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umbrella company uk for contractors
  • Limited Company
    • Contracting via a limited company – advantages and disadvantages
    • How to set up a limited company as a contractor
    • Limited or umbrella company – which is best for contractors?
    • Choose a limited company name — and what to do If you change your mind
  • Umbrella Company
    • How to compare umbrella companies: 20 things to consider
    • Contractor umbrella company fees – how much do they charge?
    • How can you find umbrella company reviews?
    • Umbrella Company Directory
    • Umbrella Company Calculator
  • IR35
    • IR35 and Off-Payroll explained – a simple beginner’s guide
    • When was IR35 introduced? Timeline from 1999 to 2023
    • Download free IR35 contract templates and example clauses
    • Guide to IR35 contract review services for IT contractors
  • Accounting
    • Contractor accountants – what to look out for
    • Do you have to appoint an accountant for your limited company?
    • Contractor accountant fees – what are the typical costs?
    • Your company annual accounts – the basics, and filing deadlines
    • Accountants Directory
  • Tax
    • What is the most tax-efficient director’s salary in 2025/26?
    • Corporation tax – guide for limited company contractors
    • Limited company tax basics for contractors
    • What are limited company dividends and how are they taxed?
  • Expenses
  • Insurance
    • Professional Indemnity
    • IR35 Insurance
    • Employers Liability
    • Public Liability
    • Life Insurance
    • Income Protection
    • Private Medical Cover
    • Critical Illness Cover
  • Work
  • Finances
    • Contractor Pensions
    • What is a SIPP?
    • Contractor Mortgages
    • Business Banking
    • Tide Bank Account

Contractor Tax Guides

As a contractor, you must pay tax on the profits you generate from your contract work. I

If you are an umbrella worker, you are an ’employee’, and your umbrella company will calculate and deduct and tax from your income. You won’t have to submit any additional paperwork unless you have any untaxed income outside of your umbrella earnings.

As a limited company contractor, you are responsible for calculating the tax your business owes and paying any liabilities to HMRC on time.

Most limited contractors outsource these tasks to their accountants, however, you should be aware of how business tax works in practice.

Here are some of our most popular limited company tax guides.

  • Contractor expenses – what can a limited company claim against its Corporation Tax liability? And what costs are excluded?
  • National Insurance – what is it? – contractors are liable to pay Class 1 NICs on salaries. What are the current rates?
  • Guide to Corporation Tax – what it is, how to register, what are the deadlines, and how CT applies to limited companies.
  • Salary vs. dividends – what’s the optimum balance for limited company owners during the current tax year?
  • Value Added Tax (VAT) – what it is, how to register, and how it is collected? An overview of the various VAT options.
  • What are dividends? – most of your income as a company owner will be funded by dividends. What are they, and how are they taxed?
  • Dividend Calculator – work out your tax liability at self-assessment time, courtesy of this useful online calculator.
entrepreneurs relief

What is BADR (entrepreneurs’ relief)? Guide for company owners

Posted by By James Leckie 3rd May 2025
If you dispose of or sell all or part of your business, you may be able to claim BADR on the proceeds and pay 14% instead of the standard CGT rate.
Read More
Capital Gains Tax it contractor

IT contractors and Capital Gains Tax (CGT)

Posted by By James Leckie 1st May 2025
If you make money from the disposal of assets, you might have to pay Capital Gains Tax on the proceeds. What is CGT and what are the current CGT rates?
Read More
Self Assessment Tax Return

Self assessment on limited company dividend income

Posted by By James Leckie 24th April 2025
A contractor recently sent in an question asking whether or not his wife needs to register to fill in a tax return, even though no tax will be payable on her dividend income.
Read More
salary vs dividend

What is the most tax-efficient director’s salary in 2025/26?

Posted by By James Leckie 6th April 2025
As a limited company director, what is the most tax-efficient salary to pay yourself in the 2025/26 tax year, and any other employees?
Read More
IT Contractor National Insurance

National Insurance (NIC) guide for IT contractors

Posted by By James Leckie 2nd April 2025
Employers and employees must pay National Insurance Contributions (NICs) on all salaries. Here we look at how the rates are calculated in 2025/26.
Read More
limited company contractor car taxed

IT contractors and company car tax – with examples (2025/26)

Posted by By James Leckie 2nd April 2025
Important tax considerations to bear in mind when deciding whether to buy a company car, or claim a mileage allowance for business use of your own car.
Read More
Contractor Employment Allowance

Can your limited company claim the Employment Allowance (EA)?

Posted by By James Leckie 1st April 2025
Your company may be able to reclaim up to £10,500 of Employers' National Insurance Contributions from HMRC each year, thanks to the Employment Allowance.
Read More
it contractor tax

Limited company tax basics for contractors

Posted by By James Leckie 1st April 2025
A concise guide to the taxes you will encounter as a limited company contractor - Corporation Tax, VAT, National Insurance, Income and Dividend Tax.
Read More
training it contractor costs

Which training expenses can you claim via your company?

Posted by By James Leckie 26th March 2025
Ongoing training is key to enhancing your existing skills, and sourcing new work, but which training costs can you claim via your company's tax bill?
Read More
Self assessment

Self-Assessment – how do payments on account work for contractors?

Posted by By James Leckie 11th March 2025
As a limited company contractor, you need to set funds aside for your annual tax return liability, which is where ‘payments on account’ come into play.
Read More

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