The Benefits of Becoming an Independent Contractor

There really never has been a better time to join the exciting and rewarding world of contracting, what with permanent employee benefits being significantly reduced, final salary pensions disappearing and salaries being cut.

So, whether you’ve chosen to become an independent contractor or you’ve considered the idea due to being made redundant, it could well be the best decision you’ve ever made, and here’s why…

Financial Benefits

There are so many ways in which independent contractors can benefit financially compared to a permanent worker, and rightly so seems that they’re not entitled to certain employee benefits, such as holiday and sick pay…

Rates – An average independent contractor rate can easily be double that of a full time employee, sometimes even more and this is mainly because they can offer their client’s both specialist skills and flexibility.  The fact that they’ll usually only be carrying out short-term projects without the added employee benefits means that it’ll still be more cost effective for the company. This contractor calculator can give you an idea of how much your take home pay could be as an independent contractor.

Expenses – Another huge advantage to contracting is being able to claim back on business expenses.  Now, the type of expenses you can claim will depend on a number of different factors, such as whether you decide to contract through an umbrella company or your own Limited company, as well as your status within the IR35 legislation.

However, all independent contractors will be able to claim something back, providing that the expenses are wholly and exclusively for the running of their business.  And, the higher your expenses, the lower your tax bill; when you make a claim you only get taxed for your profits, with the amount spent on your business remaining tax free.

The most common types of expenses include travel, the cost of work equipment, business telephone calls, advertising, the rent, heating and lighting of your business premises and business ‘entertainment’.

Other financial benefits:

  • By contracting through your own Limited company, this is the most tax efficient way of working.
  • You are also able to benefit from better tax planning opportunities with a Limited company.
  • As an independent contractor you are able to work over time and, if you can, you could also take on more than one client at a time, which will further increase your take home pay.


An independent contractor will have the type of freedom and control that permanent employees can only dream of, as essentially you become your own boss!

Because of this, you have complete control over when you want to work, where and for however long you like; taking time off work will also be a lot easier, as you won’t be in the position of having to juggle your days off around other colleagues.  You can also choose to have as much time off as possible, instead of the standard few weeks in a year.

However, it’s important to remember that with great power comes great responsibility! You must ensure that you have the motivation to keep yourself working and completing deadlines etc.  You won’t get paid if you don’t do any work!

An independent contractor will also have a lot more flexibility and control over agreeing working conditions and negotiating payment terms; the company that you work for is not your employer, but is instead your client, meaning you have far more control over your contract than what a permanent worker would have.

Other benefits of working as an independent contractor include:

  • As an independent contractor dealing with a variety of different clients, this will give you the ability to build up a wide-ranging CV and to establish an extensive list of reference contacts.
  • Working for different organisations gives you the ability to advance your career and your knowledge, without being limited by a single employer’s processes, procedures or business ethos.
  • Depending on the type of contractor you are, you will gain added experience of different types of products and/or services, which can widen your experience and make you more attractive and interesting to future clients.


About the Author: This article was written by Senior Product Manager, Luisa Lawrence on behalf of SJD Accountancy. For more information about the UK’s largest Contractor Accountants, please visit the site today.

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