Why should you set up as a Limited company contractor?

Although the word “contractor” doesn’t have a formal definition, it is commonly used in the industry whereby a recruitment business will source a short term or project contract for workers in the UK. When a recruitment business is in the supply chain, there are usually a couple of different options in how you are paid.

You could, for example, be paid directly by the recruitment business on their payroll. Alternatively, you could become an umbrella company contractor, which means you'll become an employee of the umbrella company and receive your wages like an employee, after income tax and National Insurance contributions have already been deducted.

Alternatively, some contractors choose to set up and work through their own limited company. There are many different reasons why contractors choose to work in this way and this video explains just what they are.