• Cheltenham 01242 241998
  • London 020 7118 4422


(We provide accounting services to contractors in the City of London, Cheltenham and Nationally)


  1. Limited vs Umbrella
  2. Take-Home Pay Calculations
  3. Why Choose Tax Compute Accounting
  4. Our Prices
  5. Making The Right Choice
  6. Contractors & Freelancers Information Pack

IT Contracting       Contractor UK

Contractor Accountants London

Take your next step with Tax Compute Accounting

1. Limited vs Umbrella

Here we will look at the benefits of going limited versus working through an umbrella company. We will compare the two and review the advantages and disadvantages. We will also provide take-home pay calculations for different fee base scenarios...More Contractors - Freelancers information Pack

2. Take-Home Pay Calculations  Take Home Pay Calculations
3. Why Choose Tax Compute Accounting

Tax Compute Accounting is one of the fastest growing practices in the UK. We are a family run business founded in 2014 and we already service a diverse portfolio of Contractors. We are qualified accountants and as such are regulated by two recognised accounting bodies CIMA and ICPA. That means we are duty bound to hold professional indemnity insurance to insure against any losses incurred through bad practice and advice. There are many accountancy firms that bypass this expense.

We possess the skills and experience to be able to provide a premium service to all our contractors. We will ensure that we provide the tax planning needed to maximise take-home pay. We will always provide our contractors with the most effective accounting and business solutions. Our prices are just £80/month + vat for a fully comprehensive service. We do not charge over and above a flat rate of £80/month + vat which means if you have specific tax questions relating to your company it will be researched free of charge. We will also normally answer all queries the same day.

We hope you choose us and look forward to a long and prosperous partnership. If you choose another practise we wish you good luck in your future career.

4. Our Prices

Our prices for a limited company are fixed at £80/month + vat. It is a premium service to include all of the following:

  • Free Initial Consultation
  • Dedicated Accountant
  • Ongoing Support, telephone and regular meetings & updates
  • Company Formation (Company set-up and filing with Companies House)
  • Company Accounts & Corporation Tax (Preparation & annual filing )
  • Self-Assessment
  • Tax Planning
  • VAT Returns
  • Payroll
  • Spreadsheet (monthly bookkeeping)
  • Company Secretarial (All HMRC and Co. House filings and administration)
  • Registered Office
  • IR35 Review
5. Making The Right Choice

When making your choice make sure that you make an informed decision taking into consideration all your personal and business concerns. If you choose an umbrella company you should undertake some research and if possible liaise with fellow professionals for advice and referral. You should also remember that you forgo financial benefits by not going limited. If you need more information or are not sure please contact our accountants at Tax Compute and we'll be happy to offer free advice. There are also several websites such as https://www.contractoruk.com/ which give news and information on all aspects of contracting. We at Tax Compute have put together a checklist on cautionary points you should consider if choosing an umbrella company. They are briefly stated below:

  • Beware of umbrella companies that claim they can deliver a higher take-home pay than that of their competitors. HMRC make the rules and if umbrella companies comply with those rules they should all achieve exactly the same result.
  • Beware of promises that sound suspect. Particularly in respect of the umbrella company claiming that they can claim greater expenses over their competitors. Or they have special dispensations etc... Remember HMRC make the same rules for everyone.
  • Avoid using tax avoidance schemes such as Employee Benefit Trusts and various offshore schemes. These umbrella companies charge much higher fees and are under constant scrutiny by HMRC. In the future you could find yourself in a lawsuit with HMRC and you could end up repaying thousands in back taxes.
  • Use established umbrella companies. Avoid using newer and smaller companies as there is increased risk. Remember they are in control of your money and if they ever go into administration your money will be lost.
  • Make sure that the fees are fixed regardless of your fee base. Avoid using umbrella companies that charge a fixed percentage of your day rate. It will usually work out much more expensive.
  • Umbrella companies are less financially beneficial for long term contractors.

If you choose to use a limited company we at Tax Compute Accounting can offer premium services at an extremely competitive rate. We are one of the fastest growing practices in the UK and are successfully building and enhancing our reputation all the time both locally and nationally. We operate on a fixed rate of £80/month + vat. We consider our fees to represent exceptional value for money

6. Contractors & Freelancers Information Pack  Take Home Pay Calculations

Contractor Accountants Services
CHELTENHAM  01242 241998


Introduction UK contractor numbers continue to rise as many more people are opting to become their own boss, according to new research. A study produced by Kingston University and commissioned by the Association of Independent Professionals and the Self-Employed (IPSE) has concluded that there are now more than 1.88 million freelancers and contractors in the UK. In particular, there has been a strong increase in the number of female professionals who are looking to start their own successful business, with a 41.2 per cent rise in numbers since 2008, compared to 30.5 per cent growth in the number of males. We will now look at how to become a Contractor in the UK.

Making the decision to go self employed

The contracting sector is evolving fast and many professionals are taking the step into contracting because of the benefits. Individuals who choose to become Contractors have several reasons for doing so. The two main reasons are greater earnings capability and the benefits of being your own boss. Additionally Contractors gain more varied experience thus enhancing their CV and future marketability. But before deciding to leave permanent employment and go contracting it is essential that you determine the marketability of your skill set. In other words do you possess skills that are in high demand and you can easily find work. Also, do not quit your job until you are sure that you have a contract to go or you are confident of gaining a new contract. As a Contractor you must be highly proficient in your chosen field of expertise with the skills and contacts to succeed as a Contractor.
Getting your first contract

  • Through Agencies
  • Linkedin and Social Media
  • Direct Contracts

Getting your first contract will depend on your individual circumstances and the preference of the client. Even if you have many contacts in your chosen industry and source your own contract it is more likely that the client will prefer the agency route so as to maintain an arms-length relationship.

What is IR35?
In a nutshell IR35 is a piece of legislation designed to prevent contractors from acting as 'disguised employees'. Tax Compute Accountants will conduct an IR35 review and ensure that your business is compliant with IR35 legislation and you are acting within the legal framework. Our review will ensure that you are trading legally and correctly as a contractor or freelancer. It is important to note that there are significant financial benefits in working outside of IR35.

Are you caught by IR35?
The first and most important point is to establish whether you are 'employed' or 'self-employed' under HMRC's rules. Essentially the question is whether the contract under HMRC rules is classed as an employment contract. There are basic tests to determine whether the contract is one of employment or not and this will determine whether the Contractor is self-employed or employed.
A Contractor will be outside IR35 if he/she can show that:
  1. Control - You control how the work is done and how it is completed. It is important that a contractor can demonstrate a certain amount of autonomy in the way they undertake a project.
  2. Substitution - Other suitably qualified contractors or sub-contractors can take over the work from you. The right to provide a substitute in a contractual agreement is an important factor when demonstrating to HMRC that the contract falls outside the scope of IR35. However, you should still retain the risk and control.
  3. Mutuality of obligations - Outlining the obligations of Client and Contractor to ensure that there is no obligation for further work when the contract ends. (This would normally be the case for an employee). The contract needs to state a clear end date or termination of the contract based on the completion of the project or works.

When you decide to become a contractor you will need to consider what will be your trading status. Are you going to use an umbrella company, form a limited company, work through an employment agency or simply act as a sole trader? Your individual circumstances, IR35 status and your annual remuneration will be major factors in making that decision. The overriding factors will be which one gives you the greater financial benefit and least administrative burden. A cost versus benefit analysis will help make that decision, taking into account all the relevant issues. Make sure that you receive sound advice from us before making your decision. However, it should be noted that if you are outside IR35 then a limited company is always by far the best option.

Umbrella Company
An umbrella company is a company that acts as an employer to contractors who work under a fixed term contract assignment. The umbrella company will be responsible for billing and collecting payment from the client. They in turn will pay the contractor the agreed salary net of payroll tax, NI and the agreed management fee.

Umbrella companies have become more prevalent in the UK since the introduction of IR35 legislation and it is estimated that 14% of the UK's professional contractors are currently managing their business by working through an umbrella company.

Limited Company
HMRC defines a limited company as an organisation that you can set up to run your business - it's responsible in its own right for everything it does and its finances are separate to your personal finances. Any profit it makes is owned by the company, after it pays Corporation Tax. The company can then share its profits.

Sole Trader
The simplest method of contracting as your own boss. As a sole trader, you run your own business as an individual and you keep all your business's profits after you've paid tax on them. The term 'Sole Trader' doesn't mean that you cannot employ staff, it simply means that you are responsible for the business, not that you have to work alone.

Some agency workers are engaged by an employment agency to perform fixed term assignments at various businesses. Other agency workers are permanent employees of the employment agency, directly employed by the agency and sent to work for different businesses. This category is really about employment rather than being a contractor and running a business.

This is the last step in the process and there are several contractual relationships that can exist between contractor and client.
  1. Contract between limited company and client
  2. Agency contract
  3. Umbrella Company


When working as a contractor it is absolutely essential to take out contractor insurance as a safeguard against any malpractice claims that are brought against you. Although you maybe an expert in your chosen field mistakes can still happen and it could lead to significant losses for the client. If this were to happen the client may then sue you for negligence. So make sure you have adequate Professional Indemnity and Public Liability insurance.

Remember mistakes can be costly and in some cases could run into hundreds of thousands of pounds and bankrupt you. Although not compulsory we at Tax Compute Accountants recommend that you take out indemnity insurance. Cover can start for as little as £40/month and of course it is tax deductible.

Don't delay and consult a reputable insurance broker for advice. You can also visit www.contractoruk.com for information on contractor insurance.


A limited company contractor is simply a contractor that uses a limited company to run his contracting business. By using a limited company the contractor gains the best tax advantage and keeps his/her business affairs separate from personal finances. The contractor through his limited company will sign Contracts with agents and clients. He/she will also utilise a separate bank to record and book all revenues and expenses.

At first it may appear to contractors that running a limited company will create additional work and red tape and you may therefore consider the umbrella option as preferable. However, running a limited company is not rocket science and the whole process is made relatively easy for the contractor as the accountant will do most of the bookkeeping and compliance

There are many advantages for contracting through limited companies;

  • Tax efficient and can claim more expenses.
  • Take advantage of the flat rate VAT scheme, the 5% allowance and the employment allowance.
  • Retain risk and control.
  • Many clients prefer to deal with limited companies or agencies so as to maintain an arms-length relationship.


How much do accountants charge for bookkeeping?
This varies considerably between different accountancy practices. You could spend as little as £20/month or much more depending on the amount of transactions and of course the accountancy firm you engage
For Contractors the bookkeeping is relatively straight forward and provided the contractor uses our spreadsheet to record all revenues and expenses then the cost is included in our standard £80/month premium service. If the Contractor wants Tax Compute to organise all the bookkeeping then there would be an additional £20/month

How much does an accountant cost for a small business?
Most contractor accountants adopt the fixed monthly fee basis for their clients. Charging for accountancy services by time the traditional hourly billing has had its day. The rates vary depending on the type of service the contractor requires and the firm he/she chooses to engage. Rates can be advertised as low as £60/month or as much as £150/month or in some cases much more. We at Tax Compute charge £80/month for a premium service. Please see our "Accounting Prices" section for full details.

What do Accountants do for small business?
We at Tax Compute can help small businesses and contractors in areas that many other accountancy practices have limited experience of. For example;

  • As Chartered Management Accountants we have worked in real businesses and therefore have real business knowledge.
  • Our training is both practice and industry based encompassing all areas of financial and management accounting as well as financial management and taxation.
  • Because we understand how businesses work we can;
    1. Better help to achieve your goals
    2. Suggest ways to improve overall profitability
    3. Provide advice on improving cash management
    4. Help you with preparing budget and cash flow forecasting and provide you with effective business solutions

Finally, at Tax Compute Accountants our mission is in building long term relationships with our clients and providing them with a premium service that exceeds expectations. Are you in tune with our mission statement? We'd love to hear from you so please call Jon Gunning on 0333 666 7555 or email us at info@taxcompute.co.uk

Working outside the scope of IR35 and knowing what is claimable are the two most important issues when freelancing or contracting.


We carry out an analytical review and quality checks before submitting your tax return. We ensure compliance and timely submission.


Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy.


The VAT return shows the calculation of the amount of VAT due on sales minus the amount of VAT reclaimable on purchases. The result is the amount payable to HMRC.


Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation


Within a company, payroll is the combination of all of the financial records of their employees' salaries, wages, bonuses and deductions. In accounting, the term payroll signifies the amount that has been paid out to employees for the services they have done for the organization within a certain period of time


Corporation tax is a tax placed on the taxable profits of limited companies and other organisations such as clubs, societies, associations, and unincorporated entities.


You can register online with Companies House if your company is limited by shares and uses standard articles of association (known as 'model articles'). Otherwise, you must use a different method of registration. Your company will also need to register for Corporation Tax within 3 months of starting to do business


Working outside the scope of IR35 and knowing what is claimable are the two most important issues when freelancing or contracting.