Every interim finance assignment has to be structured somehow, and the structure determines how you are paid, what protections you have, and what the arrangement is worth. Most people encounter the question for the first time when an offer arrives and a recruiter asks whether they operate through a limited company — which is a poor moment to be working it out. This guide explains the three structures used in UK interim finance, what each means in practice for both sides, and how IR35 status changes the answer. It is a general explanation for finance professionals and employers, not tax advice: the rules change, your own position depends on facts this guide cannot know, and it is worth an hour with an accountant before you decide.
Accountancy Capital places finance professionals on interim, fixed-term and permanent assignments through our interim accountancy recruitment practice, and our recruitment team discusses structure on almost every interim brief, with candidates and clients alike.
The three structures
Personal service company (PSC). You form and run your own limited company, contract through it, and draw income as a mix of salary and dividends. You are a director and shareholder of your own business, with the administrative obligations that implies: accounts, corporation tax, VAT if registered, insurance. Standard at Financial Controller, Finance Director and specialist level, where assignments are longer and rates justify the overhead.
Umbrella company. You are employed by an umbrella company, which contracts with the agency or client and pays you through PAYE after deducting its margin and employment costs. No company to run, no accounts to file, and you get statutory employment rights through the umbrella. Common where assignments are short, where the client has determined the role is inside IR35, or where someone does not want the administration. HMRC’s guidance on working through an umbrella company explains what should appear on your payslip.
Fixed-term contract (FTC). You are employed directly by the client for a defined period. On payroll, PAYE, holiday accrual, pension auto-enrolment, and the protections that come with employment — including the right not to be treated less favourably than comparable permanent employees — the statutory position is on gov.uk with practical guidance from Acas. Most common up to Finance Manager level, where the candidate pool genuinely includes people who will accept employment.
How they compare
| PSC | Umbrella | Fixed-term contract | |
|---|---|---|---|
| Employment status | Not employed | Employed by umbrella | Employed by client |
| How paid | Salary + dividends from your company | PAYE via umbrella | PAYE via client |
| Admin burden | Accounts, CT, VAT, insurance | Minimal | None |
| Holiday pay | None — build into rate | Accrued (from your rate) | Paid |
| Pension | Self-funded | Auto-enrolment (from your rate) | Employer contribution |
| Statutory rights | Very limited | Basic employment rights | Full, including FTC protections |
| Typical level | FC, FD, specialist | Any — often shorter roles | MA to FM, maternity cover |
| Cost to run | £1,000–£2,000/yr accountancy | Umbrella margin per week | None |
One point the table cannot show: an umbrella assignment rate is usually quoted before the umbrella deducts employer’s National Insurance, any apprenticeship levy, holiday pay accrual and its own margin, so the gross pay on the payslip is noticeably lower than the rate the agency pays. Ask for a take-home illustration before you agree a rate. HMRC’s page on how to work out pay from an umbrella company walks through the deductions.
Where IR35 changes everything
The structure question cannot be separated from status, because status determines what the PSC route is actually worth.
Where an assignment is outside IR35, income can be taken through your company as a mix of salary and dividends, and the arrangement is generally more tax-efficient than employment. Where it is inside IR35, income is taxed broadly as employment income and the advantage over an equivalent salary narrows considerably — frequently to the point where a fixed-term contract at a comparable rate is the better arrangement once holiday, pension and sick pay are counted.
Two practical points. For medium and large clients the engager determines the status, not you, and the determination must reflect the actual working arrangement rather than the contract wording. That has applied to public sector bodies since 2017 and to medium and large private sector clients since April 2021; where the client is small, the PSC itself remains responsible for deciding status. And blanket inside-IR35 determinations are common in risk-averse organisations — which is why the same nominal day rate can be worth quite different amounts depending on who is engaging you. HMRC’s off-payroll guidance is the primary source, HMRC’s check employment status for tax tool is what most engagers use, and our guide to IR35 and employment tax covers the framework.
The practical consequence for candidates: ask about status before you discuss the rate, because an inside-IR35 assignment at £500 a day is not comparable to an outside-IR35 assignment at the same number.
The umbrella PAYE rules from April 2026
Umbrella arrangements also changed. Rules introduced from April 2026 make the agency, or the end client where there is no agency, liable for PAYE on umbrella workers’ pay, so HMRC can recover underpaid tax and National Insurance from them if the umbrella gets it wrong. HMRC’s guidance on the PAYE rules for labour supply chains that include umbrella companies sets out who is covered. In practice, expect agencies and clients to be more selective about which umbrellas they accept and to ask for more evidence of compliance — a sensible development for contractors, since it squeezes out the schemes that caused problems in the past.
Which suits which situation
PSC suits the established interim with a genuine portfolio of clients, working on assignments likely to fall outside IR35 — defined scope, own judgement, not integrated as an employee — where the rate justifies running a company. This is the standard arrangement at FC and FD level, and the norm for fractional Financial Controllers working across several clients.
Umbrella suits shorter assignments, inside-IR35 roles where the PSC advantage disappears, and people trying interim work for the first time who do not want to form a company before they know whether it suits them. It is also the pragmatic answer when a client will only engage through one.
Fixed-term suits maternity and long-term absence cover, roles up to about Finance Manager level, and anyone who values employment protection and benefits over rate. It is genuinely the better arrangement more often than the interim market admits — our guide to temporary, fixed-term and interim arrangements works through the employer’s side of the same decision.
What fixed-term employees are entitled to
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 give fixed-term employees broadly the following protections:
- No less favourable pay and conditions than a comparable permanent employee, unless the difference can be objectively justified.
- The right to be told about suitable permanent vacancies in the organisation.
- After four years’ continuous employment on successive fixed-term contracts, the contract is generally treated as permanent unless continued use of fixed terms is objectively justified.
- The ending of a fixed-term contract without renewal counts as a dismissal, so unfair dismissal and redundancy rights can apply once the qualifying service is met.
What each is actually worth
The comparison people make — day rate against salary — is the wrong one. Work it through properly.
A £450 day rate at 210 billable days is £94,500 gross. From that, deduct no holiday pay, no sick pay, no employer pension, no bonus, and (through a PSC) accountancy and insurance costs of £1,000–£2,000. Against a £70,000 salary, whose fully loaded employment cost is roughly £84,000 including employer’s National Insurance (15% since April 2025) and pension, and which is paid across all 52 weeks regardless of utilisation.
On those numbers the interim route is ahead — but the gap is smaller than the headline suggests, and it can reverse entirely below about 160 billable days. The rate is compensation for carrying utilisation risk, not free money. Rates by role are in our interim finance rate card, and the wider comparison in contracting versus permanent in finance. For a role-specific view, see our guide to interim Financial Controller rates.
Practical points for candidates
Get an accountant before you start, not after. The set-up decisions — company or umbrella, VAT registration, salary and dividend split — are easier made once than corrected later.
Take professional indemnity insurance. Most clients require it, and the cost is modest against the exposure.
Compare umbrellas on the margin and the take-home illustration, and be wary of any arrangement promising unusually high retention — schemes of that kind have caused a great deal of difficulty for contractors in other sectors.
Read the engagement letter properly, particularly notice, scope and any restriction on working for competing clients.
And plan the pension deliberately. It is the single most neglected part of interim working, and the one where the gap against employment compounds fastest — MoneyHelper covers the options for the self-employed. If you are weighing an interim career more broadly, our guide to interim versus fractional finance compares the two working models, and you can register as a candidate at no cost.
Practical points for employers
Assess status before you advertise, not at offer stage. Candidates will ask, and a determination made late looks like an afterthought. Our guide to briefing an interim finance search puts status in the brief from day one.
Understand what a blanket determination costs. Deciding everything is inside IR35 feels safe, but it narrows the pool and raises the rate the remaining contractors require — frequently costing more than the risk it avoids.
Check the supply chain if umbrellas are involved. Under the April 2026 rules, the agency — or you, if you engage umbrella workers without an agency — carries the PAYE risk, so ask how umbrellas are vetted.
Be flexible on structure where you can. Insisting on one route removes candidates who work through another for good reasons.
And remember the FTC option at manager level. Unlike at FC and FD, plenty of capable Finance Managers will take a twelve-month contract — a wider pool at a lower cost, covered in our guide to interim Finance Manager cover.
Hiring an interim, or considering interim work? — 0204 553 8893
Same working day response, with interim candidates typically put forward within days. Our recruitment team will talk through structure and status alongside the role itself.
Frequently asked questions
Who decides whether an interim role is inside IR35?
For public sector bodies and medium or large private sector clients, the client decides and must give a status determination statement. For small private sector clients, the contractor’s own company decides.
Is an umbrella company worse than a limited company?
Not necessarily. On an inside-IR35 assignment the tax outcome is broadly similar, and an umbrella removes the administration of running a company. Outside IR35, a PSC is usually more tax-efficient.
Do fixed-term contractors get holiday and pension?
Yes. A fixed-term employee is an employee, with paid holiday, auto-enrolment and the protection of the 2002 Regulations against less favourable treatment.
Which structure do Accountancy Capital clients use?
All three. FC-level interims mostly work through their own companies, inside-IR35 roles often go through umbrellas, and manager-level cover is frequently fixed-term. Fees are agreed in writing before any search starts.
Adrian Lawrence FCA — Founder, Accountancy Capital
Fellow of the ICAEW | Chartered Accountant holding an ICAEW practising certificate | Part of FD Capital Group
Adrian is a former listed-company Finance Director with a BSc from Queen Mary College, University of London. His view is that the day rate matters far less than two other things: how many days you will actually bill, and whether your assignments fall inside or outside IR35. Get those right and the structure question mostly answers itself — and an hour with an accountant before the first assignment is the cheapest hour in the exercise.
Related Pages and Resources
The Arithmetic
What the arrangement is actually worth.
Considering interim finance work? — 0204 553 8893
Register with us at no cost to candidates, or call to talk it through first. Email recruitment@accountancycapital.co.uk, or visit us at 167–169 Great Portland Street, London W1W 5PF or Watling Court, Orbital Plaza, Watling Street, Cannock WS11 0EL.