# Accountants for Contractors: A UK Guide for 2026/27 > Looking for accountants for contractors? IR35 after April 2026, expenses, VAT, dividends and what a specialist should do for you, explained clearly. Last updated: 2026-11-08 Blog | by Rob Young | November 2026 # Accountants for Contractors: A UK Guide for 2026/27 ### Rob Young Contracting gives you freedom and a good day rate, but it also hands you tax decisions that employees never face: how to be paid, whether IR35 applies, which expenses you can claim and how much to take from your company. A specialist accountant for contractors earns their fee by getting those decisions right and keeping you on the right side of HMRC. This guide covers what contractors should expect from their accountant in 2026/27. Figures are correct as we understand them at 6 November 2026. ## How will you be paid: limited company, umbrella or sole trader? Most contractors choose between three routes. Working through your own limited company gives you the most control and usually the best take-home pay, but you carry the admin and the responsibility for IR35. An umbrella company employs you and runs payroll, which is simpler, though it charges fees and deducts tax and National Insurance as it would for any employee. Trading as a sole trader is the lightest on paperwork but offers little tax planning and leaves you personally liable. Your accountant should compare the three using your actual day rate before you commit. If you go down the company route, our guide to [accountants for limited companies](https://loveyouraccountants.com/knowledge/accountants-for-limited-companies) explains what the year-to-year service involves. ## IR35: who decides, and what changed in April 2026 IR35, also known as the off-payroll working rules decides whether a contractor is really working like an employee for tax purposes. If the rules apply and you are paid through your own company that income is taxed much like employment income. Who makes the decision depends on the size of the client. For medium and large private sector clients the client assesses your status and must issue a Status Determination Statement. For small clients the responsibility sits with you and your company. The size tests changed from 6 April 2026. A client is small if it meets at least two of these three tests: turnover of no more than £15 million, a balance sheet total of no more than £7.5 million, or no more than 50 employees. Because the tests look at the previous financial year, the change is unlikely to reach most contracts in practice before April 2027. Your accountant should help you check every contract and keep evidence on file of how the work is really done. ## Which expenses can a contractor claim? A limited company contractor can claim costs incurred wholly and exclusively for the business: accountancy fees, professional indemnity and other business insurance, software and equipment, professional subscriptions, training that maintains existing skills and a proportion of home office costs. Travel and subsistence are where most mistakes happen. Travel to a temporary workplace is normally allowable, but a workplace stops being temporary once you expect to work there for more than 24 months, so your accountant needs to track the length of each contract. Keep receipts for everything, because HMRC expects them. If a contract falls inside IR35, expenses are treated differently, which is another reason to settle your status first. ## Salary, dividends and getting paid tax-efficiently Outside IR35, many contractors pay themselves a small salary and take the rest as dividends. In 2026/27, dividends above the £500 allowance are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% at the additional rate, so the balance between salary, dividends and pension contributions matters more than it used to. Employer pension contributions from the company are usually a deductible expense and can be an efficient way to take profit out. Our guide to [paying yourself from a limited company tax-efficiently](https://loveyouraccountants.com/knowledge/pay-yourself-limited-company-tax-efficiently) works through the numbers. ## VAT for contractors You must register once your taxable turnover passes £90,000 in any rolling 12 months. Many contractors register earlier on a voluntary basis so they can reclaim VAT on costs, and some use the Flat Rate Scheme. Be careful with the scheme: contractors who spend little on goods are often classed as limited cost traders, who pay a flat 16.5% of VAT-inclusive turnover and cannot reclaim VAT on most costs, so the scheme can leave you worse off. Your accountant should run both calculations before you choose. Our [VAT services](https://loveyouraccountants.com/services/vat) cover registration, scheme choice and returns. ## Making Tax Digital: does it affect contractors? Making Tax Digital for Income Tax applies to sole traders and landlords with qualifying income above £50,000 from April 2026. If you work through your own limited company, you are not in that scheme: your company accounts and Corporation Tax return are filed in the usual way, and dividends are not counted as qualifying income. If you also have sole trader or rental income you may be affected, so tell your accountant about every source of income. ## Tax investigation cover: is it worth having? IR35 and expenses are two areas HMRC looks at closely and an enquiry can generate substantial professional fees even when you have done nothing wrong. Tax investigation insurance is designed to help with those fees if HMRC opens an enquiry and our [tax investigation insurance service](https://loveyouraccountants.com/services/tax-investigation-insurance) explains how it works. ## What to look for in an accountant for contractors Look for someone who can explain IR35 in plain English, will review your contracts, tracks the 24 month rule for you, understands the balance of salary, dividends and pension, and quotes a fixed fee. Because contractors often change client every few months, you also want an accountant who responds quickly when a contract changes. For a wider view of what to compare, read [how much accountants cost in the UK](https://loveyouraccountants.com/knowledge/how-much-do-accountants-cost). ## Frequently Asked Questions. ### Do contractors need an accountant? You can file your own accounts and returns, but contractors face IR35, expenses rules and VAT choices that are easy to get wrong. Most find a specialist pays for themselves. ### Should I use a limited company or an umbrella company? A limited company usually gives higher take-home pay but means more admin and more responsibility. An umbrella company is simpler but costs more on each contract and taxes you like an employee. Compare both using your own day rate. ### Does IR35 apply to me? It depends on how you actually work, not only on what the contract says, and on whether your client is small or medium to large. Ask your accountant to review each contract and keep evidence of how the engagement works in practice. ### Can I claim travel to my client’s site? Often yes, if the site is a temporary workplace. Travel stops being allowable once you expect to work somewhere for a substantial amount of time (which can typically be more than 24 months, but it can be more prudent in assuming 12months) so get advice before assuming. Need help? If you contract through your own company, or are thinking about it, feel free to contact us via our website and one of the team will come back to you. This guide is general information, and the rules and rates can change, so please speak to us before acting on it. Book a free consultation: https://loveyouraccountants.com/contact. Tags: corporation tax, dividends, limited companies, small business, startups, tax ![Rob Young, author at Love Your Accountants](https://loveyouraccountants.com/asset/2401/175-175-def/author-rob_young.png) **Author** ###### **Rob Young** Rob is Managing Director at LYA, supporting ambitious businesses to scale with confidence through clear planning and proactive financial insight. [Read more](https://loveyouraccountants.com/team-bio/rob-young) --- ### Related Blogs - [Accountants for Contractors: A UK Guide for 2026/27](https://loveyouraccountants.com/knowledge/accountants-for-contractors) — How contractors choose an accountant in 2026/27: IR35, expenses, VAT, director pay and tax investigation cover explained in plain English. - [Accountants for Limited Companies: What You Should Expect in 2026/27](https://loveyouraccountants.com/knowledge/accountants-for-limited-companies) — What does an accountant do for a limited company? Deadlines, director pay, 2026/27 tax rates and costs, and how to choose the right adviser. - [What to Do If You Can't Pay Your Self Assessment Tax Bill](https://loveyouraccountants.com/knowledge/cant-pay-self-assessment-tax-bill-time-to-pay) — If you can't pay your Self Assessment tax bill by 31 January, don't ignore it. Here's how HMRC's Time to Pay scheme works and how to set one up before penalties apply. - [Bank of England Raises Interest Rates to 4%: What It Means for Your Business](https://loveyouraccountants.com/knowledge/bank-of-england-interest-rate-rise-4-percent-business) — On 5 November 2026 the Bank of England raised interest rates to 4%, the first rise in over three years. Here's what it means for business loans, overdrafts and savings.