Payroll services for contractors

A contractor’s payroll route is dictated by IR35 status. Outside IR35, a limited company with a salary-plus-dividends payroll wins; inside, the choice is umbrella employment or agency PAYE – and the 2026 umbrella reforms have reshaped that market.

What makes contractors payroll different

• Outside IR35. Run a director payroll (typically a salary near the NI or personal-allowance threshold, dividends above) – the IR35 guide covers status, and the take-home calculator compares salary levels.
• Inside IR35 via umbrella. The umbrella employs you, charging a margin of roughly £15 – £30 a week. From April 2026, agencies are liable for umbrella PAYE failures – expect tighter vetting and the death of dodgy 85-percent-retention schemes.
• CIS contractors. Construction subbies sit in a different regime entirely – see construction.
• Specialist contractor bureaus. Firms such as London’s Infinity Group specialise in CIS and contractor payroll; contractor accountants bundle director payroll into monthly packages.

What to look for in a provider

Inside IR35, choose FCSA or SafeRec-accredited umbrellas and check the reconciliation on the first payslip. Outside, a contractor accountant with payroll included beats a standalone bureau.

Pricing follows the wider market – see what outsourcing costs (£4 – £10 per employee per month fully managed) – but sector add-ons matter more than the headline rate, so always compare like-for-like quotes.