10 essential steps to get started in IT contracting in 2026

If you’re considering starting a business as an IT contractor but aren’t sure where to begin, our guide to getting started in contracting should provide you with valuable pointers.

We’ve been writing about contracting for over 20 years, so the tips and ideas below are based on our experience.

1. Is life as a contractor right for you?

Ask most contractors whether they regret leaving the world of permanent work behind, and most will say a resounding ‘no’.

If you decide to take the plunge, there are many great things about being a contractor – the freedom, the chance to experience new things, and better financial rewards.

On the other hand, you need to be a self-starter, think more like a business owner, and be able to adapt when the going gets tough.

For more ideas, read our article on the pros and cons of IT contracting.

2. Is there a market for your skills?

If you decide that life as a contractor appeals to you, you need to work out:

• Is there a market for your skills?
• What contract rates are you likely to be offered?
• How strong is the general contracting market at the moment?

In 2026, it’s also worth thinking about how demand is shifting. Many clients are allocating more budget to cloud modernisation, cybersecurity, data engineering, and practical AI delivery (alongside their usual BAU work).

Numerous key factors will affect your contract rate, including:

• The scarcity of skilled contractors for a given role.
• Your own skills and business experience.
• The location of the contract role.
• How much commission the recruiter makes.

3. Get used to the changing contract market

Overall demand for IT contractors declined significantly during the 2007/8 recession and for several years thereafter.

The market rebounded strongly from 2012/13 onwards, and contracting was in a healthy state in the late 2010s.

However, Brexit and the broader economic slowdown have dampened the market.

The April 2021 ‘Off Payroll’ (IR35) rules have also made life more complicated for both recruiters and contractors. In practice, many clients now treat status decisions as a standard part of hiring, and some will only engage contractors on an inside-IR35 or umbrella basis.

At the start of 2026, the economic outlook still looks mixed. Some organisations remain cautious on permanent headcount, but will fund project work when there’s a clear business case.

As a contractor, you will become accustomed to navigating the boom-and-bust cycle and to events that inevitably impact the market every few years.

4. Get ready to quit your current job

The nature of the contracting market means clients often want contractors to start immediately or within a few weeks at most.

This means that, as a permanent employee, you must give notice to your current employer before accepting a contract role.

You can either give notice and wait until the notice period has expired before seeking work or, more likely, start to apply for roles while serving your notice period.

Your current employer may have a flexible approach to your decision to leave, allowing you to leave early. In other cases, you may have to ‘do your time’.

5. Find your first contract

There are four main ways to find contract work.

• Contractor job boards, like Jobserve.
• Directly – via recruitment agents.
• Via LinkedIn.
• Via recommendations from people you know.

Take the time to create a compelling LinkedIn profile and stay in touch with former colleagues. They may have access to juicy roles that never even reach recruitment agents.

Ensure you have a professional-looking contracting CV, and refine your interview techniques.

Once you pass the interview stage, it is time to negotiate your contract rate and discuss other matters related to the actual role.

6. Read up on IR35 (Off Payroll)

IR35 is a piece of legislation that has a significant impact on the contracting sector. The IR35 rules apply if you work via a limited company, but carry out your contract work in the same way as a regular ’employee’.

In other words, if you are under the control and supervision of your client, and don’t show any signs of being in business in your own account, the IR35 rules may apply.

For this reason, it is worth contacting an IR35 specialist to make sure that the wording of your contracts and working conditions keeps you outside the legislation.

It’s also sensible to get comfortable with the idea of a formal status process (and paperwork) before you start, as many clients now insist on this upfront.

IR35 is a topic you must research thoroughly before starting as a contractor.

7. How are you going to trade?

Another fundamental step before starting is to decide on the trading structure to use.

You either work via your own limited company, or through an umbrella company.

There are several factors which will influence your decision, such as:

• Do you want a ‘hassle-free’ solution?
• Which trading structure is the most tax-efficient for me?
• Do you want to control your business affairs?
• Are your contracts caught by IR35 or not?
• How long do you intend to contract for?

In 2026, it’s also worth monitoring umbrella-related compliance changes. HMRC has confirmed new rules coming into effect from April 2026 that shift more PAYE responsibility up the supply chain when an umbrella company is involved.

The government has also said it intends to regulate umbrella companies from 2027. See: HMRC policy paper on umbrella company market changes and the Employment Rights Bill implementation roadmap.

You can read our expert guide to limited company or umbrella, which will help you decide.

8. Do you need an accountant?

If you trade via a limited company, there are good reasons to hire an accountant.

There are many specialist contractor accountants out there – and a good accountant will save you time and money.

They will also be able to help you negotiate things like IR35 and deal with HMRC on your behalf.

9. Do you need a business bank account?

If you set up a company, it is a different legal entity from its owners. So, it must have a separate business bank account.

You can choose either a high-street name or one of the many challenger banks, such as free business accounts from Tide and Zempler.

If you have an initial ‘free’ period, make sure you find out what fees apply when the introductory offer ends.

And, if possible, choose a bank account which automatically links to accounting software, such as FreeAgent.

As an umbrella company contractor, you are an ’employee’, so there is no need to open a business bank account.

10. Maintenance

The nature of contracting means that you must stay on top of your game.

Here are some essential ongoing tasks to consider when you become a contractor.

• Keep in touch with people on LinkedIn – colleagues, clients and recruiters.
• Make sure you pay for training if needed and maintain your certifications.
• Read up on any tax legislation affecting the industry, e.g., IR35 and Managed Service Company legislation.
• If possible, set aside funds for a rainy day – many experts suggest keeping at least six months’ worth of earnings.
• If you’re a limited company contractor, file your tax returns (company and personal) on time.
• If you run a limited company, keep an eye on Companies House reform, including identity verification requirements for directors and PSCs. See: Companies House ID verification rollout.

Make sure you browse the 100s of articles on Contract Eye for further inspiration.