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Contractor

Someone providing a service to a client, usually but not always a company. They are either self-employed or an employee/worker working under an umbrella company.

How’s it different to being an employee or worker?

Unless you’re hired by an umbrella company that pays you through PAYE, you need to pay your own taxes.

You should also pay tax via PAYE if you own a limited company or you are a company director - you pay yourself through salary/dividends.

However, if you pay yourself through dividends, you’ll be eligible for dividend tax and you will be required to file a Self Assessment.

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