The 2026 ACS Update: Subcontractors, Payroll and the End of Personal Service Companies

The ACS self-assessment workbook that most approved contractors know is the April 2022 edition. Since then the SIA has published two updates on GOV.UK that replace the text of specific indicators: a 2025 update to Criterion 6 and a 2026 update to indicators 2.4.1 and 4.2.1.

If your annual assessment is coming up, the 2026 changes are the ones most likely to need work, because they reach into your supply chain and your payroll.

The 2026 update at a glance

2.4.1: use of subcontractors

Indicator 2.4.1 already required subcontracting to be agreed with customers and quality-assured. The 2026 update tightens what that means:

• Subcontracted organisations must be SIA approved contractors, unless one of the defined exceptions applies.
• Their regulated individuals must hold a valid SIA licence, which you verify by checking the SIA's register of licence holders.
• New: relevant individuals of the subcontractor are vetted and screened.

The workbook's glossary defines the exceptions: self-employed operatives directly supervised by the main contractor, directly supervised labour, subcontractors not providing designated security services, and special arrangements agreed with the SIA. If you rely on an exception, record which one and why.

4.2.1: payroll management

The payroll indicator now sets out who can do licensable work for an approved contractor:

• All people must be employees or employees for tax purposes.
• New: approved contractors cannot use operatives working through their own personal service companies, directly or anywhere in the supply chain.
• Directors who do front-line licensable work must be paid as employees for that work.

The SIA's July 2026 workbook guidance describes this as an eligibility requirement for everyone undertaking licensable activities, alongside the indicator requirement that prohibits operatives working through their own intermediaries.

The 2025 update: licence dispensation notices

The 2025 update changed only the clarification text of indicators 6.1.1 and 6.2.1. It focuses on control of licence dispensation notices (LDNs):

• No more than 15% of operatives should be working under LDNs.
• LDNs must be issued correctly according to the SIA's guidance, including the five-week limit.
• At least one person in the business must be competent to issue LDNs and refresh their knowledge every year.

What to check before your next assessment

1. List every subcontractor you used in the last twelve months, with their ACS status, or the exception you relied on, and the date you checked it.
2. Check operatives' licences on the SIA register, not just a copy of the card, and keep a dated record of the check.
3. Collect evidence that subcontractor staff were vetted and screened, for example to BS 7858.
4. Get written confirmation of employment status from each subcontractor: their operatives are employees or employees for tax purposes, not personal service companies.
5. Review your own payroll, including any directors doing front-line work, against 4.2.1.
6. Audit your LDN controls: the 15% ceiling, the five-week limit and your competent person's annual refresh.

Questions to ask every subcontractor

A short, standard questionnaire makes the 2026 requirements easier to evidence and repeat each year:

• Are you an SIA approved contractor? If so, what is your approval reference and expiry date?
• If not, which exception applies, and how is the work supervised?
• Will every operative you supply hold a valid SIA licence for the activity, and will you tell us if a licence lapses?
• Have the operatives you supply been vetted and screened, and can you provide evidence?
• Are all operatives you supply employees or employees for tax purposes? Do you use any personal service companies, directly or further down your own supply chain?
• Do you subcontract onward, and if so, on what terms?

Keep the signed answers with the date, and repeat the check before each new assignment and at least once a year.

Recording an exception properly

If you rely on one of the 2.4.1 exceptions, record which one it is, why it applies, who supervises the work and how. An exception that exists only in someone's head will not survive an assessment.

Dates that still catch companies out

How ProRota helps

Available in ProRota today: SIA licence watch for your staff with expiry alerts, BS 7858 screening in ProRota Screening, and GPS-verified attendance that shows who actually worked each shift. For the wider picture, see our guides on tracking SIA licence expiry and BS 7858 compliance.

ACS Readiness adds a subcontractor register built for the 2026 rules, recording ACS status or exception, operatives' licence checks, vetting evidence and a signed employment-status confirmation, alongside all 78 indicators and an evidence pack for your assessor.