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Operating as a Sole Trader

If you are registered as a sole trader and you find work through a recruitment agency, they won’t be able to deal with you in your capacity as a self-employed person under Section 134 of the Income & Corporation Taxes Act 1988.

Typically as a sole trader, you are expected to have multiple clients and a number of different sources of income. This would meet HMRC’s definition of self-employed.

Working through a recruitment agency, you are placed with one client and receive a single income which, if investigated, would be a very strong pointer towards being ‘employed’.

If an individual is investigated by HMRC and they haven’t paid the correct taxes, the agency could be forced into an employment arrangement and become liable for the deficit.

To protect themselves from this possibility, the agencies will insist that you are contracted through the services of an Umbrella Company or trading through your own Limited Company. The contracts are drawn up between the agency and company, rather than the individual, which removes the risk of being held accountable as the employer.

You may be given the option to be paid directly by the agency and they deduct the necessary tax and NI contributions from your income. However this will inevitably reduce the rate you are offered because the company takes on the obligations and responsibilities of the employer.

You may still be able to deal with some clients direct as a sole trader, but the majority are signed up with recruitment agencies to save the hassle of filling the position(s) themselves. You therefore may limit yourself to the number of contracts available to you unless you make alternative arrangements.

ContractorUmbrella takes on the employment responsibilities and allows you to take advantage of the higher contractor rates on offer, saving you the hassle of setting up and running your own limited company.

Our Commitment Charter guarantees the very highest levels of service for employees and clients and ensure that you will never be kept waiting for an answer.

If you have any questions or would like to make a general enquiry, please do not hesitate to contact a member of our team on 01206 713680 or email us at

Why not download our Free Guides which are packed full of invaluable advice.

Our Choosing an Umbrella Company page covers the misleading claims and promises advertised by some companies.

Why Choose ContractorUmbrella?

ContractorUmbrella is the hassle-free, straight talking umbrella company that provides umbrella employment for UK based contractors and freelancers. Independently voted as the best umbrella company by the readers of Contractor UK.

As one of the most trusted umbrella companies in the UK, we guarantee our employees peace of mind, absolute compliance and complete security. We are one of the longest standing and most respected umbrella companies in the UK.

Benefits of working through ContractorUmbrella;

  • Fast and easy registration - be ready to work in 24 hours, simply register online and we’ll take care of the rest.
  • Calculate your take home pay - use our online calculator to find out how much you could be taking home through ContractorUmbrella.
  • Same day payments - we offer same day payments as standard, for no additional fee.
  • Our Commitment Charter- is our guarantee that you will be looked after at every step of the way.
  • Flexible Limited Company Accountancy - when you sign up to our sister company Dolan Accountancy, you can transfer to ContractorUmbrella when umbrella employment better suits or your assignment sits inside IR35.
  • Employee Benefits - at ContractorUmbrella there are many benefits available to you as our employee including our Employee Rewards Scheme, Group Pension Scheme, Foreign Currency Exchange, Contractor Accommodation, Contractor Mortgages and much more.
  • Personal Employee Liaison Officer - we believe in the personal touch, so you will have your very own dedicated Employee Liaison Officer during your employment with us. Read some of the glowing testimonials we've received about our lovely staff and the outstanding commitment they give to all our employees and clients.

If you’d like to find out more, call us on 01206 591 000 or request a call back by completing our online form.