{"id":5121,"date":"2026-01-21T11:00:27","date_gmt":"2026-01-21T11:00:27","guid":{"rendered":"http:\/\/localhost:8080\/?page_id=5121"},"modified":"2026-04-14T09:54:11","modified_gmt":"2026-04-14T09:54:11","slug":"inside-ir35-checklist","status":"publish","type":"page","link":"https:\/\/staging.qualitycontracts.co.uk\/guides\/inside-ir35-checklist\/","title":{"rendered":"Inside IR35 Checklist"},"content":{"rendered":"\n<article class=\"ir35-article\">\n  <!-- Intro Section -->\n  <div class=\"ir35-intro-section\">\n    <div class=\"ir35-bordered-block\">\n      <p class=\"ir35-text\">\n        Navigating an Inside IR35 contract can be a daunting process for UK\n        contractors, especially with the additional complexities around tax,\n        employment structures, and financial planning. This comprehensive\n        checklist is\n        <strong\n          >designed to simplify your journey and ensure you&#8217;re well-prepared to\n          handle the challenges of Inside IR35 engagements.<\/strong\n        >\n      <\/p>\n      <p class=\"ir35-text\">\n        From agreeing on your assignment rate and selecting an umbrella company\n        to managing your tax obligations and building financial resilience, each\n        step is carefully outlined to guide you. This checklist also includes\n        essential considerations like insurance options, pension contributions,\n        and strategies to avoid the dreaded 60% tax trap. Additionally, it\n        highlights the importance of maintaining a robust &#8220;war chest&#8221; to\n        safeguard against unforeseen gaps in income.\n      <\/p>\n      <p class=\"ir35-text\">\n        Whether you&#8217;re new to Inside IR35 contracts or looking for ways to\n        optimise your approach, this guide is your\n        <strong\n          >practical roadmap to stay compliant, maximise your income, and plan\n          effectively for the future.<\/strong\n        >\n        Dive in to ensure you&#8217;re fully equipped for your next assignment.\n      <\/p>\n    <\/div>\n  <\/div>\n\n  <div class=\"ir35-key-takeaways\">\n    <div class=\"ir35-key-takeaways__inner\">\n      <h3 class=\"ir35-key-takeaways__title\">Inside IR35 Checklist<\/h3>\n      <ul class=\"ir35-key-takeaways__list\">\n        <li>Assignment rate<\/li>\n        <li>Umbrella company<\/li>\n        <li>Insurance<\/li>\n        <li>Timesheets<\/li>\n        <li>Self-Assessment<\/li>\n        <li>Tax Code<\/li>\n        <li>Pension<\/li>\n        <li>60% tax trap<\/li>\n        <li>War chest<\/li>\n      <\/ul>\n    <\/div>\n  <\/div>\n\n  <!-- 1. Agree your assignment rate -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">1. Agree your assignment rate<\/h3>\n\n    <p class=\"ir35-text\">\n      Once you accept an Inside IR35 contract, you must agree on an assignment\n      rate with the end hirer. The client may have already decided on the\n      assignment rate in advance; however, you&#8217;ll need to negotiate if they\n      haven.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      It&#8217;s important to remember that the assignment rate is different to gross\n      pay. It consists of employment costs, the umbrella company&#8217;s margin, and\n      the actual wages payable to you (your gross income).\n    <\/p>\n\n    <p class=\"ir35-text\">\n      Given the above, Inside IR35 rates are usually higher than Outside IR35\n      rates, although unfortunately, not always by enough to offset the\n      increased tax liabilities. There is no fixed rule, but most contractors\n      ask for a 20% and 30% uplift on their Outside IR35 rates.\n    <\/p>\n\n    <div class=\"ir35-highlight\">\n      <div class=\"ir35-highlight__icon\">\n        <img decoding=\"async\"\n          src=\"\/guides\/wp-content\/themes\/astra-child\/images\/exclamation.png\"\n          alt=\"Highlight\"\n        \/>\n      <\/div>\n      <p class=\"ir35-highlight__text\">\n        You can use our\n        <a\n          href=\"https:\/\/qualitycontracts.co.uk\/calculators\/inside-ir35-umbrella-company-calculator\"\n          >Inside IR35 (Umbrella Company) Calculator<\/a\n        >\n        to help determine what contract rate you should be asking for.\n      <\/p>\n    <\/div>\n  <\/section>\n\n  <!-- 2. Find an umbrella company -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">2. Find an umbrella company<\/h3>\n\n    <p class=\"ir35-text\">\n      Once you accept an Inside IR35 contract, you&#8217;ll need to find an umbrella\n      company to work through. There are other methods of working Inside IR35\n      (agency payroll, client payroll, etc); however, working through an\n      umbrella company is the most common.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      Our guide on How to Choose an Umbrella Company will help you decide which\n      one to go for. Once you have decided which umbrella company to work\n      through, a contract of employment is signed, effectively making you an\n      employee of the umbrella company for the length of the contract.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      Remember, recruitment agencies and end clients often have a preferred\n      suppliers list, an exclusive list of umbrella companies they work with. If\n      you want to work with a particular agency or client, your choice of which\n      umbrella company to use could be restricted.\n    <\/p>\n  <\/section>\n\n  <!-- 3. Consider insurance -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">3. Consider insurance<\/h3>\n\n    <p class=\"ir35-text\">\n      Unlike Outside IR35 contracts, where you work through a limited company,\n      there are no insurance requirements while working through an umbrella\n      company. That said, you may want to consider taking out:\n    <\/p>\n\n    <div class=\"ir35-bullet-list\">\n      <ul class=\"ir35-bullet-list__items\">\n        <li>\n          <p class=\"ir35-text-blue\">\n            \u2022 End Client and Umbrella Company Default Cover.\n          <\/p>\n          <p class=\"ir35-text\">\n            This is designed to cover you for outstanding invoices should your\n            end client or umbrella company go bankrupt or be put into\n            administration while still owing you money.\n          <\/p>\n        <\/li>\n        <li>\n          <p class=\"ir35-text-blue\">\u2022 Illness and Injury Cover<\/p>\n          <p class=\"ir35-text\">\n            Insurance designed to reimburse you should you fall ill or become\n            injured and be unable to work. As an umbrella company employee, you\n            are entitled to statutory sick pay; however, the allowance is\n            relatively low compared to what most contractors are used to.\n          <\/p>\n        <\/li>\n        <li>\n          <p class=\"ir35-text-blue\">\u2022 Jury Service Cover<\/p>\n          <p class=\"ir35-text\">\n            This insurance compensates you based on your contractual day rate\n            should you be called up to jury service and be unable to work.\n          <\/p>\n        <\/li>\n      <\/ul>\n    <\/div>\n\n    <p class=\"ir35-text\">\n      <a href=\"https:\/\/www.goqdos.com\/\">Qdos<\/a> Insurance can provide all of\n      the above\n    <\/p>\n  <\/section>\n\n  <!-- 4. Maintain timesheets -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">4. Maintain timesheets<\/h3>\n\n    <p class=\"ir35-text\">\n      Once you start working, you must provide a timesheet detailing the work\n      hours for each contractually agreed payment cycle (usually weekly). These\n      are typically submitted through an online portal and countersigned by your\n      client.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      The umbrella company will invoice the end client directly, the amount\n      being determined by the contractually agreed rate and the number of hours\n      recorded in your timesheets. The umbrella company will then deduct\n      employment costs and their margin from the amount received.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      The remainder (minus any pension contributions) will be paid to your bank\n      account via PAYE. The umbrella company will ensure all required taxes are\n      paid directly to HMRC.\n    <\/p>\n  <\/section>\n\n  <!-- 5. Register for self-assessment -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">5. Register for self-assessment<\/h3>\n\n    <p class=\"ir35-text\">\n      A question we are often asked is: &#8220;If I&#8217;m working Inside IR35 via an\n      umbrella company, do I need to register as self-employed?&#8221;. The short\n      answer to this is: it&#8217;s unlikely.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      If your only income in a tax year is paid through an umbrella company, and\n      you don&#8217;t meet any of the criteria outlined in our Self-Assessment Guide,\n      you won&#8217;t be required to submit a self-assessment tax return. However,\n      there are several additional criteria that, if met, mean you will likely\n      be required to submit a self-assessment.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      You must submit a self-assessment if you have worked Outside IR35 via a\n      limited company during the same tax year as you have been engaged via an\n      umbrella company. Alternatively, if you think you have overpaid tax and\n      are owed a rebate, then submitting a self-assessment is in your interest.\n    <\/p>\n  <\/section>\n\n  <!-- 6. Consider your tax code -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">6. Consider your tax code<\/h3>\n\n    <p class=\"ir35-text\">\n      Your personal allowance reduces by \u00a31 for every \u00a32 that your adjusted net\n      income is above \u00a3100,000, meaning it reduces to zero if your income is\n      \u00a3125,140 or above. HMRC reflect your adjusted allowance in your tax code.\n      A tax code of 1257L reflects the full personal allowance, while 0L\n      reflects no personal allowance.\n    <\/p>\n\n    <div class=\"ir35-highlight\">\n      <div class=\"ir35-highlight__icon\">\n        <img decoding=\"async\"\n          src=\"\/guides\/wp-content\/themes\/astra-child\/images\/exclamation.png\"\n          alt=\"Highlight\"\n        \/>\n      <\/div>\n      <p class=\"ir35-highlight__text\">\n        As a rough guide, a contractor earning \u00a3525 per day, working 220 days\n        per year, and making no pension contributions will breach the \u00a3100,000\n        threshold.\n      <\/p>\n    <\/div>\n\n    <p class=\"ir35-text\">\n      Although Inside IR35 contractors working through an umbrella company will\n      have their taxes deducted at source, ensuring the correct amount of tax is\n      paid remains your responsibility. If you think you will generate more than\n      \u00a3100,000 in taxable income, it is up to you to let HMRC know. The umbrella\n      company will not do this.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      You may underpay tax if you don&#8217;t contact HMRC and your tax code is\n      incorrect. If this happens you will face a large lump sum tax bill at the\n      end of the year. You can check your tax code, Personal Allowance and\n      estimated income via HMRC&#8217;s\n      <a href=\"https:\/\/www.gov.uk\/check-income-tax-current-year\"\n        >online portal<\/a\n      >.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      HMRC&#8217;s phone operators are well-versed in discussing tax codes and your\n      options. It&#8217;s best practice to give them a ring and explain your contract\n      rate and how much you think you will earn in the tax year. They will then\n      decide whether your tax code is correct or needs adjusting. If it needs\n      adjusting, they will automatically issue an updated code to your umbrella\n      company.\n    <\/p>\n\n    <div class=\"ir35-highlight\">\n      <div class=\"ir35-highlight__icon\">\n        <img decoding=\"async\"\n          src=\"\/guides\/wp-content\/themes\/astra-child\/images\/exclamation.png\"\n          alt=\"Highlight\"\n        \/>\n      <\/div>\n      <p class=\"ir35-highlight__text\">\n        Many contractors increase their pension contributions to ensure their\n        qualifying income remains below the \u00a3100,000 limit and they receive the\n        total personal allowance.\n      <\/p>\n    <\/div>\n  <\/section>\n\n  <!-- 7. Contribute to your pension -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">7. Contribute to your pension<\/h3>\n\n    <p class=\"ir35-text\">\n      If you want to contribute to a pension, you must decide whether to\n      contribute to a workplace pension or sacrifice salary into a SIPP. Most\n      contractors opt out of the workplace pension and contribute to a SIPP of\n      their choosing. As salary sacrifice reduces Income Tax and National\n      Insurance, it is the best option for those seeking to minimise their tax\n      liabilities.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      You must speak to your umbrella company if you want to contribute via\n      salary sacrifice. Given the extra administrative burden, it often comes\n      with supplementary fees, although these are usually minimal.\n    <\/p>\n  <\/section>\n\n  <!-- 8. Avoid the 60% tax trap -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">8. Avoid the 60% tax trap<\/h3>\n\n    <p class=\"ir35-text\">\n      As mentioned above, the standard personal allowance is \u00a312,570 per year.\n      However, if your income exceeds \u00a3100,000, this is reduced by \u00a31 for every\n      \u00a32 over \u00a3100,000. What this means in real terms is that, for every \u00a3100\n      you earn between \u00a3100,000 and \u00a3125,140, you only get to keep \u00a340.\n    <\/p>\n\n    <div class=\"ir35-highlight\">\n      <div class=\"ir35-highlight__icon\">\n        <img decoding=\"async\"\n          src=\"\/guides\/wp-content\/themes\/astra-child\/images\/exclamation.png\"\n          alt=\"Highlight\"\n        \/>\n      <\/div>\n      <p class=\"ir35-highlight__text\">\n        Of the \u00a360 you don&#8217;t keep, \u00a340 is deducted in Income Tax, and \u00a320 is\n        lost to the taper. As this is an effective tax rate of 60%, it is known\n        as a &#8216;tax trap&#8217;.\n      <\/p>\n    <\/div>\n    <p class=\"ir35-text\">\n      Most contractors try to avoid the 60% tax trap by paying more into their\n      pension, reducing their qualifying earnings below the \u00a3100,000 threshold.\n      Not only does this save Income Tax, it boosts your retirement fund at the\n      same time.\n    <\/p>\n  <\/section>\n\n  <!-- 9. Build a war chest -->\n  <section class=\"ir35-section\">\n    <h3 class=\"ir35-title-h3\">9. Build a war chest<\/h3>\n\n    <p class=\"ir35-text\">\n      A &#8216;war chest&#8217; is a cash reserve that acts as your rainy-day fund, a\n      financial fallback intended for use if your income drops. As a contractor,\n      your income can drop for any number of reasons.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      You may be forced to take sick leave. A client could be late paying an\n      invoice. Or, most commonly, you may not be able to find a contract,\n      experiencing a break between assignments. It is a very real possibility\n      that you go for months without work (and income).\n    <\/p>\n\n    <p class=\"ir35-text\">\n      If this happens, you must have money put aside to cover your outgoings,\n      particularly if you have dependents like children. Although you should\n      already have a war chest before starting to contract, I recommend topping\n      it up with whatever you can afford when working.\n    <\/p>\n\n    <p class=\"ir35-text\">\n      How much is enough? Only you can answer that based on your monthly\n      outgoings. A good rule of thumb is to save enough so that you can survive\n      if you go without income for 6 to 9 months. Although this may sound\n      excessive, the more you save into your war chest, the less stressed you&#8217;ll\n      be when you go through a period without work.\n    <\/p>\n  <\/section>\n<\/article>\n\n","protected":false},"excerpt":{"rendered":"<p>Navigating an Inside IR35 contract can be a daunting process for UK contractors, especially with the additional complexities around tax, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"page-inside-ir35-checklist.php","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"acf":[],"_links":{"self":[{"href":"https:\/\/staging.qualitycontracts.co.uk\/guides\/wp-json\/wp\/v2\/pages\/5121"}],"collection":[{"href":"https:\/\/staging.qualitycontracts.co.uk\/guides\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/staging.qualitycontracts.co.uk\/guides\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/staging.qualitycontracts.co.uk\/guides\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.qualitycontracts.co.uk\/guides\/wp-json\/wp\/v2\/comments?post=5121"}],"version-history":[{"count":6,"href":"https:\/\/staging.qualitycontracts.co.uk\/guides\/wp-json\/wp\/v2\/pages\/5121\/revisions"}],"predecessor-version":[{"id":5185,"href":"https:\/\/staging.qualitycontracts.co.uk\/guides\/wp-json\/wp\/v2\/pages\/5121\/revisions\/5185"}],"wp:attachment":[{"href":"https:\/\/staging.qualitycontracts.co.uk\/guides\/wp-json\/wp\/v2\/media?parent=5121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}