# Do contractors need a specialist accountant?

Pick My Accountant (https://pickmyaccountant.co.uk/answers/do-contractors-need-a-specialist-accountant/): Do contractors need a specialist accountant? — Quick answer. Not legally, but practically it helps a lot. Contracting through a personal service company lives and dies on IR35 status, contract reviews, and dividend/salary planning — bread and butter for specialist contractor firms, occasional work for generalists. Specialists typically charge £83–£155 per month all-in for a PSC, with IR35 guidance included.

## Key facts

- IR35 status determines whether you're taxed as employed or can use the dividend/salary mix
- Since 2021, medium and large clients decide your status; small clients leave the decision (and risk) with you
- Specialist packages usually include company accounts, payroll, VAT, self assessment, and IR35 support
- Inside-IR35 contracts often mean umbrella employment — a good specialist will say when a PSC isn't worth it
- Check the firm's stance on Managed Service Company rules — bad structures create personal tax bills

## What makes contracting different

A contractor's tax position swings on employment-status rules rather than turnover: whether each engagement falls inside or outside IR35 changes take-home pay by thousands. Add the personal service company itself — payroll for one, quarterly VAT (often flat-rate), dividends, and a director's return — and the compliance stack is heavier than for a similar-sized 'normal' business.

## What a specialist actually adds

Contract and working-practice reviews before you sign, calculators comparing PSC vs umbrella take-home on real numbers, correct handling of the off-payroll rules when an end-client makes the determination, and awareness of traps like the Managed Service Company legislation and s455 loans. Generalist firms can do PSC compliance; the difference shows when a status question or an HMRC letter arrives.

## Choosing between specialist firms

The market is competitive — compare what's included (insurance-backed IR35 defence? unlimited status reviews? switching support between PSC and umbrella?), response times during contract negotiations when you need same-day answers, and exit terms. Ask how they'd advise you on a mixed year of inside and outside engagements; the quality of that answer is the interview.

## FAQs

**Q: What is IR35 in one paragraph?**
A: IR35 (the intermediaries legislation) asks whether, ignoring your company, you'd be an employee of the client. If yes ('inside'), income is taxed like employment. Since 2021 medium/large clients make this determination for you; for small clients, your company decides and carries the risk.

**Q: PSC or umbrella — which is better?**
A: Outside-IR35 contracts favour a PSC; inside-IR35 contracts usually make an umbrella simpler since PAYE applies anyway. Many contractors run both across a year — a specialist accountant helps you switch cleanly.

**Q: How much do contractor accountants charge?**
A: Typically £83–£155 per month for a full PSC package on our benchmarks, including the director's self assessment. Umbrella employment replaces the accountant fee with an umbrella margin of £15–£30 per week.

Updated: 2026-07-08

Source: https://pickmyaccountant.co.uk/answers/do-contractors-need-a-specialist-accountant/