Contracting in the UK

A guide for those 'outside' the UK considering contracting 'inside' the UK.

If you are already in the UK, you may find the following pages, guides and case studies useful:

Whether you are thinking of working in the UK under a HSMP (Highly Skilled Migrant Programme) or are allowed to work in the UK under other such Government approved schemes, it is perfectly acceptable for you to work through your own limited company or work through an umbrella company.

In order to work in the UK you may need a work permit or a visa; you will also need a National Insurance Number which is a personal number that is used to record an individual's NI contributions and credited contributions. You will also need a personal bank account and if you are planning to work through your own limited company a company/business bank account.

There are a few FREE downloadable guides that you may find helpful:

Lets first consider your options
1. Operate through your own limited company.
2. Work through an umbrella company.

We've summarised the alternatives along with the pros and cons of each method on these pages:

You may also find the following pages, guides and case studies helpful:

Contracting through your own limited company

It is often said that contracting through your own limited company is a daunting task. In fact, nothing could be further from the truth.

Administering your own limited company with the support a dedicated firm of accountants like SJD Accountancy, is simple, efficient and inexpensive.

Contracting through your own limited company does require a little more work than using an umbrella company; you'll need to form a company which will just take five minutes - you can form your company and check name availability here.

Benefits of Contracting through your own limited company:

  • The most tax efficient way of working.
  • Claim a wide range of expenses - accountancy fees, equipment, software etc.
  • Access to the Flat Rate VAT Scheme (saving around £2,000 - £3,000 a year on a typical contract value)
  • Even if inside IR35 it may still be worth it.
  • You keep complete control of your financial affairs meaning you do not have to risk your money with any third party administrator.
  • Running your own business isn't difficult; submit spreadsheets to your SJD accountant - just like Umbrella time sheets and expenses.


  • There is a certain amount of paperwork involved, usually about 10 - 15 minutes per month.

Working through an umbrella company

This is where you 'the contractor' essentially become an employee of the umbrella company.

You submit time-sheets to the umbrella who will in turn, invoice the end client (or agency) for the work done by you. You will then be paid as a PAYE employee less the umbrella fee.

Benefits of using an Umbrella Company

  • Very easy to use, you simply enter your timesheet and expense details and wait to be paid.
  • All tax and NI is deducted before you receive your money, so you will have no further taxes to pay.
  • Ideal if your contract is less than three months.


  • You will receive a salary that is subject to full PAYE Tax and NI, it's just like being a permanent member of staff again.
  • You are reliant on the umbrella company to collect your money from the client or agent and then to pay it on to you.

Accountancy Services for Contractors

At SJD we have put together a complete package which will take care of all your company's needs, this includes:

  • Year-end accounts*
  • Corporation tax
  • Payroll bureau
  • Dividend administration
  • Dealing with HM Revenue and Customs and Companies House
  • Quarterly VAT Calculations 
  • Support with Annual Returns
  • Personal Taxation
  • Access to your own dedicated accountant* for all help and advice
  • Free bookkeeping software

Our On-line Company formation service offers same-day formations and includes opening a Company Bank Account, VAT/PAYE registration and advice on share structure.

If you have any question about contracting or would like any further advice please call our New Business Team on 01442 275789 or email