Umbrella Companies and Creatives: What You Need to Know Before 2026

Introduction

If you’re a creative in the UK, whether you act, paint, make films, design sets, or play gigs, chances are you’ve come across umbrella companies. For many, they seem like a quick fix: your agency pays the umbrella, the umbrella pays you, and the paperwork is handled. Easy, right?

Not quite. 

The world of umbrella companies is changing. With reforms due in April 2026, many agencies and clients will rethink how they engage contractors. And for creatives, this means fresh questions: is an umbrella still worth it? Or is it time to explore alternatives, like setting up your own limited company?

At Creative & Numbers, we help self-employed creatives cut through the jargon. Let’s break down what umbrella companies do, the problems they’ve caused, what’s changing in 2026, and why many of your peers are turning to limited companies for more control over their money.

What is an umbrella company?

An umbrella company acts as the middleman between you and your end client. In practice:

• You sign a contract with an umbrella company.

• The client or agency pays the umbrella for your work.

• The umbrella deducts Income Tax, National Insurance, pension contributions, employer costs, and its own margin.

• Whatever’s left comes to you as a salary.

Sounds neat. You avoid running payroll, filing tax, or keeping business accounts. But the simplicity often comes with hidden costs.

Why creatives have grown wary of umbrellas

Umbrella companies have attracted growing criticism, especially in industries with short contracts and agency work such as film crews, theatre staff, musicians, and beyond. Issues include:

• Opaque deductions: workers report payslips with charges that aren’t fully explained.

• Tax avoidance schemes: some umbrellas have tempted contractors with “tax-free” income or disguised pay, leaving creatives with hefty HMRC bills down the line.

• Employment rights disputes: holiday pay and sick pay claims often get lost in the chain of responsibility.

• Unpaid liabilities: if an umbrella fails to pay PAYE properly, workers can still get caught in the crossfire.

For creatives already juggling irregular income, these risks can be especially stressful.

What’s changing in 2026?

From 6 April 2026, the government plans to introduce joint and several liability (JSL) in supply chains using umbrella companies.

This means:

• If an umbrella fails to hand over PAYE or NIC to HMRC, the agency or in some cases the end client may become equally liable.

• Agencies and clients will be under pressure to work only with “trusted umbrellas” or to avoid umbrellas altogether.

• The burden of risk shifts up the chain, making umbrellas less attractive for agencies and clients.

For creatives, this could mean fewer opportunities to use umbrellas. You may be asked to work PAYE directly, or to consider setting up your own limited company.

Why a limited company gives creatives more control

Here’s where many self-employed creatives are looking for a safer, more transparent route: operating through a limited company.

• Clearer finances: you decide what counts as business expense, what’s salary, and what’s profit.

• Fewer surprises: no hidden deductions from an intermediary. You’ll know exactly where your money goes.

• Professional standing: clients often see limited companies as more established and reliable.

• Tax efficiency: with proper support, you may pay less tax overall than through an umbrella.

Yes, it involves more admin, but that’s exactly where we come in.

How Creative & Numbers helps

We specialise in accounting for creatives. That means we know what it’s like to live project to project, or to mix PAYE day jobs with freelance contracts. If you’re considering moving away from an umbrella, we can:

• Help you set up a limited company quickly and correctly.

• Take care of your bookkeeping, tax returns, and Companies House filings.

• Show you what expenses you can claim, from travel to costumes to studio equipment.

• Run the numbers so you can compare umbrella vs limited company take-home pay.

That way, you stay compliant with HMRC while keeping as much control and cash as possible.

Practical steps if you’re using an umbrella now

If you’re currently paid through an umbrella company, here’s what you can do:

1. Check your payslips and make sure deductions are clearly explained.

2. Ask questions and request a Key Information Document (KID) from your umbrella.

3. Stay alert to 2026 as changes are coming, and some agencies may start adjusting their processes early.

4. Explore your options by speaking with us about the pros and cons of switching to a limited company.

Final thoughts

Umbrella companies have long promised simplicity for creatives. But with mounting scrutiny and major reforms landing in 2026, the model may not be the safety net it once was.

For many in the creative industries, setting up a limited company with expert support can offer more stability, clarity, and control over your finances.

At Creative & Numbers, we believe accounting for creatives should be simple, transparent, and stress-free. Let us handle the numbers so you can get back to the art.

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Thinking of moving away from an umbrella company? Get in touch with Creative & Numbers today. We’ll help you set up a limited company and manage your accounts, so you can focus on creating without financial stress. Book a free 30-minute consultation with Creative & Numbers today.