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A limited company contractor’s guide to getting paid your worth and negotiating your day rate

4 min read

In this blog with SG Contractor Accounting we take a look at the ways you can negotiate your rates as a contractor and get paid what your worth.


Sadly it’s never been so expensive to live and work in the UK. With a rise in National Insurance, and the ever-increasing price of energy, fuel, food and other basic commodities, if you’re able to increase your rates in order to continue to make your contracting career as lucrative as possible, then now is a good time to consider how.

What’s the current going rate?

Negotiating a higher rate is near impossible if you don’t have clear evidence of how much the current rate is for your skill set, level of experience, and location. Take a look to see what the average rate is based on those variables, and then compare what your current or last contract paid to see if you’re within the same range. If not then this is a good place to start, and see if your next client can offer any scope for a higher rate.

It might sound obvious, but the location of an assignment can have a huge impact. Always ensure the location is included in your research, as city rates will always be higher, respectively. It’s also advisable to have a look on the specific contractor forums to see what your contracting colleagues are being paid. A good one to start with is ContractorUK, where you’ll find like-minded contractors who will be able to give you advice.

What are your strengths and skills actually worth?

If there were ten contractors with the same skills, what would you highlight to a prospective client in order to help you stand out from the crowd? Take a look at your professionalism within the parameters of point one, and if you have any specific experience with a previous client or project that sets you above the rest, you’ll be in a much stronger position to command a higher day rate.

Will you be found inside or outside of IR35?

All Limited Company contractors know that should they be found inside IR35 on any contract, they’ll have to pay the associated taxes and work under an Umbrella Company – both of which carry higher financial obligations than operating through your Limited Company, and therefore will mean a smaller take-home pay. When you accept any contract ensure you consider the financial implication being found inside IR35 could have on your take-home pay, and whether the rate will reflect this. Your accountant should be able to give you an illustration to show the difference in take-home pay of working through an umbrella versus a Limited Company, and this can be used as a negotiating tool.

Consider increasing your professional value

The world of contracting moves fast, and clients will want the most up-to-date skills and knowledge when it comes to choosing a contractor to complete their work. Is it time to update your qualifications and skills? If so then this will put you in good stead to command a higher rate. Your client gets what they pay for at the end of the day, so make yourself as attractive as possible.

Have a discussion with your agency

If you use a recruitment agency to find contracts, be sure to discuss your thoughts with them. They’ll have similar contractors as yourself on their books and will know how much they earn, and which clients offer the most for your skills, so it’s worth having a chat to see what their thoughts are and how you can get what you want.

Be sure to present your rates research to your agency, to show you’ve done your groundwork and have a basis for your discussion.

Be choosy with the contracts you accept

One downside of being self-employed is that you never know when your next contract will be, and therefore you may feel that it’s on the safer side to accept every contract that comes your way. If you’re new to contracting you may find that taking contracts which are on the lower rate side may still be worth your while, if the experience and client could open doors in the future. Whatever the reason for accepting a contract, look at the bigger picture to see how it can benefit you. There’s nothing wrong with being slightly picky!

Final thoughts

When you decide to change your day rate, the best and first place to start is with your professional worth, as you know your experience and skill set better than anyone else. It’ll be clear when your skills will need updating, or if a previous client isn’t paying what you’re worth. If you ever feel awkward asking for more remember that it’s business and not personal; it’s about your professional capabilities as a whole, and those come at a premium.

If you’re on the lookout for a contractor accountant that’s an expert in IR35 and tax advice, can offer Umbrella Company services at the flick of a switch, and financial advice when needed, then look no further than SG Contractor Accounting. 

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