Contracting in the UK from Overseas: A Guide

Is It Possible To Contract In The UK As A Foreigner?

It is possible to become a contractor in the UK as a foreigner; however, doing so is complicated. People have been considering options abroad for work, travel, and living more in recent years, so it is not surprising that there has also been a rise in overseas contracting.

Yet, contracting in the UK does come with the requirement of a visa. If a person is not a British national, Irish citizen, settled, pre-settled, or holding indefinite leave to remain, then they will need a visa to contract in the UK.

To find out what visa is needed, you will need to figure out what type of visa fits your work. Most contractors will consider a Skilled Worker Visa, which does require a job offer in the UK.

The majority of contractors from overseas will be covered by Skilled Worker Visas. There are conditions for this type of visa, however, which include the following:

• The contractor must work for a Home Office approved UK employer.
• The contractor will require a ‘certificate of sponsorship’ from the UK employer that covers information regarding the role that they have been offered in the United Kingdom.
• The contractor is required for a job that is on the list of ‘eligible occupations’.
• The contractor needs to be paid a minimum salary based on the type of work that they do.
• The contractor needs to have an offer of a job confirmed before they apply for a visa.
• It must be demonstrated that the person can understand, write, and read English.

Additional Visa Options

However, if this is not an option for you, then there are other possible options available. Only in the aforementioned Skilled Worker visa is it necessary to need a confirmed offer for a job; in the following visa options, this is not a requirement.

• A Graduate Visa. This is available to those who are graduating in the UK to be able to stay in the country and work for two years.
• India Young Professionals Scheme Visa. This is for those between 18 and 30 years of age from India to obtain mobility.
• Youth Mobility Scheme Visa. This visa is applicable for those between 18 and 30 years of age who come from a list of eligible countries.
• British National (Overseas) Visa: This is a visa for Hong Kong nationals.
• UK Ancestry Visa. This allows individuals who can prove that they have grandparents who were born in the UK, Isle of Man, or the Channel Islands to enter the UK.
• Global Talent Visa This is an option for individuals who are acknowledged leaders in academics, digital technology, and the arts to be able to gain UK entry.
• High Potential Visa. This is a visa for those who graduated within the last five years from a university that was on the list of fifty of the top universities worldwide when they graduated.
• Exceptional Talent Visa (Tier 1). This is granted to specialists in the fields of engineering, science, medicine, arts, humanities, and technology.
• Investor Visa (Tier 1). This is granted to those investing a minimum of £2 million in the UK, valid for three years and extendable for an additional two years.
• Innovator visa. This is for established and experienced businesspeople who have scalable and viable ideas. This does require an endorsement letter for an idea or business approved by an endorsing body. It is valid for three years.
• Start-Up Visa. This is a great visa for those who want to start a business in the UK. This is dependent on their ability to financially support themselves and the business at this time.
• Permitted Paid Engagement Visa. Those who seek short-term paid work with no sponsorship for a month or less than this.

As contracting is typically a self-employed position, it is unlikely that many contractors will take on a Skilled Worker visa, as this visa type requires a job offer in the UK through an employer.

You cannot get a Skilled Worker visa with an employer and then leave the employment to be self-employed in the UK.

How To Become A Contractor In The UK As A Foreigner

The first step to being able to work as an overseas contractor in the UK from overseas is to pick which visa type is best for you.

For many, this will not be the Skilled Worker visa but one of the other options listed above. If you are having trouble figuring out which is most applicable to you, seek professional advice.

Give IAS a call at +44 (0)333 414 9244, and one of our legal advisors can help you figure out which is best for you.

The Skilled Worker visa is one of the top choices today; however, it requires a first job offer to apply. This means you will have to be employed by the individual or business that sponsored this visa.

It is not possible to be self-employed, nor is it possible to use your own limited company to contract, as this would mean you would be placed on a payroll in the UK, and the employer would take social charges (national insurance contributions) and income tax off of your payroll.

This means most contractors will have a visa that falls into one of the other categories. Some may find they have the option to be employed directly, to use an umbrella company to engage them, to use a limited company, or even to be a sole trader.

There are some resistances to being a sole trader or using a UK limited company, as clients will usually have concerns about the risks of deemed employment and the associated tax implications.

Becoming A Contractor In The UK Step-By-Step

It is a complicated process to become a contractor in the UK from a foreign country, so follow these steps to make it a little easier for you:

Obtain The Right To Work

Since Brexit, European Union citizens do not have the same freedom of movement in the UK as before. However, some individuals do still have the right to work in the UK automatically. These include the following:

• Irish and British citizens who have dual citizenship.
• Those who gained pre-settled or settled status in the UK before the Brexit deadline.
• Those who have a family permit from the EU Settlement Scheme.
• Those who have indefinite leave to remain or enter the country. This also includes those who have the right of abode.

Individuals who do not fall into one of the above categories will need to get an employment visa and work permit. Those who are employed must have their employer apply on their behalf, but self-employed individuals will need to do this themselves. Documents can take three months to get approved; therefore, the application should be completed well in advance. Self-employed individuals will need to consider different options, as seen above.

Understand UK Tax and Become Compliant Legally.

Tax affairs can be very complex in the UK, and even more so for contractors from overseas. There were changes to the IR35 off-payroll tax residency legislation in 2021 that extended to the private sector, meaning that additional administration is needed for a contractor to be law-compliant. This means that many contractors inside IR35 will need to pay the same UK tax as an employee does.

Whether a contractor is or is not a lawful complainant depends on multiple factors. These factors can include the equipment used, where, how, and when the contractor works, and the relationship with the end client. Incorrect status determination can result in a significant fine and a lengthy court case.

Many contractors operate through umbrella companies or payroll partners to ensure that their pension, taxes, and NIC (national insurance contributions) are all in order. Accountants and tax advisers are also a common choice for handling tax affairs.

Jobs

Contractors in the UK can work in private-sector or government jobs. While there are skills shortages in most countries, the UK is experiencing many shortages of professionals across several industries, and therefore there is an Occupation Shortage List available that shows the many career paths that would make a worker eligible for the Skilled Worker Visa. These occupations include the following:

• Health Services such as doctors, nurses, healthcare assistants, etc.
• Engineering such as electronics, civil, design, quality control, chemical, etc.
• Social Care such as senior care workers, domiciliary care managers, social workers, etc.
• IT and Technology such as business analysts, programmers, software developers, and web designers.

To apply for a role contracting in the UK, a self-employed professional can reach out to a company directly, register with a recruitment agency, and more. It is also useful to search job boards such as Indeed.co.uk.

Applications

Once an individual has understood which visa type they are applying for to gain entry into the UK, they must collect all documents and evidence necessary to apply for their visa and a self-employed work permit.

It is also wise to consider setting up a UK bank account for UK contractor’s working accounts and speaking to an accountant or tax adviser. With all the documents and understanding of contracting from overseas, submit your application and pay the necessary fees, which will vary depending on the type of visa you choose.

Depending on the type of visa you apply for, you will have to wait a set amount of time before receiving a decision and getting your visa and work permit.

Using An Umbrella Company In The UK

Knowing how to pay tax in the UK when contracting abroad is complex and a massive area for consideration. Tax in many countries varies by state, and where you are a tax resident can impact how much you pay.

An accountant or tax adviser can give you help, but this is why many overseas contractors choose to use umbrella companies that specialise in international contracts. These companies ’employ contractors, aiding in tax purposes, find work, and provide payroll services.

Umbrella companies can help make tax affairs easier and leave you to focus on work opportunities outside the UK. However, this also makes you a permanent employee of the company, and you lose out on the tax benefits of self-employment, such as being able to claim tax relief.

How IAS Can Help

Whether you are starting a UK company for contracting, using an umbrella company to start working in the UK or working on an overseas contract, the path to working abroad in the UK as a contractor is complex. Many overseas contractors find themselves confused by tax relief, local tax liability, UK taxes, and understanding the obligations of self-employed contractors working in the UK from overseas.

IAS can help you understand how to handle tax affairs and payroll services, as well as how the tax year in the UK works. If you need help understanding your visa options or what visa overseas contractors choose, IAS legal advisers can help. Seek expert advice today, get your company registered, and start working overseas today.

Give IAS a call today at +44 (0)333 414 9244 and get started on contracting abroad with no worries about how to pay UK tax.