Accounting software for UK contractors
Contracting brings a question freelancing usually does not: whether an engagement would be employment if you were engaged directly. That question drives your tax, so your records need to support the answer.
IR35 and off-payroll working
The rules test whether the reality of an engagement looks like employment. Who decides depends on the client: for public sector and medium or large private clients, the client makes the determination and can be liable for getting it wrong. For small clients, the responsibility stays with your own company.
Records that support a determination
Status is judged on how an engagement actually works, not what the contract says. Keeping a clean, dated record per engagement is the practical part you control.
- Income tracked per client and per engagement, not as one pot
- Expenses attached to the engagement they belong to
- Invoices and payment dates retained, showing how you were actually paid
- A ledger you can hand to an accountant or an adviser without a rebuild
The company side
If you contract through your own company, Corporation Tax is payable nine months and one day after your accounting period ends, while the return itself is not due for twelve months. That gap catches out most first-time directors. Both dates run from your own accounting reference date, so add them to your tax calendar.
Common questions
Does Taxmo tell me if I am inside IR35?
No, and be wary of anything that claims to. Status depends on the facts of each engagement and is a judgement, not a calculation. HMRC's CEST tool and a qualified adviser are the right route. What Taxmo does is keep the records that a determination and any later enquiry will rely on.
Umbrella or limited company?
An umbrella pays you through PAYE with no company admin, and is often the practical answer for engagements determined inside IR35. A limited company gives more control and different tax treatment but brings Corporation Tax, Companies House filing and director responsibilities. The right answer depends on your mix of engagements.
Can I claim travel to a client site?
It depends on whether the site is a temporary workplace, and the rules tighten where a determination puts an engagement inside the off-payroll rules. This is a common and expensive area to get wrong, so it is worth checking your specific position rather than applying a general rule.
Last updated 2026-04-25. Thresholds, rates and allowances are indexed or reset at fiscal events and are deliberately not quoted here; check GOV.UK for current amounts.