{"id":5110,"date":"2026-01-21T09:41:10","date_gmt":"2026-01-21T09:41:10","guid":{"rendered":"http:\/\/localhost:8080\/?page_id=5110"},"modified":"2026-04-14T09:53:23","modified_gmt":"2026-04-14T09:53:23","slug":"how-to-become-a-contractor","status":"publish","type":"page","link":"https:\/\/staging.qualitycontracts.co.uk\/guides\/how-to-become-a-contractor\/","title":{"rendered":"How to become contractor"},"content":{"rendered":"\n
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\n Figuring out\n \n how to transition from permanent employment to contracting can be\n challenging.\n <\/strong>\n Though dozens of websites offer advice, it is often difficult to\n differentiate between what is genuinely helpful and what is simply an\n attempt to get you to sign up for a ‘free consultation’.\n <\/p>\n

\n While the life of a contractor can be incredibly rewarding, the\n potential risks and uncertainties shouldn’t be underestimated. As such,\n it is critical you take the time to really understand what contracting\n entails.\n <\/p>\n

\n This guide on becoming a contractor is\n written by contractors for contractors.<\/strong>\n It will provide insight that will (hopefully) allow you to contractors.\n It will provide insight that will (hopefully) allow you to look at your\n situation objectively, offering practical tips and checklists to help\n you succeed.\n <\/p>\n <\/div>\n <\/div>\n\n \n

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Contracting v. Freelancing<\/h2>\n
\n <\/div>\n <\/section>\n\n \n
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What is a contractor?<\/h3>\n\n

\n The term freelancing’ has been mistakenly used as a sort of\n ‘catch-all-term for any form of independent worker. Although contractors\n and freelancers both fall under the umbrella of ‘self-employed’ and often\n have similar taxation requirements, there are significant differences in\n how they operate and the services they offer.\n <\/p>\n\n

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  • \n Contractors are highly skilled professionals who provide services to a\n single client for a defined period under strict contractual terms.\n Although some contractors take on multiple clients simultaneously, this\n is an exception rather than standard practice.\n <\/li>\n
  • \n Contractors tend to work for a defined number of hours per day and are\n often required to visit their client’s offices. During the projects,\n contractors are seen as ‘part of the team’ and are regularly offered\n permanent positions once their contract is finished.\n <\/li>\n
  • \n Contracting is particularly prominent in the fields of IT, engineering\n and finance. Think developers employed for an entire product lifecycle,\n finance managers brought on to help with year-end or engineers tasked\n with continuous improvement projects.\n <\/li>\n <\/ul>\n <\/section>\n\n \n
    \n

    What is a freelancer?<\/h3>\n\n

    \n A freelancer is a self-employed individual who works independently,\n lending their specific skillset to multiple clients on a flexible basis.\n They aren’t tied to a single customer, aren’t required to work specific\n hours, and don’t need to be in a particular location. Most work from home,\n although some rent studio or office space.\n <\/p>\n\n

    \n Freelancing can be a career in itself, or it can be done as a ‘side\n hustle’. Freelancing income is determined by the volume of work and the\n prices charged, so you can do as much or as little as you want. There are\n many different types of freelancers, although it tends to be most\n prevalent in creative industries like web developers, designers, writers,\n photographers, etc.\n <\/p>\n <\/section>\n\n \n

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    Differences<\/h3>\n\n

    \n There are a few key differences between a freelancer and a contractor:\n <\/p>\n\n

    \n \n
    \n
    \n
    \n \"I\"\n\n <\/div>\n

    Finding Work<\/h4>\n <\/div>\n
    \n

    \n Contractors tend to find work via recruitment agencies, although\n sourcing contracts directly with the client is possible. Freelancers\n are responsible for advertising their services and sourcing jobs\n themselves. Many freelancers work through marketplaces such as\n Upwork, Toptal and Fiverr.\n <\/p>\n <\/div>\n <\/div>\n\n \n

    \n
    \n
    \n \"II\"\n\n <\/div>\n

    Clients<\/h4>\n <\/div>\n
    \n

    \n Contractors usually work for a single client, while freelancers are\n likelier to have multiple ‘projects’ simultaneously.\n <\/p>\n <\/div>\n <\/div>\n\n \n

    \n
    \n
    \n \"III\"\n\n <\/div>\n

    Length of Employment<\/h4>\n <\/div>\n
    \n

    \n Contractors usually work for an extended period, which is defined in\n an engagement contract. Contracts range from 3 months to a year,\n although some can stretch longer. Freelancers work on an ad hoc\n basis, working for as long as it takes to complete the requested\n task.\n <\/p>\n <\/div>\n <\/div>\n\n \n

    \n
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    \n \"IV\"\n\n <\/div>\n

    Employment Status<\/h4>\n <\/div>\n
    \n

    \n Freelancers are self-employed as sole traders or operating via their\n own limited company. IR35 has added a level of confusion to the\n employment status of contractors. Usually (although not always), if\n you’re Outside IR35, you are self-employed, whereas if you’re Inside\n IR35, you’re technically an employee of the umbrella company you\n work through.\n <\/p>\n <\/div>\n <\/div>\n\n \n

    \n
    \n
    \n \"V\"\n\n <\/div>\n

    Working Practices<\/h4>\n <\/div>\n
    \n

    \n As contractors usually work as part of a team, they work consistent\n business hours and are often required to work from the client’s\n offices. Freelancers can work whenever and wherever they want as\n long as they meet their agreed-upon deadlines.\n <\/p>\n <\/div>\n <\/div>\n\n \n

    \n
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    \n \"VI\"\n\n <\/div>\n

    IR35<\/h4>\n <\/div>\n
    \n

    \n IR35 is designed for contractors. If you are a UK resident for tax\n purposes, your contract must be assessed through the lens of IR35.\n Freelancers are self-employed and do not need to worry about IR35 or\n perform IR35 assessments.\n <\/p>\n <\/div>\n <\/div>\n <\/div>\n <\/section>\n<\/article>\n\n

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    \n

    Life of a Contractor<\/h2>\n
    \n <\/div>\n\n

    \n At first glance, the life of a contractor can be incredibly appealing.\n Earning significantly more than permanent employees and taking time off\n whenever you like, what’s not to love? The answer is, a lot. While the\n life of a contractor can be gratifying, it can also be very challenging.\n <\/p>\n\n

    \n In this section, I’ll aim to explain the good and the bad of becoming a\n contractor. While I don’t want you to be put off by the idea of\n contracting, I do want you to approach the decision with a pragmatic view\n of what life is really like.\n <\/p>\n <\/section>\n\n \n

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    Increased earnings<\/h3>\n\n \n
    \n
    \n

    The Good<\/h4>\n <\/div>\n
    \n

    \n Contracting pays more than the permanent market, particularly when you\n have a high-demand skillset, and contractors regularly earn over\n \u00a3100,000 per year in non-management roles. In fact, increased earnings\n are the most common reason for entering the contract market. To earn\n the same as a contractor, permanent employees will often need to climb\n the corporate ladder, which is often unappealing.\n <\/p>\n\n

    \n Not only are they paid more per day than an equivalent employee, but\n if they work Outside IR35, contractors can also benefit from efficient\n tax planning.\n <\/p>\n <\/div>\n <\/div>\n\n \n

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    \n

    The Challenge<\/h4>\n <\/div>\n
    \n

    \n As mentioned above, a decision to start contracting is a decision to\n become self-employed and forego almost all employment benefits. No\n more employer’s pension contribution, no more subsidised training, no\n more paid holidays or sick leave.\n <\/p>\n\n

    \n Given the (often significant) increase in take-home pay from\n contracting tends to offset the loss of employment benefits, most\n contractors are happy to forego them for the pay increase.\n <\/p>\n\n

    \n While not necessarily a problem, contractors must also be aware that\n earning over \u00a3100,000 per year comes with the additional\n responsibility of avoiding ‘tax traps’ and (potentially) filing\n self-assessment tax returns.\n <\/p>\n <\/div>\n <\/div>\n <\/section>\n\n \n

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    Greater flexibility and variety<\/h3>\n\n \n
    \n
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    The Good<\/h4>\n <\/div>\n
    \n

    \n One perceived benefit of contracting is that you can choose which jobs\n to take on and which sectors to work in. If you don’t like a business,\n okay, don’t work for them. When the market is good, and plenty of work\n is available, contracting gives greater independence regarding your\n projects. It can provide a great deal of variety, offering the\n possibility to work for several companies across multiple industries.\n <\/p>\n <\/div>\n <\/div>\n\n \n

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    The Challenge<\/h4>\n <\/div>\n
    \n

    \n When the market is bad, however, maintaining a constant flow of work\n can often be quite challenging. If the market is experiencing a\n downturn, you may struggle to find a contract. When this happens, you\n can’t be picky about the work you accept or who you work for.\n <\/p>\n\n

    \n In fact, it’s not uncommon for contractors to find themselves without\n work for significant periods of time. This is why you will always hear\n veteran contractors talk about a ‘war chest’. A war chest is a cash\n reserve that acts as your rainy-day fund, a financial fallback\n intended for use if your income drops or stops altogether.\n <\/p>\n\n

    \n Speaking from experience, when you are into your fourth month without\n work, I can assure you that you won’t be overly picky about your next\n client or the industry they operate in.\n <\/p>\n <\/div>\n <\/div>\n <\/section>\n\n \n

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    Work-life balance<\/h3>\n\n \n
    \n
    \n

    The Good<\/h4>\n <\/div>\n
    \n

    \n Contracting offers a great deal of lifestyle flexibility compared to\n permanent work. As jobs tend to be short-term project-based, taking\n time off between contracts is feasible. If you want to work for six\n months and then take two months off before starting work again, you\n can.\n <\/p>\n\n

    \n If properly saved, the increased take-home pay you earn from\n contracting can be used to subsidise this time off. Whether you want\n to spend time with the family, travel, or pursue other activities,\n contracting makes this possible.\n <\/p>\n <\/div>\n <\/div>\n\n \n

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    The Challenge<\/h4>\n <\/div>\n
    \n

    \n While this increased freedom is fantastic, you must stay on top of\n your finances if you want to take periods of extended leave. It takes\n significant forethought and planning to ensure you have enough saved\n to cover your bills and other outgoings when you’re not working.\n <\/p>\n <\/div>\n <\/div>\n <\/section>\n\n \n

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    Day-to-day working<\/h3>\n\n \n
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    The Good<\/h4>\n <\/div>\n
    \n

    \n As a contractor, you’re spared most of the office politics of trying\n to climb the corporate ladder. You’re hired to do a specific job, and\n you tend to be left alone if you do it well. There’s no pressure for\n you to put in excessive hours, work weekends (unless paid), or strive\n for promotions to secure a salary increase.\n <\/p>\n <\/div>\n <\/div>\n\n \n

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    The Challenge<\/h4>\n <\/div>\n
    \n

    \n That said, day-to-day working can be one of the biggest challenges\n with contracting. You’re repeatedly dropped into unfamiliar\n environments with high expectations to perform while never having job\n security.\n <\/p>\n\n

    \n Every contract you take, every office you work in, every person you\n work with is slightly different. There’s no guarantee that what worked\n in previous roles will work in your next. As a contractor, you need to\n be able to adapt your communication and style of work to fit whatever\n situation may arise.\n <\/p>\n\n

    \n Unlike permanent employees, you’re given little time to ‘find your\n feet’. There is an expectation to hit the ground running and be\n effective from day one. After all, you’ve been hired as a specialist.\n If you cannot do the job, the client can let you go with little\n notice.\n <\/p>\n\n

    \n If you’re not up to scratch, the budget runs out, or the project\n finishes early, there’s a genuine possibility that a client ends your\n contract at short notice. This will inevitably result in a period\n without income while you search for your next contract.\n <\/p>\n <\/div>\n <\/div>\n\n

    \n
    \n \"Highlight\"\n\n <\/div>\n

    \n To become a successful contractor, you need to be comfortable with the\n uncertainty of having no job security.\n <\/p>\n <\/div>\n <\/section>\n\n \n

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    Career<\/h3>\n\n \n
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    The Good<\/h4>\n <\/div>\n
    \n

    \n As a contractor, you gave a great deal of entrepreneurial freedom\n regarding how your career progresses. You choose which skills you’d\n like to develop and what training you’d like to do. You’ll find that\n you gain much greater satisfaction and return on investment when you\n control your own development.\n <\/p>\n\n

    \n Choosing which contracts to take allows you to develop your expertise,\n broaden your experience in different industries, and enhance your CV\n and marketability for future roles.\n <\/p>\n <\/div>\n <\/div>\n\n \n

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    \n

    The Challenge<\/h4>\n <\/div>\n
    \n

    \n This freedom can often be seen as a burden by some. Although it may\n feel empowering to be in charge of how your career progresses, it is a\n significant amount of work.\n <\/p>\n\n

    \n There is no HR department to ensure you’re suitably qualified.\n Everything needs to be done yourself. If you want to ensure you can\n charge a higher rate when your contract expires, you must identify any\n shortfalls in your expertise that may prevent you from doing so.\n <\/p>\n\n

    \n Unlike permanent employment, there is no structured progression. You\n do not automatically get a pay rise or promotion due to the length of\n time served. You need to earn it.\n <\/p>\n\n

    \n While you will find some natural development comes from years of\n working on different types of contracts, it is often not enough. You\n must proactively ensure your skillset is up to par with current trends\n and demand.\n <\/p>\n <\/div>\n <\/div>\n <\/section>\n\n \n

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    Self-employed<\/h3>\n\n \n
    \n
    \n

    The Challenge<\/h4>\n <\/div>\n
    \n

    \n Contractors working Outside IR35 via their own limited company are\n self-employed. As such, they need to maintain appropriate accounting\n records, pay the correct taxes, hold proper levels of insurance and\n more.\n <\/p>\n\n

    \n Whereas for a permanent employee, the company you work for will do\n this for you, contractors must do this themselves. Although\n accountants can help with the administrative burden of running a\n limited company, it is still ultimately the contractor’s\n responsibility to ensure all requirements are met.\n <\/p>\n\n

    \n If you are working Inside IR35 via an umbrella company, then it’s\n slightly different. While you will still need to source contracts, all\n your earnings are taxed at source via PAYE, so there is less of an\n administrative burden.\n <\/p>\n <\/div>\n <\/div>\n <\/section>\n\n \n

    \n

    Summary<\/h3>\n\n

    \n The benefits of contracting are simple. You can earn significantly more\n than you would as a permanent employee while living a more flexible\n work-life balance.\n <\/p>\n\n

    \n These benefits come with significant risks, though. If contracting were an\n easy and safe way of making a living, everyone would do it. Maintaining a\n constant supply of work can often be challenging, and the increased stress\n that comes with no job security isn’t for everyone. That said, if you are\n happy to adopt these risks for the increased rewards, then contracting\n could be right for you.\n <\/p>\n <\/section>\n<\/article>\n\n

    \n \n
    \n
    \n

    Why Contractors Earn More<\/h2>\n
    \n <\/div>\n\n

    \n Contractors earn more than permanent employees for three main reasons: (i)\n They take greater risks, (ii) they’re highly specialised at what they do,\n and (iii) they don’t get benefits.\n <\/p>\n <\/section>\n\n \n

    \n
    \n \n
    \n
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    \n \"I\"\n\n <\/div>\n

    Risk<\/h3>\n <\/div>\n
    \n
    \n

    \n Contractors trade the benefit of earning more with the risks of\n not being in a secure, full-time position. If the market is in a\n downturn, it could take weeks to find a new contract once the old\n one ends.\n <\/p>\n\n

    \n Contractors (especially those working Outside IR35) have virtually\n no employee rights, especially regarding the right of dismissal.\n If permanent employees are let go, the employer must provide a\n valid justification, and the employee can expect a significant\n notice period (usually one to three months). Not so for\n contractors. Contractors can be let go for no reason and often\n only have notice periods of one week.\n <\/p>\n\n

    \n Full-time employees are paid on holidays, during their annual\n leave, and when absent due to sickness. Contractors are not. If a\n contractor has to take an unexpected leave of absence from work or\n the market dips and can’t find a contract for a few months, they\n do not earn income.\n <\/p>\n\n

    \n While there are some insurances you can take to offset this risk\n of falling sick, you cannot insure against the risk of not being\n able to find work.\n <\/p>\n <\/div>\n <\/div>\n <\/div>\n\n \n

    \n
    \n
    \n \"II\"\n\n <\/div>\n

    Specialised<\/h3>\n <\/div>\n
    \n
    \n

    \n Companies that hire contractors tend to do so for short-term\n roles. While contractors can be hired for ‘generic’,\n all-encompassing jobs (such as maternity leave cover), most\n contractors are hired for the specialised knowledge they can bring\n to a specific project.\n <\/p>\n\n

    \n As these projects are usually one-off or unique, it’s often hard\n for a business to find the necessary skillsets in their permanent\n workforce. Contractors, however, tend to have a great deal of\n experience in the industry in which they operate, and businesses\n are willing to pay a premium for this expertise.\n <\/p>\n <\/div>\n <\/div>\n <\/div>\n\n \n

    \n
    \n
    \n \"III\"\n\n <\/div>\n

    No Benefits<\/h3>\n <\/div>\n
    \n
    \n

    \n When comparing how much a permanent employee earns against what a\n contractor makes, it’s often easy to forget to include benefits in\n this assessment. Paid holiday, sick pay, employer pension\n contributions, training, healthcare, and more are often all part\n of a permanent employee’s benefits package.\n <\/p>\n\n

    \n Non-wage compensation is often overlooked in ‘take-home pay’\n comparisons; however, it is usually worth significant money and\n shouldn’t be forgotten.\n <\/p>\n\n

    \n As a contractor, you do not receive any benefits. The only pension\n contributions you get are the ones you make yourself, while any\n insurance or professional development courses are paid out of your\n own money.\n <\/p>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/section>\n\n \n

    \n
    \n
    \n \"Highlight\"\n\n <\/div>\n

    \n The loss of these ‘hidden’ benefits of permanent employment shouldn’t be\n ignored when considering contracting.\n <\/p>\n <\/div>\n <\/section>\n<\/article>\n\n

    \n \n
    \n
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    Who Can Become a Contractor?<\/h2>\n
    \n <\/div>\n\n

    \n While contracting can be lucrative and fulfilling, it isn’t for everyone.\n It takes a particular type of person to thrive under the constant pressure\n and uncertainty of the job. These are the five key traits I believe you\n need to succeed as a contractor:\n <\/p>\n <\/section>\n\n \n

    \n

    Self-motivated<\/h3>\n\n

    \n You’re responsible for finding your next contract. If you’re not actively\n searching when your contract ends, tracking jobs online, and phoning\n agencies, then there’s a good chance you won’t work. You’re also\n responsible for negotiating rate increases, paying taxes and ensuring your\n skillset stays relevant.\n <\/p>\n\n

    \n There are dozens of moving parts you need to stay on top of as a\n contractor. If you’re not self-motivated and proactive about it, you will\n really struggle.\n <\/p>\n <\/section>\n\n \n

    \n

    Mentally resilient<\/h3>\n\n

    \n As a contractor, you must be able to cope with difficult events, handle\n stress, and be comfortable with uncertainty. If you’re not a resilient\n person, then your mental health could suffer.\n <\/p>\n\n

    \n I have personally experienced the following:<\/span\n >\n <\/p>\n\n