L day 2025 – what to expect and what comes next for umbrella companies, agencies and supply chains?

L day will be on the 21 July 2025, as announced on 4 July in a written ministerial statement. But what is L day exactly and what opportunities does it bring for the industry to further shape the direction of travel?

But what is L day exactly?

L day is when the government publishes draft clauses for the next Finance Bill, covering pre-announced policy changes along with accompanying explanatory notes, tax information and impact notes, responses to consultations and other supporting documents.

It’s part of the government’s commitment to open, staged tax policymaking, and gives stakeholders a chance to comment on how draft tax laws are written — before they’re formally introduced to Parliament.

What to expect this year

21 July is therefore the date that we expect to see the draft legislation that will give effect to HMRC’s umbrella policy proposals to tackle non-compliance in the market. This is widely expected to take the form of joint and several liability. We expect there to be a short technical consultation on the draft legislation.

Stakeholders (businesses, tax professionals, trade bodies, etc.) can respond with feedback, however it is important to understand that at this stage, we are quite far down the policy development path and changes will probably be limited to tweaks to refine the legislation, not the core policy per se.
After this, we understand that HMRC and HM Treasury officials will review consultation responses and make any revisions to the legislation as they see fit.

What happens then?

Based on our research, once finalised, the clause will be included in the next appropriate Finance Bill – usually introduced in November.

The Bill will then go through the following Parliamentary stages in the House of Commons:

• Second Reading (general debate)
• Committee Stage (scrutiny either in the Committee of the Whole House for key clauses or in the Public Bill Committee where the rest of the Bill is tackled on a clause by clause basis))
• Report Stage (further amendments and debates on key issues)
• Third Reading (final review and vote)

Then it proceeds to the House of Lords for more or less the same. Although Lords can’t amend tax legislation, they do scrutinise it and as you may know, in recent years the Lords Economic Affairs Committee usually establishes a sub-committee each year to investigate and report on aspects of the Finance Bill (although last year this didn’t happen).

Therefore in addition to the pre-legislative scrutiny afforded by the publication of draft legislation for consultation, there is also formal parliamentary scrutiny. There are opportunities for stakeholders to input to this via briefings for MPs and Lords, via suggested amendments (although last year all opposition amendments put forward in the Committee of the Whole House were rejected; only government amendments in the Public Bill Committee were accepted) and via Committee evidence sessions as well as indirectly, through media pressure for example.

After passing through both Houses, the Finance Bill receives Royal Assent, becoming law (usually around July for Spring Finance Bills).

Are there still opportunities for influence?

Given we are at stage 3 of HMRC’s 5 stage consultation process, opportunity to further shape HMRC’s direction of travel on umbrellas, is probably now limited to the wording and mechanics of the joint and several liability law. Stakeholders should be on the lookout for tweaks to fix technical issues, clarify ambiguities or address unintended consequences.

However, based on what we have seen from the collaborative way HMRC Head of Intermediary Policy and his team work, there are probably going to be more significant opportunities for stakeholders to feed into HMRC’s implementation plans.

This might include their operational approach, guidance (in manuals or separate guidance notes), and potentially other products like webinars. We look forward to engaging further and encourage everyone with an interest in this area to help HMRC make something clear, workable and fair.

What about broader umbrella regulation?

At the same time as HMRC’s draft legislation will be available for consultation, the Employment Rights Bill which provides for the regulation of umbrella companies from 2027, via an extension of the definition of employment businesses used in the Employment Agencies Act and Conduct Regulations, will be nearing the end of its journey.

There was one umbrella related amendment put forward at Lords Committee stage (a new licensing requirement for umbrellas) however it was subsequently withdrawn. A new amendment has been tabled for Lords Report stage (scheduled for 14,16, 21 and 23 July) proposing existing certifications and accreditations be incorporated into umbrella regulation.

Unless this opposition amendment voted through, it looks like umbrellas will be regulated under the existing Conduct Regulation framework, with oversight by the EAS Inspectorate and the future FWA. We expect a consultation on updating the Conduct Regulations for umbrellas at some point over the autumn.

Can umbrella regulation matters be added to the Finance Bill?

Probably not – things like employment licensing regimes and other regulatory options are out of scope.

The Long Title of the Finance Bill is usually as follows: “a Bill to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Finance, and to make further provision in connection with finance.” As a result the Bill can only include provisions relating to the imposition and alteration of taxes to raise money for financing central government as a whole. It cannot – for example – include anything unrelated to tax or public finance (e.g., immigration, education, criminal law. It doesn’t even cover employment law issues, despite the fact that in the umbrella company world, they are often closely connected to tax issues.

Final thoughts

L Day provides a crucial window for stakeholders to engage with the detail of upcoming tax legislation — even if the policy direction is largely fixed.

For the umbrella company sector, this is more than a policy update — it marks a turning point. If, as expected, HMRC introduces joint and several liability to tackle tax non-compliance, the implications for recruitment agencies will be substantial and material. Liability will no longer stop at the umbrella — agencies will be held accountable for unpaid taxes within their supply chain.

In that context, this isn't just about reviewing a draft clause — it’s about reassessing how you select and work with umbrella companies. The time of taking providers at their word is coming to an end. Agencies will need to demonstrate that the umbrellas they engage are not only compliant in theory but are actively and continuously paying the correct tax to HMRC in practice.

That means moving beyond accreditations and promises. It means real-time verification, independent auditing, and full transparency.

At SafeRec, we’ve built exactly that — a solution that empowers agencies to work only with umbrella companies who can prove their compliance: Not only with a payslip audit, but audit of RTIs and ensuring taxes are actually paid to HMRC.

If you want to be ready for what’s coming, start by creating a free SafeRec account today. You’ll gain access to our technology, tools, and growing network of certified umbrella companies — giving you the evidence, assurance, and protection you’ll need in a post–L Day world.

Create your free account here and take back control of your supply chain — before HMRC puts you on the hook for someone else’s mistakes.