Independent Contractor Agreement — UK
Independent contractor agreement UK
A UK-compliant agreement built around the IR35 tests — substitution rights, no mutuality of obligation, and deliverables-based control. Tailored to your engagement. Ready in 60 seconds.
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What a UK independent contractor agreement must include
Generic templates downloaded from US sites fail UK tax and employment law tests. These are the clauses that matter under English law.
Right of substitution
Chapter 8 ITEPA 2003The contractor can send a qualified substitute to complete the work. HMRC treats this as a strong indicator of genuine self-employment — a direct employee cannot send a substitute.
No mutuality of obligation
Autoclenz v Belcher [2011] UKSC 41The client is under no obligation to offer work, and the contractor is under no obligation to accept it. This destroys the employment relationship HMRC needs to reclassify inside IR35.
Deliverables-based control
Ready Mixed Concrete v Minister of Pensions [1968]The contractor controls how and when the work is done. The client specifies what is delivered, not how. HMRC's control test fails if there is no right to direct the method of working.
IP assignment on full payment
CDPA 1988 s.11Intellectual property created during the engagement transfers to the client only on receipt of cleared funds. Until then, the contractor retains copyright under UK law.
Invoicing and payment terms
Late Payment of Commercial Debts Act 1998Statutory interest of 8% above Bank of England base rate applies automatically to overdue invoices. The agreement should reference this — it adds weight without requiring a solicitor to chase.
Termination and notice
Common law contract principlesEither party can end the engagement on written notice. Without this clause, a client who cancels mid-project has no contractual obligation — the contractor has no claim beyond quantum meruit.
Why IR35 language matters in every contractor agreement
Since April 2021, medium and large businesses in the UK are responsible for determining whether a contractor falls inside or outside IR35 (Chapter 8, ITEPA 2003). If HMRC disagrees with their determination, the end-client bears the tax liability — not the contractor.
HMRC uses three primary tests: substitution (can the contractor send someone else?), control (who decides how the work is done?), and mutuality of obligation (is either party obligated to continue the relationship?). A contract that does not address all three is a liability for both parties.
Contracto's IR35 services agreement is built around these three tests. It does not guarantee an outside determination — no contract can — but it establishes the contractual framework that supports one.
Generate your independent contractor agreement
Answer a few questions about the engagement — client name, deliverables, rate, payment terms, jurisdiction. Contracto generates a complete IR35-aware agreement, ready to send.
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Independent contractor agreement UK — common questions
What is an independent contractor agreement under UK law?
An independent contractor agreement is a contract between a business and a self-employed individual or Personal Service Company (PSC) for specific work or deliverables. Unlike an employment contract, it establishes that no employment relationship exists — the contractor is in business on their own account. Under UK law, this distinction matters for IR35, National Insurance, and employment rights.
How is an independent contractor agreement different from an employment contract?
An employment contract creates a duty of care, employment rights (notice, holiday pay, unfair dismissal), and PAYE obligations for the employer. An independent contractor agreement does none of these — but only if it accurately reflects the real working arrangement. HMRC can override a contract if the day-to-day reality looks like employment.
Does an independent contractor agreement protect against IR35?
It helps, but a contract alone is not sufficient. HMRC looks at the substance of the working arrangement, not just what the contract says. The three key tests are: right of substitution, control, and mutuality of obligation. A well-drafted contract establishes all three — and should reflect how the engagement actually operates. Contracto's IR35 agreement is built around these tests.
Who is responsible for issuing an IR35 Status Determination Statement?
Since April 2021, the end-client (the business receiving the services) is responsible for issuing a Status Determination Statement (SDS) for contracts with medium and large businesses. The end-client bears the liability if they determine incorrectly. For small businesses (under the Companies Act threshold), the IR35 obligation remains with the contractor's PSC.
Can I use this for a limited company contractor?
Yes. Independent contractor agreements are typically between the client and the contractor's limited company (PSC), not with the contractor as an individual. This is the standard structure for UK IT, finance, and professional services contractors operating through their own company.
How much does a UK independent contractor agreement cost?
A solicitor-drafted agreement starts at several hundred pounds. Contracto generates a UK-compliant independent contractor agreement tailored to your engagement for £9 — with the IR35 clauses, IP assignment, substitution right, and payment terms built in.
Ready to generate yours?
UK independent contractor agreement — tailored to your engagement
Substitution rights, no MOO, deliverables-based control, IP assignment, Late Payment Act provisions. Correct governing law. Generated in 60 seconds.
Generate my contractor agreement →Free with watermark. £9 for a clean PDF.