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UK Recruitment Glossary

Contractor

Alex By Alex · 12-year UK recruiter · Updated April 2026

In recruiter context

Different beast from an employee. No paid holiday, no sick pay, no notice protection, but typically 30-60% higher day rate to compensate. UK contractors operate either through their own limited company (outside IR35) or through an umbrella company (inside IR35). Day rate maths is rough: take the rate, multiply by 220 working days, subtract umbrella fees and tax. A £500/day inside-IR35 contract through an umbrella nets roughly the same take-home as a £75-80k permanent salary. The freedom is real; so is the lack of safety net.

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