IT contractors and freelancers
Are you an IT contractor or thinking about becoming one? IT contractors and freelancers are often in demand, as their specialist skills are sought after, and recruiters and clients all over the UK are constantly looking to fill in skill gaps with flexible IT professionals. This means IT contractors and freelancers have the potential to negotiate for higher rates of pay—especially if their skills are in high demand.
IT and technology firms everywhere are moving to increase their cyber security and gain a competitive edge in the industry, so being an IT contractor in this environment could offer you a rewarding and fulfilling career and help you further develop your skills and experience as an IT professional.
There are a wide variety of IT contract roles available, including IT support, Java Developer, Test Analyst, and Technical Architect, to name a few. If you are thinking of becoming an IT contractor or have already done so, you may find you need support to help you with the administrative side of contracting, which can often take up a lot of time.
What are the benefits of becoming an IT contractor?
Here are just a few benefits of becoming an IT contractor:
- Increased earning potential – Because the skills of contractors and freelancers are in high demand, this gives you negotiating power when it comes to your rates, meaning you have an increased earning potential over a permanent employee. Furthermore, you have increased earning potential if you are outside IR35 and can work through your own limited company. You can pay yourself a salary and dividends – which is very tax-efficient.
- Flexibility – Contracting allows you to choose when and where you work, giving you more flexibility in your career. You also aren’t restricted to working traditional 9 to 5 hours, which can increase your free time and improve your work/life balance. More professionals than ever see flexible working as a factor of high importance in their careers.
- Professional development – When you choose to be a contractor or freelancer, you are allowing yourself to further develop your skills and abilities as an IT professional. You can work on a variety of projects for different clients and organisations, accumulating a higher level of skills and knowledge.
What are the options available to IT contractors?
When you become an IT contractor, you have a few options to pay yourself as you won’t be on your client’s payroll. These options include becoming a sole trader, setting up a limited company, agency PAYE (if your recruitment agency offers this option), or using an umbrella company. However, below, we have provided a brief overview of the more popular choices for IT contractors and the benefits of each.
Limited company
For many contractors, operating outside IR35 and via a limited company offers significant tax advantages and more control and flexibility over your finances. It also comes with limited liability but a lot of responsibility. As a limited company director, you are responsible for:
- Keeping up-to-date company records
- Report any changes to your company
- Follow the company’s rules, which are available in your article of association (more information is available on the government’s website)
- File accounts
- Stay informed about government rules and regulations and implement any changes
- Company tax return
- Corporation tax
By hiring a contractor accountant, you will be using the services of experts who can assist you with running your limited company and provide accurate and trustworthy advice to ensure you operate your business in a compliant and tax-efficient manner.
Our sister company, Churchill Knight & Associates Ltd, has provided specialist contractor accountancy services to contractors and freelancers in the UK since 1998. As part of their dedicated contractor accountancy service, you can benefit from bookkeeping, innovative software, full administrative support, a dedicated account manager, no set-up fees, and more. Please visit their website for more information about Churchill Knight & Associates Ltd’s contractor accountancy service.
Umbrella company
Using an umbrella company is the easiest way to get paid as a contractor for contracts inside IR35. When you register, you become an umbrella company employee, and they will process the payment for the work completed for your end client – ensuring the correct tax and National Insurance Contributions (NICs) are paid to HMRC on your behalf.
Unlike limited company contracting, there is very little administration when you work via an umbrella company. All you will need to do throughout your time with an umbrella company is ensure you correctly submit the hours you have worked if your agency or end client requires you to do so. You do not need to worry about invoicing clients or any other administrative tasks, as the umbrella company will handle all of this for you!
Churchill Knight Umbrella is a SafeRec-certified, FCSA-accredited, and leading PAYE umbrella company. Since we launched in 2017, we have quickly become one of the most popular umbrella companies in the UK. We help thousands of contractors and freelancers get paid every month. We operate a traditional PAYE umbrella payroll, but our service includes a load of extras—at no additional cost. These include £25 million insurance, Employee Benefits, Same-Day Faster Payments, no joining or leaving fees, and access to a dedicated Account Manager.
More information on the benefits available to Churchill Knight Umbrella employees is available here.
Contact us today to discuss our umbrella service
Churchill Knight Umbrella is committed to providing a transparent and compliant payroll service to contractors and freelancers in the UK. Since launching in 2017, we have quickly become one of the most popular payroll providers and help thousands of workers get paid weekly.
Our FCSA accreditation and SafeRec certification are testaments to the highest standards of compliance that our business operations adhere to. This is why many contractors choose Churchill Knight Umbrella—they know they are registering with a compliant provider they can trust.
To request a take-home pay calculation or to begin the registration process, please call our friendly team on 01707 871622. You can also request a call back at a time that suits you, and we will be in touch to discuss our service with you.
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