Big changes are coming.
From April 2026, legislation comes into force that could leave construction firms exposed to HMRC claims – even if they’re working with a payroll or umbrella company.
It’s a shift that hasn’t made big headlines yet, but it should be on the radar of every contractor using subcontractors long-term.
Because the very thing many firms thought was protecting them… might not protect them at all.
Let’s break it down.
What’s changing in 2026?
Right now, many construction firms use payroll or umbrella companies to handle compliance around subcontractor relationships.
These companies offer peace of mind by claiming they take on the risk, deal with the admin and make sure everything is above board.
But from April 2026, if HMRC investigates and finds that those payroll companies weren’t operating compliantly, they can come after the contractor for the unpaid tax and NI.
Even if you:
- Paid the payroll company to handle compliance
- Followed their processes
- Believed you were protected
HMRC can still say, “You benefited from the labour therefore you’re responsible.”
In short:
Payroll companies will no longer be able to guarantee their clients protection.
Why is this happening?
Because HMRC are cracking down on setups that look good on paper but don’t reflect what’s happening on site.
For years, there’s been a fair amount of smoke and mirrors involved.
The contract might say one thing. The subbie’s day-to-day reality tells another story.
And HMRC are done with it. They want genuine self-employment to mean genuine self-employment.
So what does this mean for construction firms?
It means relying on a third party to sort your compliance is no longer a get-out-of-jail-free card.
The long-standing payroll pitch of:
- “Let us take on the risk”
- “We’ll sort the paperwork”
- “We’ll keep you compliant”
…now comes with a massive asterisk:
✳Unless HMRC finds out we’ve done it wrong – in which case, they’ll come after you instead.
Because if they get it wrong, you’re still on the hook.
Here’s the better alternative
If you want the same protection payroll companies have historically claimed to offer, the answer is simple:
Set your business up like a payroll company would but do it with the truth baked in.
That means:
- Contracts that actually match the way you treat your subbies
- A working relationship that fits the legal definition of self-employment
- Supporting documents that back up your position (not undermine it)
- A company structure that holds up under scrutiny
In other words, your setup doesn’t just look compliant.
It is compliant.
No loopholes. No dodgy paperwork. No hoping no one looks too closely.
Final thought
You might have used payroll companies in the past.
You might be using one now.
Or you might have considered them as a way to keep subbies long-term without the risk.
But with the changes coming in 2026, it’s time to rethink what protection really looks like.
And if you want help getting that setup in place?
Well, that’s what we do.
Want to chat it through?
If you’d like to understand what the 2026 legislation means for your business, and how to make sure you’re covered now and in the future, get in touch.
You can book a free call with our team, or grab a copy of our free guide to subcontractor compliance.