Daily Rate Consulting Agreement UK Template
Agreeing a daily rate verbally or via email leaves both consultants and clients exposed to payment disputes, scope creep, and costly IR35 misclassification. A properly drafted Daily Rate Consulting Agreement establishes clear boundaries around deliverables, payment terms, and working arrangements — protecting both parties under English law. Under Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003, poorly structured consulting arrangements can trigger IR35 liability, while undocumented payment schedules leave consultants reliant on the Late Payment of Commercial Debts Act 1998 to recover overdue fees. A written agreement removes ambiguity, sets enforceable invoicing cycles, and demonstrates genuine business-to-business relationships to HMRC. Whether you are an independent consultant or a business engaging specialist expertise, get your daily rate consulting agreement generated in minutes.
Generate your Consulting Agreement free →Key clauses in a Consulting Agreement
Daily Rate and Payment Terms
This clause defines the agreed daily rate, invoicing frequency, and payment deadlines, creating an enforceable debt if the client defaults. Under the Late Payment of Commercial Debts Act 1998, consultants can claim statutory interest at 8% above the Bank of England base rate on overdue invoices, but only where a clear contractual payment period has first been established.
IR35 Status and Substitution
This clause sets out the right of substitution, the absence of mutuality of obligation, and the consultant's control over how work is performed — the three primary tests HMRC applies when determining IR35 status under Chapter 10 of ITEPA 2003. Correctly drafted substitution and control provisions help demonstrate a genuine business-to-business relationship, reducing the risk of the engagement being reclassified as deemed employment.
Intellectual Property Assignment
This clause determines who owns work product, reports, code, or creative output produced during the engagement, which under the Copyright, Designs and Patents Act 1988 defaults to the consultant as author unless contractually transferred. Without an explicit assignment or licence, clients may find they do not legally own deliverables they have paid for, creating significant commercial and operational risk.
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Generate free →Frequently asked questions
Does a daily rate consulting agreement automatically keep me outside IR35?
No — the contract wording is one factor HMRC considers, but the actual working practices must also reflect a genuine business-to-business relationship. HMRC's Check Employment Status for Tax (CEST) tool assesses the real-world arrangement, including control, substitution, and mutuality of obligation under Chapter 10 ITEPA 2003. A well-drafted agreement supports your position but must be backed by how the engagement operates day to day.
What happens if a client does not pay my consulting invoice on time?
If your contract specifies a payment date and the client misses it, you are entitled to claim statutory interest at 8% above the Bank of England base rate under the Late Payment of Commercial Debts Act 1998. You can also claim fixed debt recovery costs ranging from £40 to £100 depending on the invoice value. Sending a formal letter before action is advisable before pursuing a claim through the County Court.
Should I use a limited company or operate as a sole trader when signing a daily rate consulting agreement?
This is a commercial and tax decision rather than a purely legal one, but the structure affects your liability and IR35 exposure significantly. Operating through a limited company provides personal liability protection and can offer tax advantages, though it also brings greater administrative responsibilities under the Companies Act 2006. Sole traders face unlimited personal liability but have simpler tax reporting obligations, and you should seek accountancy advice to determine which structure suits your circumstances.
The information on this page is for general informational purposes only and does not constitute legal advice. Contracto generates AI-assisted contract templates — they are not a substitute for advice from a qualified solicitor. For high-value or complex engagements, always seek independent legal review.