Expert accounting for IT contractors, freelancers, CIS workers and gig economy professionals. Tax-efficient structures, IR35 guidance and MTD compliance — from £19.99/month.
Contracting in the UK means navigating a web of tax rules that simply do not apply to permanent employees. Corporation tax rates, dividend planning, IR35 status, allowable expenses, employer NI obligations and Making Tax Digital quarterly reporting all interact — and getting any one of them wrong can cost you thousands of pounds a year or trigger an HMRC enquiry.
A generalist accountant handles annual accounts and tax returns. A specialist contractor accountant does that and proactively structures your affairs to minimise your tax bill legally, keeps you compliant with off-payroll working rules, and ensures you are ready for MTD before HMRC enforces it. The difference in take-home pay is typically £3,000–£8,000 per year for a contractor earning £60,000–£100,000.
At AccTek, we are ICAEW-regulated chartered accountants who work exclusively with contractors, freelancers, landlords and small businesses. Every client gets a named accountant — not a call centre — and proactive advice tailored to your contracting structure.
The structure you choose determines how much tax you pay, how much admin you handle, and what legal protections you have. Here is how the three main options compare for 2026/27:
| Factor | Limited Company | Umbrella | Sole Trader |
|---|---|---|---|
| Tax efficiency | Highest — salary + dividends | Lowest — taxed as employment | Medium — income tax + Class 4 NI on all profit |
| Admin burden | Annual accounts, CT600, payroll, confirmation statement | None — umbrella handles everything | Self Assessment only |
| IR35 relevance | Must demonstrate outside IR35 | Always inside (already taxed as employment) | Rarely relevant |
| Optimal for income | £30,000+ | Short contracts or inside-IR35 roles | Under £30,000 |
| Corporation tax | 19% (small profits up to £50,000) | N/A | N/A |
| NI on salary | Employer 15% + Employee 8% (above thresholds) | Deducted by umbrella | Class 4: 6% / 2% |
For an in-depth side-by-side comparison with worked examples at every income level, see our dedicated umbrella vs limited company guide.
A contractor earning £75,000 through a limited company can pay themselves a salary of £12,570 (the personal allowance for 2026/27, meaning zero income tax and minimal NI) and extract the remaining profit as dividends taxed at just 10.75% at the basic rate. Compared to an umbrella, where the full £75,000 is taxed as employment income with income tax and NI, the limited company route typically saves £5,000–£10,000 per year.
Use our free Ltd company vs PAYE tax calculator to compare your take-home pay, or see our Ltd company vs sole trader calculator for a side-by-side breakdown. For a detailed walkthrough of the numbers, read our guide: limited company vs sole trader for consultants in 2026.
If you are a freelancer or consultant, our specialist team helps you pick the right structure from day one. Need to decide on VAT? Our VAT for contractors guide covers registration thresholds, scheme selection and common mistakes. Thinking of incorporating? Our step-by-step limited company setup guide covers everything from Companies House to your first invoice. Already trading through a limited company? We handle your annual accounts, corporation tax return, payroll and dividend paperwork so you can focus on the work.
Since the April 2021 off-payroll reforms, medium and large private-sector clients are responsible for determining your IR35 status and issuing a Status Determination Statement (SDS). Small private-sector clients still leave the determination to the contractor. Getting this wrong can result in backdated tax bills running into tens of thousands of pounds.
HMRC and the tribunals assess IR35 status based on three primary tests: substitution (can you send someone else to do the work?), control (does the client dictate how, when and where you work?), and mutuality of obligation (is the client obliged to offer work and are you obliged to accept it?). If all three point towards employment, the contract is likely inside IR35.
HMRC’s CEST tool (Check Employment Status for Tax) gives an indication but is widely criticised for producing “indeterminate” results and ignoring the substitution clause. A specialist IT contractor accountant reviews your actual working practices — not just the contract wording — and advises on defensible positioning.
For a comprehensive walkthrough of the three tests, off-payroll reforms and how to build a defensible IR35 position, read our full IR35 guide for UK contractors. Already determined inside? See our inside IR35 options guide for your next steps.
If you are concerned about HMRC loan scheme investigations or the loan charge, our detailed guide explains what you need to know about HMRC loan schemes and the loan charge in 2026.
After paying yourself the optimal salary, you extract further profits as dividends. For 2026/27, dividend tax rates are:
| Band | Rate | Threshold |
|---|---|---|
| Dividend allowance | 0% | First £500 |
| Basic rate | 10.75% | £12,571 – £50,270 (total income) |
| Higher rate | 35.75% | £50,271 – £125,140 |
| Additional rate | 39.35% | Over £125,140 |
Note that dividend rates increased by 2% from 6 April 2026 — the basic rate moved from 8.75% to 10.75%. Your corporation tax rate also matters: limited companies with profits up to £50,000 pay the 19% small profits rate, while those above £250,000 pay the 25% main rate, with marginal relief (~26.5% effective) in between.
A contractor billing £80,000 through a limited company, claiming £5,000 in allowable expenses, pays corporation tax of 19% on the £75,000 profit (£14,250), takes a £12,570 salary, and extracts the rest (£48,180) as dividends. Total tax and NI: approximately £20,800 — giving a take-home of around £59,200. Through an umbrella, the same £80,000 yields approximately £53,500 after tax and NI. The limited company saves roughly £5,700.
For the full breakdown of why £12,570 is optimal, the £5,000 alternative, pension extraction and the £100k personal allowance trap, see our director salary and dividend strategy guide for 2026/27. Run your own numbers with our Ltd vs PAYE tax calculator. For broader context on UK take-home pay, see our post on take-home pay after tax.
HMRC’s “wholly and exclusively” rule is the test: an expense must be incurred entirely for business purposes. Common contractor expenses include:
For a comprehensive list with HMRC references, read our ultimate allowable expense checklist for 2026/27. For the hidden savings most contractors miss — employer pensions, actual home office costs, trivial benefits and more — see our contractor expenses guide.
From April 2027, the threshold drops to £30,000, bringing significantly more contractors into scope. If you operate through a limited company only (no sole trade or property income), MTD ITSA does not apply directly to you — but if you also have rental income or a side freelance trade, it almost certainly does.
You must keep digital records of income and expenses (spreadsheets alone are not sufficient — you need MTD-compatible software), submit quarterly updates to HMRC (not full tax returns, but summaries of income and expenses for each quarter), file an End of Period Statement after your accounting year end, and submit a Final Declaration replacing the traditional Self Assessment return.
For a complete walkthrough, visit our MTD knowledge hub or read our targeted guide: MTD for freelancers. If you are a freelancer or sole trader, our MTD checklist for freelancers and sole traders walks through every step. For the broader picture including landlords, see the complete MTD 2026 guide.
We work with contractors across every engagement model. Whatever your sector or structure, AccTek provides the specialist accounting support you need. If you work through a recruitment agency, see our guide on how agencies affect your tax, IR35 and contract terms.
IR35 reviews, optimal salary and dividend planning, annual accounts and corporation tax returns.
Structure advice (Ltd vs sole trader), expense claims, MTD compliance and Self Assessment.
CIS registration, monthly returns, tax deduction reconciliation and year-end rebates.
Self Assessment for Uber, Deliveroo and platform income. Expense guidance and MTD setup.
AccTek integrates directly with your bank, Xero and reporting tools so your numbers are always current, reconciled and ready for decisions — not sitting in a spreadsheet you forgot to update.
From first contact to fully managed accounts in under two weeks — here is what the process looks like:
AccTek is an ICAEW-regulated chartered accountancy practice founded by Godwin Pinto ACA. We specialise in the four client groups where specialist knowledge delivers the biggest financial benefit: IT contractors, freelancers, landlords and small businesses.
What sets us apart from the large contractor accounting factories:
Whether you are switching from another accountant or setting up your first limited company, we make the transition painless. New to contracting? Our first-year contractor tax checklist covers every deadline and tax-saving opportunity month by month.
How much does a contractor accountant cost?
AccTek’s contractor accounting packages start from £19.99 per month with fixed fees and no hidden charges. The exact price depends on your structure (limited company, sole trader or partnership), turnover level and whether you need add-ons like VAT returns or payroll. Get a personalised quote in under two minutes on our instant quote page.
Do I need a limited company to contract?
You do not have to, but for most contractors earning above £30,000 a limited company is significantly more tax-efficient than working through an umbrella or as a sole trader. The company pays corporation tax at 19% (small profits rate for 2026/27) and you extract profits as dividends taxed at 10.75% basic rate, rather than paying income tax and NI on the full amount. Use our Ltd vs sole trader calculator to compare.
What is IR35 and does it affect me?
IR35 is tax legislation that determines whether a contractor is genuinely self-employed or effectively an employee for tax purposes. If your contract falls inside IR35, you lose the tax benefits of your limited company. Since April 2021, medium and large clients must assess your status. An IT contractor accountant can review your contracts and working practices to help you stay compliant.
How much should I pay myself as a director in 2026/27?
The optimal director salary for a sole-director limited company in 2026/27 is £12,570 — the personal allowance level. You pay zero income tax on this amount and maintain your state pension qualifying year. Employer NI of 15% applies on the portion above £5,000 (the secondary threshold), costing £1,135.50 but deductible as a business expense.
Can I claim expenses as a contractor?
Yes. Limited company contractors can claim any expense incurred wholly and exclusively for business purposes against corporation tax. Common claims include travel to temporary workplaces, equipment, software, professional subscriptions, home office costs and accountancy fees. See our full allowable expense checklist for 2026/27.
What is Making Tax Digital and do I need to comply?
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) requires digital record-keeping and quarterly reporting to HMRC. It became mandatory from April 2026 for anyone with qualifying income above £50,000. If you have sole trade or property income above this threshold, you must use MTD-compatible software. Visit our MTD knowledge hub for a complete guide.
How do I switch to AccTek from my current accountant?
Switching accountants is straightforward. We handle the professional clearance process, contact your outgoing accountant to obtain your records, and set up your accounts on our systems. There is no gap in service and we aim to complete the transition within two weeks. Read our guide on changing accountants smoothly.
Do you help CIS contractors?
Yes. We handle CIS registration, monthly CIS returns, reconciliation of tax deductions against your Self Assessment, and year-end rebate claims. Whether you are a subcontractor or a contractor making CIS deductions, our CIS contractor accountant service covers everything.
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