Moving from Permanent Employee to Full-Time Contractor

Limited or Umbrella - TaxAgility Accountants LondonIf you’re considering moving from working as a permanent employee into a full-time contractor you likely already know all the benefits of doing so — such as the flexible working hours, higher pay, and the freedom of choice around the projects you take on.

What you may be less aware of is how, exactly, you can make this move, especially if you’ve worked in permanent employment all your life. In a world of increasing job uncertainly, contractors are a cost-effective solution for businesses who require extra assistance on certain tasks, but who can’t afford to take on another employee.

If you’re ready and willing to make the move from permanent employee to full-time contractor, you should start by:

Sending Out Speculative Applications

When you send out speculative applications you’ll give yourself a general view of the marketplace, assuming you send out enough (aim for at least one hundred), to see how businesses react to your proposal.

Don’t worry about everyone replying to you, offering you a contract on the spot. That won’t happen. In fact, depending on the quality of your email (and offer) you can expect only about ten percent of the companies you contact to reply. That’s fine though, as of those who do reply, even if they’re not looking to take on any contractors right now, most will offer to keep your details on file and contact you when something comes up.


This refers to networking at business events (make sure you have some business cards to hand out), and networking online; especially on the professional social network, LinkedIn.

It’s all about getting your name out there. Though you shouldn’t contact clients that you previously worked with when you were a full-time employee for someone else, there’s no reason why you can’t contact individuals who you used to liaise with, but who’ve since moved company (and therefore you’re not taking business away from your former employer).

Forming Your Company

When you first start out contracting you’ll have to make the choice between working through an umbrella company, or forming your own limited company.

We’ve written at length on the differences between umbrella and limited companies in the past, but as a simple explanation, when you work through an umbrella company they take care of the financial side of things; taking payment from clients then paying you, minus tax, national insurance, and their personal fees. When you form a limited company everything (including the financial side) is your responsibility; but you’ll ultimately make more money as you won’t have fees to pay, and you’ll probably be operating outside of IR35 legislation.

Hiring an Accountant

Lastly, if you’ve not done so already you should look to hire an accountant to help you deal with all the unknowns that come from moving from permanent employee to full-time contractor, including all aspects of company formation (see above), opening a business bank account, and setting up with HM Revenue and Customs (HMRC).

To speak with experienced tax accountants to discuss your potential move from permanent employee to full-time contractor, contact us today on 020 7129 1199 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

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