Specialist Online Accountants for UK Contractors

Contractor accountancy fees typically range from £75 to £150 per month depending on your turnover, complexity, and services required. Most specialist contractor accountants operate on fixed monthly fees rather than hourly rates, providing transparent pricing. This usually includes company formation, bookkeeping, VAT returns, Corporation Tax, Self Assessment, payroll, and unlimited support. Additional services like IR35 contract reviews may incur extra charges (typically £150-£300 per review).

Whilst any accountant can file your tax returns, specialist contractor accountants offer significant advantages. They understand IR35 legislation thoroughly, know contractor-specific tax planning strategies, provide faster response times, use cloud accounting software as standard, and offer fixed-fee pricing. Regular accountants may lack experience with off-payroll working rules and contractor-specific expense claims. Given that IR35 mistakes can cost thousands in backdated tax, the specialist knowledge is worth the investment.

Limited Company: You're a business owner, paying yourself via salary and dividends. More tax-efficient if outside IR35, but requires more admin and comes with director responsibilities. You keep more of your earnings but need an accountant.

Umbrella Company: You're an employee of the umbrella, who handles all admin and compliance. Simpler but less tax-efficient—you pay full employee tax and NI, plus the umbrella's margin (typically £100-£150/month). Better for inside IR35 contracts or short-term roles.

General Rule: Limited company is better if you're genuinely outside IR35 and earning over £30,000/year. Umbrella suits inside IR35 situations or contractors wanting minimal hassle.

Contractors can claim a wide range of business expenses including: office equipment (laptops, monitors, software), business travel and accommodation, business mileage (45p per mile for first 10,000 miles), professional subscriptions and memberships, business insurance policies, marketing and advertising costs, training and professional development, business phone and internet (proportion used for business), accountancy fees, and home office expenses.

You cannot claim personal expenses, commuting to a permanent workplace (if inside IR35), or entertainment costs without a genuine business purpose. A specialist contractor accountant will advise on what's allowable for your specific situation and ensure claims are defensible if HMRC enquires.

With a specialist contractor accountant, you can form a limited company and be ready to invoice within 24-48 hours. The process involves: company registration with Companies House (same day using fast-track service), registering for Corporation Tax with HMRC (immediate), opening a business bank account (1-5 days depending on the bank), registering as an employer for PAYE (if taking a salary), and VAT registration if required (optional initially, mandatory over £90,000 turnover).

Many contractor accountants offer complete company formation packages handling all registration, providing template contracts, setting up your accounting software, and giving you initial compliance guidance—all within 24 hours so you can start your contract immediately.

The most tax-efficient structure for contractors outside IR35 is taking a small salary (typically around £9,100-£12,570 per year—the personal allowance threshold) plus the remainder as dividends. This approach minimises National Insurance contributions whilst keeping you eligible for state pension credits.

Example: Salary of £12,570 (no income tax, minimal NI), with remaining profits taken as dividends taxed at 8.75% (basic rate) or 33.75% (higher rate) compared to 20-45% income tax plus 12% NI on equivalent salary. On a £60,000 income, this strategy can save £5,000-£8,000 in tax annually compared to being employed.

Your contractor accountant will calculate the optimal salary-dividend split based on your personal circumstances, other income sources, and changes to tax thresholds each year.

Most modern contractor accountants operate primarily online using video calls (Zoom, Teams, Google Meet), email, phone, and messaging platforms for communication. This remote-first approach offers faster response times, flexible meeting schedules, and lower costs compared to traditional high-street accountants.

However, many online accountants will offer face-to-face meetings if needed, either at their office or your location. The benefit of online accountants is flexibility—you can communicate however suits you best, whether that's a quick email, scheduled video call, or in-person meeting. Given that most contractor queries are resolved quickly via email or phone, the online model typically provides better service than waiting for office appointments.

If HMRC opens an enquiry or investigation into your company, your contractor accountant will handle all communication and representation on your behalf. They will: respond to HMRC correspondence, gather required documentation and evidence, prepare written submissions, attend meetings or calls with HMRC, negotiate settlements if necessary, and protect your interests throughout the process.

Most HMRC enquiries into contractor companies focus on IR35 status, expense claims, or VAT compliance. Having a specialist contractor accountant who has maintained proper records and followed best practices significantly reduces your risk. If issues arise, they can often resolve them quickly. Some accountants include tax investigation insurance in their packages, covering professional fees if HMRC investigates (typically worth £100,000+ in cover).

Yes, you can switch contractor accountants at any time during the year. The process is straightforward: choose your new accountant, they'll send a "professional clearance" request to your old accountant (standard protocol), your old accountant confirms no outstanding fees or issues, your new accountant requests your records and files, and the transition is completed (usually within 1-2 weeks).

You may need to pay your previous accountant for work completed up to the switch date. Good contractor accountants make the transition seamless, importing your existing data into their systems and picking up exactly where your previous accountant left off. Many contractors switch accountants to get better service, specialist IR35 advice, or more responsive support—don't stay with an accountant who isn't meeting your needs.

Most specialist contractor accountants use cloud-based accounting software that's Making Tax Digital (MTD) compliant. Popular platforms include:

• Xero: Comprehensive features, excellent for contractors, strong bank feed integration (most popular)
• QuickBooks Online: User-friendly, good mobile app, widely used
• FreeAgent: Designed specifically for contractors and freelancers, includes tax calculators

These platforms connect directly to your business bank account, automatically import transactions, allow receipt uploads via mobile apps, generate invoices, and submit VAT returns directly to HMRC. Your accountant has real-time access to your accounts, making support faster and year-end accounts preparation more efficient. Most contractor accountants include software subscriptions in their monthly fees.