Quick answer: A contractor accountant runs your limited company compliance, reviews your IR35 status contract by contract, and structures salary, dividends and pension contributions to maximise take-home pay. Bayar Hughes & Co, chartered certified accountants in New Eltham, London since 1991, supports contractors and freelancers on fixed monthly fees, in person or fully online.
IR35: Inside or Outside Matters More Than Your Rate
IR35 (the off-payroll working rules) decides whether HMRC treats you as genuinely in business or as a disguised employee — and the difference can be thousands of pounds a year on the same day rate. Since the 2021 reforms, medium and large clients determine your status and issue a Status Determination Statement; for small clients, the responsibility stays with you and your company.
Status turns on the working reality, not the label on the contract. The key factors are:
- Substitution — could you genuinely send someone else to do the work?
- Control — who decides what is done, and how, when and where?
- Mutuality of obligation — is the client obliged to offer work, and you to accept it?
- Supporting factors such as financial risk, own equipment, and working for multiple clients
We review contracts and working practices before you sign, help you respond to determinations you disagree with, and keep evidence on file in case HMRC ever asks.
Limited Company or Umbrella?
For contracts outside IR35, a limited company is usually the most tax-efficient structure: you can pay yourself a modest salary, take the rest as dividends, claim legitimate business expenses and make employer pension contributions from pre-tax profit. For contracts inside IR35 — or for short stints where company admin isn't worth it — an umbrella company that employs you and handles PAYE can be the pragmatic choice, though fees and employment costs come off your rate.
Many contractors now mix both across a year. We help you compare the real net position for each contract, keep a dormant or active company as your circumstances change, and close a company down tax-efficiently if contracting ends.
Take-Home Pay, Expenses and the Limits of CEST
Maximising take-home pay is about more than the salary-and-dividend split. Timing dividends across tax years, using pension contributions, claiming allowable expenses (travel to temporary workplaces, equipment, software, insurance, home office) and choosing sensible VAT treatment all move the needle. We build a plan around your contracts rather than applying a one-size-fits-all template.
A word of caution on HMRC's CEST tool: it is widely used but has real limitations — it does not fully weigh mutuality of obligation, returns an "unable to determine" result in a significant minority of cases, and its outcome only protects you if the information entered was accurate and the tool was used properly. Treat CEST as one piece of evidence, not a verdict. An independent professional review of the contract and your actual working practices is far stronger ground to stand on.
Services for Contractors & Freelancers
Limited Company Accounts
Year-end accounts, corporation tax returns, director payroll and dividend planning for lim…
Payroll Services
Outsourced payroll that runs itself — RTI submissions, pensions auto-enrolment, payslips, …
VAT Returns & Registration
VAT registration, quarterly Making Tax Digital returns and scheme advice that keeps you co…
Self Assessment Tax Returns
Accurate, stress-free tax returns for sole traders, landlords, directors and high earners …
Tax Planning
Proactive personal and business tax planning — pay what you owe, and not a penny more.…
Company Formation
Hassle-free company formation — multi-jurisdiction incorporation, registrations and everyt…
Frequently Asked Questions
How much does a contractor accountant cost?
Specialist contractor accounting is usually a fixed monthly fee — typically somewhere between £80 and £180 a month — covering company accounts, corporation tax, payroll, VAT and ongoing advice. Bayar Hughes & Co agrees the fee up front so you always know where you stand.
How do I know if my contract is inside or outside IR35?
Status depends on substitution, control and mutuality of obligation in your actual working arrangements, not just the contract wording. For medium and large clients, they decide and must give you a Status Determination Statement. We review contracts and working practices and give you a reasoned written opinion.
Is it better to go limited or umbrella as a contractor?
Outside IR35, a limited company usually delivers better take-home pay and more flexibility. Inside IR35, or for short contracts, an umbrella often makes more sense despite its fees. Many contractors use both at different times — we run the numbers for each contract so you can choose with the facts.
What expenses can I claim as a contractor?
Through your company you can typically claim travel to temporary workplaces, accommodation and subsistence on those trips, equipment and software, professional insurance, training, accountancy fees and a home-office amount. Inside-IR35 engagements restrict expense relief significantly, so status shapes what you can claim.
Can I rely on the CEST tool for my IR35 status?
CEST gives a useful indication and HMRC says it will stand by results based on accurate inputs, but it doesn't fully test mutuality of obligation and returns no answer in a meaningful share of cases. We recommend pairing it with an independent contract review and written evidence of your working practices.