How to Become an Engineering Contractor

how to become an engineering contractor

Want to know more about how to become a contractor, but not sure where to start? If you’re a permanent engineer looking for advice on how to start contracting, this blog is for you.

With the help of one of our Contract Recruitment Specialists, who has over 12 years’ experience with engineering contractors, we have compiled a list of things you will need to think about and action before you begin your first contract.

We’ve also spoken to contractor insurance specialists, Kingsbridge, to outline your protection requirements as a contractor, to protect both you and your clients from any unexpected costs. Keep reading to find out the steps you’ll need to take to become an engineering contractor.

Weigh up the pros and cons

If you’ve always been a permanent employee, there are several things to consider when making the move into contracting.

When you leave permanent employment, you also lose all the comforts of a permanent job, such as holiday pay and sick pay – as a contractor, you’re only paid for the time you work. However, contractor pay is attractive, and the flexibility is ideal for those who don’t always want to work 9-5.

There are both reasons for and against contracting, and it completely depends on your personal circumstances. Read our blog on the life of a contractor for a full comparison of contract and permanent employment.

Do some market research

How much contractors are paid is determined by several factors – experience, location and market demand are just some of the things that may influence your rate. Some of the rates you may have seen advertised could be completely different to what you could realistically earn.

Do some research on job boards and find out what rates are being offered for roles similar to your profile and ask your connections about current pay rates in the market. Doing so will ensure you’re realistic and know exactly what to expect when it comes to looking for your first engineering contract.

Working away

It’s very unlikely that you will find an engineering contract on your doorstep – the right contract can sometimes come with lengthy commutes or require you to lodge for the duration until the work is complete.

Whether this is feasible will of course depend on your individual circumstances, but it’s a question that will come up during any conversation with a contract recruiter, so ensure your mind is made up.

Set up a limited company

Great, you’ve decided that contracting is the route you want to go down, so now you need to get set up.

Most engineering contractors we work with at ATA are paid through a personal service company (PSC) which is the most common way to contract as it’s the most tax efficient. In order to do this, you would need to set up your own limited company. Working as a PSC and running a limited company, you’re invoicing for your work as a business, not an individual, and therefore are accountable for all the admin involved, including corporation tax and other deductions.

You will not be able to start an engineering contract as a PSC without your certificate of incorporation, business bank account details and proof of identity, so ensure you have all that ready before you begin searching for your first contract role. You will also be required to obtain relevant insurances, we’ll cover this later in this blog.

Contractor Insurances

In order to carry out any work as a contractor, most clients and recruiters will require you to have Public Liability Insurance and Professional Indemnity Insurance.

Public Liability covers you if somebody is injured, or property is damaged as a result of your actions while providing a service. Professional Indemnity covers you if you’re accused of professional negligence, bad advice or making an error that costs your client money.

Even the best of us make mistakes. Yes, even you. 9 times out of 10 everything will run smoothly, but there’s always a chance of something going wrong. Maybe you’ll give the wrong advice, or perhaps you’ll make incorrect measurements which set the project back or requires retrospective work.

We work closely with Kingsbridge Contractor Insurance who insure over 50,000 contractors throughout the UK. Rather than piecing together various elements of insurance at a high price, Kingsbridge offer all the key insurances a contractor needs in one easy-to-manage package. They also have a price promise – if you can find the same cover for a better price, they’ll match it.

You will need to obtain these insurances before you can start contracting, and by reading this you can benefit from a 10% discount on your annual policy with Kingsbridge by following the button at the bottom of this blog.

IR35 Status

You don’t necessarily need to know every small detail about IR35, but you will need to understand whether your contract will be inside or outside of IR35, and exactly what this means.

The IR35 status of your contract will have an effect on the amount of tax you pay, as those inside IR35 are taxed the same as a permanent employee. For a full explanation of IR35, what it means and how it may affect you, we recommend visiting Contractor Calculator.


This blog has outlined both the decision-making process for becoming a contractor, and the initial steps required for you to be eligible to work on your first contract. Hopefully, by now you’re much clearer on what you need to do and are ready to begin searching for an engineering job. The last piece of the puzzle is finding a great engineering contract recruiter – that’s where ATA Recruitment comes in.

Contract Engineering Jobs

ATA Recruitment is more than just an engineering recruitment agency – we have a dedicated contract team that can help you to find a job and provide advice about contracting and the engineering marketplace. To begin searching for an engineering job, and to claim your 10% insurance discount with Kingsbridge through ATA, use the buttons below.

Search Engineering Jobs
Get 10% off Contractor Insurance