What’s the Going Rate for Freelance Accountants?

Freelance accountancy rates are squeezed while finance remains an attractive sector for freelancers and temps.

Twice a year I get to crunch all the numbers that come out of all the data we hold on our systems for umbrella contractors. The trends that are uncovered always throw up some useful stats and lead to some interesting conversations around the office.

The findings have shown that the average hourly rate for umbrella contractors has fallen in the last 12 months from £34.41 to £33.12; however, contractors over 35 are typically £10 an hour better off than their younger counterparts.

The accountancy sector remains an attractive sector for contractors, temps and freelancers; the average hourly rate remained slightly above average at £33.16. However, this time last year the average hourly rate for accountancy temps working via an umbrella company was £35.36. So freelance accountancy professionals are feeling the squeeze just like everyone else.

The study also found that:

• Greater London and the South East remain the best places to contract in the UK based on hourly rates, with both regions seeing slight increases. Rates in Greater London have risen from £36.16 to £36.88 and in the South East from £36.64 to £36.74.
• The lowest average rates can be found in the East Midlands (£25.81) followed by Northern Ireland (£27.25) and the North West (£28.64).
• The Oil industry enjoys the highest average hourly rate at £90 followed by Construction (£59.50), Finance (£48.37) and Healthcare (£45).

In contrast to the rest of the UK’s labour markets, the study suggests that rates do get better with age for freelancers. The average rate in the 25 to 33 year-old category is £28.68, compared to £37.09 for 35 to 44 year-olds and £37.21 for those aged 45 to 54.

You can attribute the drop in rates to the state of the UK economy; however, it’s hard to explain why there’s a gender gap in umbrella contracting. Many industry commentators often put it down (rightly or wrongly) to factors such as women taking a break from their career to have children. I’m not so sure this stands up in the profession and it definitely doesn’t in contracting. Surely a hirer is engaging a contractor because they have a specific skill set and the going rate for that skill set is market led?

The age difference is perhaps more straightforward. The older a contractor, the more experience they have and this is reflected in the rates they can command as they secure more senior roles. So unlike the rest of UK Plcs, age appears to be a benefit for professional accountancy freelancers and contractors.

I firmly believe that freelancers have a massive contribution to make to the UK’s economic recovery. Over the last two months we’ve seen an increase in the number of contractors making enquiries with us, so prospects are picking up.


Rob Crossland is the Chief executive of the Parasol family of companies, which also includes ClearSky Accounting, and provides umbrella PAYE services to over 9,000 freelancers in the UK.

Will the AWR turn life upside down for financial temps and contractors?

In my last blog post I discussed the impending Agency Workers Regulations (AWR) and what their impact could be for the UK’s interim and freelance accountancy professionals. We’ve now had the Department for Business Innovation and Skills (BIS) publish its guidance notes on the new legislation and the picture has become a lot clearer.

As experienced freelancers in the accountancy world will know, the temporary worker industry is one that has experienced a lot of legislative change over the last 10 years and correctly structured support service providers, i.e. specialist freelance accountants and umbrella companies, have adapted and thrived. Good service providers talk about working within new legislation, not around it, and the AWR will be no different; this is good news for the thousands of freelance accountancy and finance professionals that rely on them to ensure they are running their businesses compliantly.

In fact, most ‘good’ umbrella company business models are eight tenths of the way to being a compliant solution to the AWR already. These are the umbrellas that have a robust contract of employment in place with the freelancers who use their services and who demonstrably behave as a true employer should. The less scrupulous providers (that do exist out there) will really struggle with this as their contracts of employment have no basis in case law and their attitudes to compliance are ‘relaxed’, to say the least.

Freelance finance professionals who are paid via their agency’s PAYE are going to see some significant changes and it’s worthwhile looking at the alternative options open to them. Make sure you aren’t missing out on some of the additional benefits available to temps and freelancers as a result of the AWR.

All change?

The AWR is not as daunting as some commentators have alluded to and it does provide opportunities for freelancers to work with umbrella companies and benefit from additional perks.

For career freelancers, a model based on ‘full employment’ is the answer. This would involve the agency worker being employed by the umbrella company on a permanent basis with the umbrella company providing pay between assignments, holidays and pensions. The umbrella will also work with the recruitment agency partners to help you find your next assignment and you will still have your existing right to claim legitimate business expenses to boost your take-home pay – not something that will necessarily be offered by the alternatives.

What is the full employment model?

The full employment model takes elements from what has become known as the Swedish Derogation – a fancy-sounding name for a clause negotiated by the Swedish delegation when the Agency Workers Directive was debated at EU level. To put it simply, it means that the AWR rights to equal pay of an agency worker no longer exist when agency workers are employed on a permanent basis by their umbrella company or temporary work agency and receive pay in-between assignments. Under these circumstances, the protection afforded by the AWR becomes superfluous as the worker is already protected as a full employee.

However, there are conditions to this, with the first one being that the agency worker needs to be genuinely employed by the umbrella company or agency with a permanent contract of employment in place, and that the contract was entered into before the beginning of the worker’s first assignment.

There are some conditions to this though that you need to be aware of. Ask your agency or service provider if they will:

• Pay you during non-working periods when you are between assignments
• Take reasonable steps to help you find your next assignment
• Make sure that any suitable available work is offered to you
• Pay you a “minimum amount” for an aggregated period of not less than 4 calendar weeks (subject to national minimum wage)
• The “minimum amount” must be at least 50% of your pay from your previous assignment. However, it cannot be less than the national minimum wage

We are almost there

In recent years, correctly structured umbrella companies have transformed themselves into risk mitigation employment businesses, using robust over-arching contracts of employment with contractors to mitigate the risks faced by hirers and freelancers alike. It means that ‘good’ umbrella companies are taking full responsibility for freelancers’ employment rights and the associated risks, all of which have been polarised by the AWR.

From this position, for many umbrella companies, it’s become their responsibility to develop the solution to the AWR and as a result, the ‘true’ umbrella companies are not far off becoming a compliant post-AWR business model. This is where the ‘full employment’ model comes in.

As a result, ‘umbrella company’ is a phrase that is likely to become redundant, replaced by phrases such as ‘outsourced employment services provider’, for example, but for freelancers, recruiters and their end-clients this is good news. As long as the freelancer has a robust contract of employment in place with their umbrella that meets all of the above requirements, then all of the responsibilities regarding pay that come with the introduction of the AWR lie with the umbrella. Should a tribunal ever come about, it will be the umbrella that the tribunal is brought against.

Freelance accountancy and finance professionals will, however, need to conduct due diligence to ensure that the agencies and umbrella companies they are working with are applying the ‘full employment’ model correctly and have the financial strength to ensure they can pay you if you find yourself without an assignment. A good place to start is the membership of FCSA.


Rob Crossland is the Chief executive of the Parasol family of companies, which also includes ClearSky Accounting, and provides umbrella PAYE services to over 9,000 freelancers in the UK.

Freelance accountancy professionals must get to grips with the AWR

Later on this year, a new piece of EU legislation will come into effect that will impact on freelance accountants and finance professionals everywhere. However, as the clock ticks down to its introduction, a failure to get to grips with the new rules could be costly and damaging.

The Agency Worker Regulations (AWR) will come into force in the UK in October 2011. It has huge implications for temporary work agencies and the contractors, freelancers and temps who find work through them. The aim of the AWR is to protect vulnerable workers from exploitation and ensure them the same basic employment conditions as their permanent equivalents after 12 weeks of service – mainly the right to the same pay, working hours and holidays. However, it also has implications for skilled accountancy and finance freelancers as the legislation makes no distinction between them and low-paid, low-skilled temporary workers.

To say that the evolution of the AWR has been controversial is an understatement, and the legislation as it currently stands is the result of a plenty of horse trading between the Government, the TUC and the CBI.

Perhaps the biggest confusion seems to be around what constitutes an agency worker.

The traditional view of agency workers seems to be blue collar production line workers such as those caught up in the row between BMW and the union Unite in 2009 (which, although you can trace the beginnings of the AWR back to 2000, led to a marked step change towards its introduction). However, an agency worker can range from those working in agriculture and food production industries to temporary secretarial staff, or from jobbing actors through to highly skilled freelance accountants and consultants.

The official definition of an agency worker is a person who has a contract of employment with a temporary work agency and is supplied by them to work temporarily for, and under the supervision of, a hirer or client. They can also be known as temps, interims, contractors, freelancers or flexible workers and in the more heated moments of the AWR debate, as vulnerable workers.

Like a lot of the legislation introduced in recent years to the temporary workers market (IR35, MSC etc), the legislation has not made a distinction between these two ends of the agency worker spectrum: the vulnerable agency workers who deserve the protection of the AWR, and the highly skilled, high-earning contractors who provide their services to end users via a recruiter. It’s fair to say that most of the highly skilled, high paid agency workers do not see themselves as vulnerable or in need or want of protection.

In fact, when we polled our own base of the 8,000 contractors we work with, over 80% hadn’t even heard of the AWR, despite the impact it could have on the way they work. In addition, a survey of contractors by www.contractorcalculator.co.uk concluded that 75% of professional contractors and temps don’t want employee rights in the first place.

Temps, freelancers and interim managers need to be talking to their recruitment agents and clients now and use resources such as www.understandingawr.co.uk to brush up on their own working knowledge of the AWR.

It is absolutely right that vulnerable workers are protected in this country. However, this shouldn’t be to the detriment of the UK’s highly skilled temporary and freelance workforce who make such a valuable contribution to the economy and are supporting the fledging recovery.

If the industry gets this wrong, then a lot of time and money will be wasted as it moves to the courts and employment tribunals to sort this out. Sensible discussion now, 8 months before its introduction, will ensure that all parties in the temporary labour market can develop a robust solution in order to work within the legislation and ensure that freelancing remains a profitable option for accountancy professionals and a valued service for businesses.


Rob Crossland is the Chief executive of the Parasol family of companies, which also includes ClearSky Accounting, and provides umbrella PAYE services to over 9,000 freelancers in the UK.

Freelance working shows its value

Last October, I spoke about our research into freelance working in the accountancy and finance sector and how freelancers manage their own business and tax affairs. As this is very much a growing trend in the sector, we took our research a step further to examine the earning potential for freelance accountancy and finance professionals. We discovered that the average salary for freelance accountants working via an umbrella is over £66,000 per year.

This is based on the fact that the average hourly rate for umbrella accountancy freelancers in the UK currently stands at £35.37. Calculated on a 40-hour working week during a 47 week working year, this equates to an annual salary of £66,495.60.

There are currently in excess of 86,000 accountancy professionals working on a freelance or interim basis in the UK, and many leading industry experts and commentators expect this figure to grow.

This visibly growing trend for using freelance professionals in the UK is largely due to the reduced costs associated with employing an interim manager as opposed to a permanent member of staff. The accountancy and finance roles being taken by temps in the current market cover everything from project accountants, purchase ledger clerks and business analysts, to interim finance directors and financial controllers.

Despite the Office for Budget Responsibility announcing at the close of 2010 that the economy is currently recovering better than expected, there is still a nervousness in the business community, particularly for SMEs, who are finding it difficult to secure finance to invest in their business and its growth. This means they are reluctant to employ permanent team members.

The public sector spending cuts will only add to this; a recruitment freeze in the public sector, followed by expected jobs cuts, means that there will be more opportunities for freelancers. This is particularly true in the departments where the work still needs to be done in spite of the cuts.

The advantage for the public sector having access to freelancers is that it will also have access to highly skilled, experienced and motivated individuals to complete projects without the need to supply a host of benefits, particularly pensions, and no redundancy costs when their services are no longer required. There is also the option to include longer payment terms in any contract, compared to paying employees on a weekly or monthly basis, which then creates cash flow savings for the public sector. This was of course one of the suggestions made by Sir Philip Green in his recent public sector spending review.

And when you think of the tax and lifestyle benefits of working on your own account, be it via an umbrella or limited company, all of this adds to the attractiveness of employing freelance professionals on a temporary basis. It also highlights the fact that there are opportunities out there for highly skilled, highly motivated accountancy and finance professionals who are looking to add a bit more flexibility to their working life.


Rob Crossland is the Chief executive of the Parasol family of companies, which also includes ClearSky Accounting, and provides umbrella PAYE services to over 9,000 freelancers in the UK.

How taxing should freelancing be?

We’ve been doing some research into the freelancer segment of the accountancy and finance professions recently, and one of the most surprising things we’ve uncovered is that a big chunk of accountancy professionals currently working in the UK are paying too much tax. As a result, some are missing out on 10 per cent of their own take-home pay.

On the face of it, the reasons for this happening are perfectly understandable. For one, when you spend all day focussed on somebody else’s finances, the last thing you want is a Busman’s holiday in your own down time. Another reason is that temping or freelancing is not as ‘mature’ in accountancy and finance as it is in the IT sector, for example.

But there are a growing number of freelance finance professionals in the UK, and a lack of awareness of the payment options open to them is coming at a cost.

The report we commissioned found that there are currently in excess of 86,000 accountancy professionals working as contractors or on a freelance basis in the UK. In addition, and largely due to the way in which they choose to manage their own finances, over 43,000 are failing to take advantage of all the benefits of working for yourself.

This biggest loss of take-home pay is caused by how accounting and finance freelancers are managing their own tax affairs. The report found that:

• 29 per cent of freelance accountants are paid via their recruitment agency’s PAYE system;
• 21 per cent are working as a sole trader;
• 29 per cent are working via their own limited company.

Those working as a sole trader or via agency PAYE (50 per cent) are not taking full advantage of the tax benefits of contracting or freelancing.

There is a well-documented trend that more and more accountancy and finance professionals are deciding to work on a contract or freelance basis. This could be professionals looking for a stop gap between permanent roles, recent graduates looking to add good names to their CVs, people who have moved to a new region or women returning to work after time out to raise a family, or accountants who are attracted to the lifestyle of flexible freelance working and are genuinely in business on their own account as a career choice.

From an employer’s point of view, at a time when there is a general lack of economic confidence in the UK around employing permanent staff and the cost of recruitment, it is a cost effective solution to a staffing need and a potential way of navigating round a head count freeze.

However, as 50 per cent of freelance accountants are working via a sole trader or agency PAYE model, they are missing out on the tax benefits of working in this way.

Working via an umbrella company, for example, means that freelancers can benefit from a hassle-free solution that allows them to claim tax relief on legitimate business expenses incurred for travel and subsistence, ultimately leaving them with more take-home pay in their pocket.

Although by no means a new way of working, freelancing is a growth area in accountancy, and freelancers are still working out the best ways to work and ensure they are paying the correct amount of tax. There is a duty of care here for the agents that place them; they also need to be fully aware of all the options open to freelancers and be able to advise on those that are the most tax efficient. For anyone about to take the plunge, it’s worth fully examining all the options available and making an informed decision on the best way to manage your business.


Rob Crossland is the Chief executive of the Parasol family of companies, which also includes ClearSky Accounting, and provides umbrella PAYE services to over 9,000 freelancers in the UK.