Should I become a contractor?

Contract roles can offer a better work-life balance, greater flexibility and the opportunity to increase hourly earnings. They can also offer the opportunity to work on a variety of different assignments. This, in turn, will increase your industry knowledge, skills base, exposure to dynamic environments and experience.

If you are considering becoming a contractor, there are a number of reasons why contracting could be a very good move. And remember – if you quickly decide that contracting is not for you, you can quickly move back to permanent employment.

Flexibility

As a contractor, you have complete control of your time and when you choose to work. This means:

• You can choose where and when you work, and for as long as you want.
• You have more independence than permanent employees.
• You can take as little, or as much holiday as you like.
• You have the opportunity to gain experience in working for a variety of organisations with different cultures, management styles and structures.
• If you find that contracting isn’t for you then it is very easy to become a permanent employee again.

Financial benefits

Financial benefits are some of the most compelling reasons to become a contractor.

• As a contractor, you will be paid for every hour that you work, as well as the opportunity to receive extra for overtime.
• You will be paid very high hourly rates due to the specialist nature of your skill set.
• Contracting through your own limited company is the most tax efficient way to maximise your take-home pay as a contractor (in most circumstances).
• You can offset all of your business expenses against your income to reduce your tax bill further.

An opportunity to grow your skills

You will find yourself working in a variety of differing roles, for different companies, in different industries, and this will help you to acquire a large range of skills and experiences.

For example:

• You will be given the opportunity to broaden your sector experience or specialise in a particular industry.
• You will be given the chance to grow your contact base and network list.
• You will grow your skill set or have the opportunity to specialise in a niche area.
• Working in different companies gives you the ability to build up a wide-ranging CV and to establish an extensive list of references.
• Opportunities abroad become more obtainable.
• A good contractor often becomes well-known within their field of work and you may even find that your services become sought-after.

The downside to contract work

Whilst there are many benefits to contracting, there are a few disadvantages:

• Even in a high demand market, there is always some uncertainty as to where the next contract will come from.
• You are responsible for finding your own work.
• You are responsible for managing your finances- for example, paying Income Tax and National Insurance Contributions if you work through a limited company.
• You are responsible for negotiating your own working conditions and payment terms.
• Contract work can be lonely so it is important to build up a good support network to help you manage all aspects of your business.
• You need to consider IR35. If you work on assignments inside IR35, you may decide your best option may be using an umbrella company for your payroll. If you are outside IR35, you may decide you want to contract as the director of a limited company (personal service company). Please note your IR35 status will change for each assignment and must be assessed properly to ensure compliance with UK tax law.

The information above is written for guidance purposes only and should not be considered factual legal advice. Legislation is updated regularly and the content may be outdated. For more information, please call 01707 871622.