Contracting in the UK from abroad: The complete guide

Picture this - you’ve just landed a high-value contract from a UK client. Although you live abroad, it’s a lucrative bit of business for you, and you can do it without relocating.

But what about all the other things, like handling taxes or getting paid in pounds without losing a chunk of earnings to fees and marked-up exchange rates?

In this guide, we’ve broken down everything you need to know to navigate UK rules for international contractors. 

We've also explained how a Wise Business account can be your secret weapon, letting you receive GBP payments as if you were in the UK and convert it to 8+ currencies at the mid-market exchange rate (the one you see on Google), with no hidden fees.

Register for Wise Business ✍️

Table of contents

Key takeaways  Can foreigners work as contractors in the UK? UK visa options for overseas contractors Skilled Worker visa Global Talent visa International Agreement visa (Temporary Work) Youth Mobility Scheme visa Innovator Founder visa Setting up your business structure Sole trader vs limited company Working as a sole trader Setting up a UK limited company Choosing a business bank account Paying taxes as an overseas contractor in the UK Tax residency Income tax and National Insurance Limited companies and corporation tax VAT IR35 Double taxation agreements Using an umbrella company Manage your earnings as an overseas contractor in the UK with Wise Business FAQs Can I claim UK tax relief on travel if I visit clients? Can I switch between an umbrella company and my own limited company? What happens if my client pays me late from the UK?

Key takeaways 

Category	Key Takeaways
🌍 Working location	Your physical location is key; working entirely from abroad means no UK visa or IR35 rules apply, whereas working in the UK triggers tax and immigration requirements.
🛂 Visa requirements	There is no specific "contractor visa," so you must apply for alternatives like the Global Talent or Youth Mobility visa, depending on your circumstances.
🏢 Business structures	You can operate as a sole trader for simplicity, set up a limited company for a more professional status, or use an umbrella company to handle payroll and tax administration for you.
💳 Business account	Opening a traditional UK bank account without a local address is challenging, making Wise Business the perfect solution to receive payments.
💷 Tax residency	The number of days you spend in the UK determines your tax residency status. Spending 183 or more days in a year automatically makes you a UK tax resident.
👔 Tax according to business structure	Key obligations include Income Tax and National Insurance for sole traders, Corporation Tax for limited companies, and mandatory VAT registration if your annual turnover exceeds £90,000.
📜 IR35 Rules	These rules assess whether a contractor is effectively an employee for tax purposes, but they are not a concern if you perform all your work from outside the UK.
⚖️ Double Taxation	The UK has treaties with many countries to prevent the same income from being taxed twice, allowing you to claim tax relief in either the UK or your home country.

Can foreigners work as contractors in the UK?

Yes, foreigners can work as contractors in the UK, but the rules vary depending on your specific situation. 

If you live overseas and do the work entirely from abroad, you don't need a UK visa, and off-payroll working rules, also known as IR35, don’t apply¹. You only need to follow the tax rules in your country.

If you plan to spend time in the UK while working on contracts, then visas and UK tax laws would apply. 

HMRC uses the Statutory Residence Test (SRT) to determine tax residency based on the number of days spent in the UK and factors such as property ownership or family ties².

How you structure your work also makes a difference. 

Some overseas contractors use a UK limited company, while others use an umbrella company (one of three main options, alongside sole trader and limited company), which makes tax and payroll easier. 

Both of these are possible, but which one you choose depends on how long you plan to work and how much admin you're willing to take on.

UK visa options for overseas contractors

Visa Type	Notes
🧑‍💼 Skilled Worker Visa	Best for those with a sponsored job offer from a UK company, making it unsuitable for most independent contractors due to the sponsorship requirement.
🌟 Global Talent Visa	Designed for recognised leaders or rising stars in fields like tech and the arts, offering the freedom to work on different contracts without employer sponsorship.
🤝 International Agreement Visa	A specialist, temporary visa for contractors whose work is part of an eligible international treaty, such as a government service agreement.
🎒 Youth Mobility Scheme Visa	A two-year visa for young adults (typically 18-30) from eligible countries, permitting limited self-employment for those wanting to live and work in the UK.
💡 Innovator Founder Visa	Aimed at entrepreneurs establishing an innovative business in the UK; it is not designed for short-term contracting but can be suitable if you plan to build a company.

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⚠️ Do you need a visa? You do not need a visa if you are working 100% remotely from overseas, or if you are an Irish citizen or have indefinite leave to remain in the UK.

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Foreign contractors in the UK typically need a visa, except that they’re an Irish citizen or have indefinite leave to remain in the UK³.

There’s no visa specifically for contractors, so the best visa for you depends on your skills, your work, and the length of stay.

Skilled Worker visa

The Skilled Worker Visa⁴ requires a UK employer to sponsor you, so it isn't ideal for most contractors who value independence.  

Requirements:

• A confirmed job offer from a UK employer that’s a licensed sponsor
• An eligible job
• Proof that you can speak and understand English
• Minimum £41,700 salary (£33,400 for immigration salary list jobs or new entrants)⁵

Validity: Up to 5 years.

Costs:

• £5,144 for a visa lasting less than or equal to 3 years. This consists of a £769 application fee, £3,105 for the Immigration Health Surcharge (IHS), and £1,270 for maintenance funds⁶.
• £7,964 for a visa lasting 3+ years. This consists of a £1,519 application fee, £5,175 for the IHS, and £1,270 for maintenance funds⁶.

Note: Maintenance funds are personal savings you must show you have to support yourself upon arrival, unless your sponsor certifies they will cover these costs. They are not a payable fee, but we’ve included it as a ‘cost’ for clarity.

Global Talent visa

The Global Talent Visa⁷ is designed for leaders or rising stars in science, tech, engineering, or the arts. It doesn't tie you to one employer, so you can take on different projects.

Requirements:

• An endorsement by an approved body in the UK, such as Tech Nation or Arts Council England (Except you’ve won a prestigious award such as the Nobel Prize, Abel Prize, etc or other eligible awards)
• Evidence of excellent accomplishments or promise in your field

Validity: Up to 5 years.

Costs £3,871. This consists of a £766 application fee and £3,105 for the Immigration Health Surcharge (IHS). An additional £3,871 is required for each dependent.

International Agreement visa (Temporary Work)

The International Agreement Visa (Temporary Work)^8,9 is a specialist visa that falls under an international treaty, such as government contracts or overseas service agreements. It’s niche, but it works if your contract qualifies.

Requirements:

• Proof that your work is linked to one of the eligible agreements
• Have at least £1,270 available 
• Be 18 and above

Validity: Up to 2 years.

Costs £1,354. This consists of a £319 application fee and £1,035 for the Immigration Health Surcharge (IHS).

Youth Mobility Scheme visa

If you’re from an eligible country and in the right age bracket, this allows you to live and work in the UK¹⁰.

Self-employment is allowed, with limits. You can’t employ other people, you can’t invest more than £5,000 in equipment, and you must work from home. 

Requirements:

• Be between 18 and 30 (35 for Australia, Canada, New Zealand and South Korea)
• Be a passport holder of an eligible country on the list, including Australia, Canada, Hong Kong, India, Japan, New Zealand, South Korea, Taiwan, and Uruguay.
• Have savings of £2,530 

Validity: 2 years.

Costs £1,871. This consists of a £319 application fee and £1,552 for the Immigration Health Surcharge. 

Innovator Founder visa

The Innovator Founder visa¹¹ is for entrepreneurs seeking to expand their businesses in the UK. 

This visa is not designed for short-term contracts, but if you're looking to combine contracting with building a company, then it’s worth considering.

Requirements:

• A recommendation from an approved body in the UK
• A viable, original business plan with the potential to expand

Validity: 3 years

Costs a minimum of £6,379. This consists of £1,000 + ongoing meeting fees (£500 each, minimum 2 required) for endorsements, £1,274 for the application fee (or £1,590 if you’re extending/switching to this visa from within the UK), and £1,035 per year for the Immigration Health Surcharge.

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⚠️ Student Visas and Tourist Visas prohibit contracting or freelance work. Working under these visas breaches UK immigration rules.

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Setting up your business structure

Sole trader vs limited company

Factor	Sole Trader	**Limited Company **
Setup cost 🚧	No registration fee	£50 to register online16
Annual filing 📄	Self Assessment (once a year	£34 to file with Companies House17
Accounting costs 🧮	£60-£100/year (if you hire help)	£1,000-£1,900/year
Admin requirements ✏️	Low	High (annual accounts + corporation tax)

Working as a sole trader

Being a sole trader has less paperwork and fewer costs than running a company. 

You register with HMRC for self-assessment if you earn more than £1,000 in a tax year and pay tax on your profits¹².

You’ll also have to declare income generated on UK contracts even when you’re based outside the UK. 

Moreover, you may have to consider double taxation agreements (DTA) between the UK and your country of residence, depending on where you live¹³. 

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ℹ️ The UK has DTA with many countries, including the United States, India, Nigeria and Germany¹⁴. All treaties work the same way - you report the income and claim relief to avoid double taxation.

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Setting up a UK limited company

Registering a limited company can appear more professional, aid with tax planning, and safeguard your personal assets. Some UK clients might also prefer to use contractors with this setup for longer projects.

Although non-residents are allowed to register a UK limited company with Companies House without a home address in the UK, they need to have a registered office address¹⁵.

There are a few simple ways to handle this:

• Use your accountant’s address 
• Go through a company formation agent (cost between £50 and £150 annually)
• Choose a virtual office service for around £50 to £200 annually  

You also need to maintain reporting obligations, including the preparation of annual accounts and corporation tax returns.

Altogether, you’re looking at roughly £100 to £300 to get fully set up as a non-resident limited company.

Choosing a business bank account

You'll need a practical way to get paid. Traditional UK banks require proof of a UK address, making things difficult for non-residents.

Wise Business solves this issue. Simply open an account without living in the UK and receive local bank details for pounds, euros, or other major currencies.

For overseas contractors, it removes barriers to getting paid reliably without high conversion fees or delays.

Paying taxes as an overseas contractor in the UK

Tax residency

HMRC applies the statuatory residence test (SRT) to determine whether you’re a UK resident².

Here’s how it breaks down¹⁸:

If you've been a UK resident during the previous 3 years, but you've been in the UK for less than 16 days in the current tax year, then you will automatically be considered a non-resident for tax purposes.

If you have not been a UK resident in any of the previous three tax years, and you spend fewer than 46 days in the UK in the current tax year, then you will automatically be considered a non-resident for tax purposes.

If you have been in the UK for 183 days or more in the current tax year, then you will automatically be considered a UK resident for tax purposes.

If it’s clear that you’re a resident, you’ll typically pay UK tax on all your income from anywhere in the world. If you’re non-resident, you’ll only pay UK tax on money earned from UK sources.

Income tax and National Insurance

If you’re a sole trader, your profits are taxed as personal income. 

For the 2025/26 tax year, the bands are¹⁹:

• Up to £12.570 - no tax (Personal Allowance)
• £12,571 to £50,270 - 20% basic rate
• £50,271 to £125,140 - 40% higher rate
• Over £125,140 - 45% additional rate

The personal allowance reduces once income passes £100,000 and is fully removed before £125,140.

On top of that, you’ll also pay National Insurance contributions (NICs), which depend on your employment status and how much profit you make.

For 2025/26, self-employed contractors pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270, and 2% on anything above £50,270. 

Those earning over £6,845 automatically get Class 2 credits, meaning you no longer have to make separate payments²⁰.

Example calculation:

If your profit is £40,000, you’d pay 6% on £27,430. That’s £1,645 in total.

Employee/Umbrella (Class 1):

• £12,570-£50,270: 8% employee
• Above £50,270: 2% employee

Employers pay 15% above £5,000/year (this comes out of the umbrella contractor's day rate)²¹.

Limited companies and corporation tax

If you set up a UK limited company, the company itself pays corporation tax on its profits. The rate is currently 25%, though smaller companies with profits under £50,000 pay 19%.²².

When you take money out as dividends, there’s personal tax on top, although the dividend allowance softens the impact.

VAT

Turnover matters too. If your taxable turnover goes above £90,000 a year, you’ll need to register for VAT^23.

Even if you live abroad, VAT can still apply if you’re selling to UK clients. Some contractors register earlier so they can reclaim VAT on their costs.

IR35

Note: If you're working entirely from outside the UK, IR35 doesn't apply to you. Skip ahead to Double Taxation Agreements.

The IR35 rules are there to stop people from paying themselves as contractors when the work looks more like employment²⁴.  

HMRC looks at things like who controls your work, if you can send a substitute and whether there’s an ongoing obligation between you and the client.

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💡 Read our guide to learn more - What is IR35?

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Double taxation agreements

One big concern for overseas contractors is paying tax twice, once in the UK and once at home.

The UK has treaties with many countries to make sure the same income isn’t taxed twice.

You’ll either get relief in your home country or avoid double charges altogether¹².

For example, a US contractor working remotely for UK clients typically pays tax only in the US, not the UK. The UK only gains taxing rights if the contractor establishes a UK office or works on-site in the UK for 12+ months. 

Under the US-UK tax treaty, interest and royalties face 0% UK withholding tax.

The UK system has a lot of moving parts: residency tests, corporation tax, VAT, National Insurance, and IR35.

As an overseas contractor, you can consult an accountant who specialises in cross-border tax to save time and avoid tax mistakes.

Using an umbrella company

Let's be honest - navigating tax as an overseas contractor can be a headache.

It’s far too easy to overpay in both the UK and your home country if you don’t have the right setup, leaving you out of pocket when compared to your budget.

That’s why many overseas contractors use an umbrella company.

On paper, the umbrella acts as your employer (signing the client contract, running payroll, deducting tax and National Insurance, and handling expenses). 

At the same time, you get a salary after deductions.

Some umbrellas charge a fixed £20-£30 a week²⁵. 

Once you add employer NI, PAYE and employee NI, take-home from a £500-a-day contract is typically £300 to £350.

Here’s an example to show you how it works in numbers:

• Day rate: £500 × 220 working days = £110,000
• Umbrella company fee: £1,200 (£100/month)
• Employer’s NI (15%): £15,750
• Taxable pay: £93,050
• Income tax: £20,496
• Employee NI: £3,610
• Net annual pay: £68,944 (around £313/day)

For someone working abroad, an umbrella company removes much of the admin.

Instead of filing returns in two countries or tracking IR35, the umbrella handles compliance.

It’s often faster and easier than setting up a UK limited company, especially for short contracts¹⁷.

Manage your earnings as an overseas contractor in the UK with Wise Business

With Wise Business, you don’t need a UK bank account to get paid like a local. You can open 8+ sets of account details and receive money in multiple currencies, including GBP, EUR and USD. 

Clients simply pay into those details, and the money lands straight in your Wise account. You can hold it in any of the 40+ currencies supported, or convert only when you need to.

Once the money’s in, you have options. You can keep it in GBP for future UK expenses, convert at the mid-market rate, or send payments to any of the 140+ countries Wise supports. 

Best of all, opening a Wise Business account in the UK costs just £45, with no monthly charges.

Be Smart, Get Wise.

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“Using a traditional bank for international payments can be a nightmare if you're not super familiar with the process. With Wise Business, it’s so easy and effortless. Why go back to an archaic way of sending money?”

-- Suzanne Noble, Co-founder of Startup School for Seniors

 

FAQs

Can I claim UK tax relief on travel if I visit clients?

If you’re a UK tax resident, you may claim relief under HMRC’s 24-month rule (short-term travel only)²⁶.

If the contract requires you to work in the UK for more than 24 months, travel costs usually won’t qualify.

Can I switch between an umbrella company and my own limited company?

Yes, but it’s best to plan ahead. Some contractors start with an umbrella company because it’s simpler for short-term work, then set up a limited company if they secure longer projects.

Just remember, each structure has its own tax implications.

What happens if my client pays me late from the UK?

UK law protects contractors with rules on late payments. You can charge statutory interest and claim reasonable recovery costs if a UK-based client fails to pay on time. 

This applies even if you’re working from abroad.

Sources:

1. Kingsbridge, IR35 guide for overseas contractors and end clients
2. GOV.UK, Statutory Residence Test
3. GOV.UK, UK visa sponsorship for employers
4. GOV.UK, Skilled Worker Visa
5. GOV.UK, Skilled Worker Visa: Your Job
6. GOV.UK, Skilled Worker Visa: How much it costs
7. GOV.UK, Apply for the Global Talent Visa
8. UK Home Office, Workers and Temporary Workers: guidance for sponsors
9. GOV.UK, International Agreement Worker Visa | Eligibility
10. GOV.UK, Youth Mobility Scheme
11. GOV.UK, Innovator Founder Visa
12. GOV.UK, Non-resident relief under double taxation agreements
13. GOV.UK, What a sole trader is
14. GOV.UK, Set up a private limited company
15. GOV.UK, Filing your company's confirmation statement
16. GOV.UK, Tax treaties
17. GOV.UK, Set up a limited company
18. GOV.UK, UK residence and tax
19. GOV.UK, Income tax rates
20. GOV.UK, Self-employed national insurance rates
21. Contractor UK, Are umbrella companies shouldering higher employer NICs?
22. GOV.UK, Corporation tax rate
23. GOV.UK, When to register for VAT
24. GOV.UK, Working through an umbrella company
25. Contractor UK, What are the costs and fees of an umbrella company?
26. GOV.UK, Travel expenses