2016 changes for contractors in the UK

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What will 2016 have in store for contractors?

Published on Thursday, February 4, 2016

Written by Alex Cadman

2015 was a turbulent year for the contractor industry, with many changes announced to take effect in April 2016, such as the removal of Travel and Subsistence. Despite the challenges, contracting is set to continue to grow as an ideal career path, especially for IT and Finance professionals. What will this year have in store for contractors? What market trends and changes can contractors expect to see this year?


We have compiled our contractor market trends for 2016 based on recent market changes and the changes announced in last year’s Autumn Statement and Finance Bill 2016.  

There are 1.9 million contractors in the UK, and despite any uncertainties, this number is set to grow and thrive especially for highly skilled IT, Finance and Engineering contractors.

Key factors contributing to this growth:

  • A general skills shortage indicates that contractor numbers will rise in 2016 due to increasing demand from businesses trying to fill gaps in their workforce
  • IT and Finance will be the most prosperous sectors, with many permanent employees looking to switch to contracting as they gain more experience
  • Government investment in the NHS could result in opportunities for contractors in IT, procurement, management and finance.


Companies are recognising the long-term savings and flexible options that comes with hiring contractors; ninety-seven percent of businesses and clients will plan strategically by including more contractors in their teams in the next four to twelve months. This is good news, as contractors and freelancers will benefit financially and professionally from an increase in contracting opportunities.

Also contributing to industry growth is the millennial generation fast tracking their careers by contracting immediately after graduating university. This shift is an important component in the growth of the contractor industry in 2016.

While the prospects for the contractor industry are looking good overall, certain changes could act as challenges for some contractors:

  • Changes to Travel and Subsistence will come into effect in April 2016, reducing the take home pay of thousands of contractors who work through an umbrella company. A limited company, however, could be a more tax efficient solution.
  • Some companies have started setting up operations outside London to reduce costs. This means that opportunities for contract work are extending to other areas of the UK; therefore, contractors may see increased competition in the capital
  • The UK construction industry has struggled since the start of 2016, with growth in the sector slowing down in January to its weakest level for nine months. Opportunities for investment in infrastructure are plentiful, and show positive signs for potential growth later in the year.


Despite potential market challenges, many signs point towards 2016 being a good year for contractors.

What trends and challenges do you experience in your contractor career? What are your 2016 market predictions for contractors and freelancers? Leave a comment below or feel free to contact us with any questions you have.

You can also stay up to date on the latest contractor industry news and trends by following us on LinkedIn and visiting our blog.

If you are a contractor looking for a tax-efficient way to reduce the impact of some of the challenges highlighted above, a limited company could be the best option for you. Find out more about our accountancy services by clicking the button below, or use the take home pay calculator to find out how you could benefit from operating your own limited company.

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