used a company before and nothing happened, but rules have changed in recent years, investigations can take years not months, and there’s a renewed effort to seek out non-compliance. HMRC has full visibility of what’s being paid into your umbrella or limited company. Agencies are required to report quarterly how much they’ve paid on your behalf. If HMRC sees you putting a small salary through PAYE while large sums are being paid to you via loans, advances, or other mechanisms, they can — and do — come back for the unpaid tax and NIC, often retrospectively and with significant penalties. There’s more scrutiny than ever from HMRC, and if they find something wrong with the taxes for just one employee of an umbrella company, they’ll look at all of them!
Joint and Several Liability (JSL) changes the game
From 2026, Joint and Several Liability means that if an umbrella company fails to pay the correct PAYE tax or National Insurance, HMRC can pursue other parties in the labour supply chain, including the recruitment agency and, in some cases, the end client.
What does that mean for you as a contractor?
- Agencies and clients will be far more cautious about which umbrella companies they allow on their Preferred Supplier Lists.
- Umbrellas that run non‑compliant schemes are more likely to be blocked or removed.
- If your preferred umbrella is rejected late in the process, you could face a last‑minute scramble to find an alternative before you can start work.
Choosing a compliant umbrella from the outset reduces the risk of delays, awkward conversations, or even losing an assignment because your chosen provider doesn’t pass due diligence. Most importantly it also means that YOU avoid unnecessary, costly and stressful HMRC investigations, penalties and even back taxes!
The good news is that staying compliant is straightforward: choose a reputable umbrella, understand your payslip, and avoid anything that sounds too good to be true. Here at Corriculo we’ll be happy to help you navigate IR35 and find a compliant umbrella company that works for you.
Your take‑home pay shouldn’t vary much between compliant umbrellas
For most contractors, especially post‑IR35 reforms, the days of claiming extensive travel and subsistence expenses are gone. That means:
- The tax and NIC due will be broadly the same across all compliant umbrella companies.
- The main difference between providers is their margin and the quality of their service, not your net pay.
If one umbrella is offering you significantly more take‑home pay than others, that’s not a “better deal” — it’s a warning sign.
What every umbrella will legitimately deduct
A compliant umbrella will always account for:
- PAYE tax
- Employee’s National Insurance
- Employer’s National Insurance
- Apprenticeship Levy (if applicable)
- Pension contributions – voluntary but remember that both employer and employee contributions come from the assignment rate you’re paid
- Their margin
Anything that tries to sidestep these core deductions should be treated with extreme caution.
Things to look out for and avoid
Be very wary of any umbrella company that:
- Claims it can save you tax or National Insurance through special schemes
- Offers two different payment models, one of which gives much higher take‑home pay
- Claims to be “HMRC approved” or “government backed” — HMRC does not endorse providers
- Pays you in multiple parts, from different bank accounts, or via loans, advances, or offshore arrangements
- Doesn’t show your full pay on your payslip, or is reluctant to provide clear, detailed payslips
If you don’t fully understand how you’re being paid, that’s a problem in itself.
How to choose a compliant umbrella company
The safest approach is to work with umbrella companies that have been independently audited and accredited. At Corriculo, we only work with umbrella providers accredited by bodies such as, and we have done so for many years:
APSCo
FCSA / REC
Professional Passport
These organisations carry out regular checks to ensure providers are operating within current legislation and best practice. With JSL on the horizon, agencies and clients will increasingly insist on this level of assurance. The good news is that there are plenty of compliant umbrellas to choose from, so you don’t need to sacrifice peace of mind to get paid correctly.
If you’re exploring new opportunities — whether now or in the near future — we’re here to help. At Corriculo, we specialise in supporting IT, scientific, and engineering professionals at every stage of their career journey. From refining your CV to matching you with roles that genuinely fit your skills and ambitions, our team offers honest advice, market insight, and access to opportunities you won’t always find advertised. If you’re ready for your next step, we’d love to talk.
Victoria Harlock is Operations Manager at Corriculo Ltd, a specialist IT, Scientific and Engineering recruitment agency supporting permanent and contract hiring across the UK.
