The rise of the contract and freelance workforce in the UK has been well documented
. As the number of self-employed workers increased from 3.3 million in 2001 to 4.8 million in 2017, it’s clear that the appeal of working for yourself has never been stronger. Contracting can offer flexibility, work-life balance, high pay and variety – but what is the reality of going from full-time permanent work to life as a contractor?
Higher rates but fewer benefits
On average, contractors can command significantly higher rates than permanent salaried workers. You can expect your income to vary depending on how long your contracts are for and how much down time you have between jobs, but hourly and daily rates of pay will generally see you take home much more than you would in a salaried role. In addition, contractors can claim back reasonable expenses such as travel, accommodation and subsistence, phone calls and equipment costs. However, these financial savings must be balanced with the loss of employee benefits that comes with the contracting territory. Holiday and sick leave aren’t typically covered with contract work, which means no paid time off. Other perks such as healthcare and insurance, pension schemes and maternity and paternity leave are typically not offered with contract work.
Contractors with niche skillsets, great experience and reliable reputations will always be in demand by employers, particularly in the current skills shortage that is costing UK organisations £6.3 billion. However, there may occasionally be downtime between contracts – particularly if you are looking for a specific opportunity or want to work in a different location – so contractors need to be financially savvy and plan ahead for the quiet times.
A more complicated tax landscape
Contractors effectively have to run their own businesses, much of which involves accountancy. One of the most important considerations for new contractors to make is whether to establish a private limited company or designate an umbrella company to organise payment for you. Both options have their benefits, with most contractors finding umbrella companies offer a more hassle-free solution, while running your own limited company can be more lucrative.
Contractors will quickly become used to logging and submitting timesheets and expenses. At Quanta, we make this easier thanks to our InTime timesheet and expense software and our Self Bill invoicing tool.
The upcoming changes to IR35 regulations
have created some uncertainty amongst contractors, with some contractors now expecting to pay more tax and take home less money than in previous years. If you’re considering moving from permanent work to contracting, consider whether you will fall inside or outside of IR35 and how this could impact your earning expectations. Contracts that are not IR35 compliant may be less appealing for some in the market, but for many, the benefits of contract work go far beyond the tax benefits and IR35 will not be a deterrent.
A more varied and flexible approach to working
Flexibility is often cited as the most important factor
in choosing to move to a freelance or contracting career. For employees who have only ever worked a 9-5, five days a week, the freedom and flexibility of contracting can be very appealing. Contractors have more autonomy over when and how they work and have greater control over their place of work and hours. They can also choose to take extended breaks in between contracts, taking time to travel, rest, see family or complete personal projects. This can mean better work-life balance and more control over how you work. It can also lead to more variety in the type of work you do, with changing contracts generally easier than changing permanent roles. Contracting can see you working in different countries, experiencing different environments and using new technologies, developing new networks and building skills. Once you establish yourself in your industry and build your reputation as a reliable contractor, you can pick and choose your assignments and clients, meaning you only work on the projects that most interest you.
Find your next contract role with Quanta
At Quanta, we make contracting easy
. We understand these types of workers have certain needs and expectations when it comes to the projects they work on, and we endeavour to meet these needs at every step of the way. Take a look at our latest contractor jobs
in life sciences, ICT and renewables and make your move.