Contract for Services Template (UK)
Updated on 30 July 2026
A contract for services sets out the terms on which a business engages someone as a self-employed contractor rather than an employee. UK law has a third category most other countries don't — "worker" status, sitting between employee and genuinely self-employed — and if the engagement involves the contractor working through their own company, the off-payroll working rules (IR35) may put the responsibility for getting the status right onto you, not the contractor.
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Contract for Services
This Contract for Services is made on between of (the "Client") and , trading as (the "Contractor").
1. Services
The Contractor shall provide the following services to the Client: .
2. Term
This Contract begins on and continues until , or until terminated earlier in accordance with this Contract.
3. Payment
- Rate or fee:
- £
- Schedule:
4. Right of Substitution
The Contractor may, at its own cost, engage a suitably qualified substitute to perform the services in its place, provided the Client is notified in advance. The Client shall not unreasonably refuse a proposed substitute.
5. Control and Independent Status
The Contractor controls the manner in which the services are performed, including the hours worked and the methods used, subject to the deliverables agreed under this Contract. The Contractor is not obliged to accept further engagements from the Client beyond those set out here, and the Client is not obliged to offer any. Nothing in this Contract shall be construed as creating a contract of employment, a partnership or an agency relationship between the parties.
6. Intellectual Property
The Contractor assigns to the Client all right, title and interest in the work product created under this Contract, effective upon payment in full. The Contractor retains rights to any pre-existing materials incorporated into the work product and grants the Client a licence to use them as part of the work product.
7. Confidentiality
The Contractor shall not disclose the Client's confidential information obtained during the engagement, during the term of this Contract or after its termination, except as required by law.
8. Termination
Either party may terminate this Contract by giving days' written notice to the other. The Client shall pay the Contractor for services performed up to the date of termination.
9. General
This Contract is governed by the law of England and Wales and constitutes the entire agreement between the parties. It may be amended only in writing signed by both parties.
The Client
Date:
The Contractor
Date:
Contract for services, not a contract of service
UK law distinguishes a "contract for services" (a self-employed contractor, in business on their own account) from a "contract of service" (an employee). Getting this labelled correctly in the document matters less than getting the actual relationship right — tribunals and HMRC look at the reality of how the work is controlled and performed, not just what the contract calls it.
The UK's third category: "worker" status
Unlike many countries, UK employment law recognises a middle category between employee and self-employed contractor: the "worker." A worker isn't an employee, but does personally perform work for someone who isn't simply their client, and gets a smaller set of rights than an employee — including the minimum wage, paid holiday and protection from unlawful discrimination — that a genuinely self-employed contractor does not get. A contractor who has to do the work personally, can't send a substitute, and is meaningfully integrated into the client's business can be found to be a worker even if the contract calls them a self-employed contractor.
IR35 and the off-payroll working rules
If the contractor provides their services through their own limited company (a personal service company, or PSC) rather than as a sole trader, the off-payroll working rules may apply. For engagements with a medium or large client, the client is responsible for determining whether the engagement would be one of employment if the PSC didn't exist — and if so, must operate PAYE and National Insurance on the payments, shifting the tax responsibility away from the contractor's company.
Small clients are exempt from having to make this determination — the responsibility then stays with the contractor's own company. As of 6 April 2026, a company counts as small if it meets at least two of: turnover of £15 million or less, a balance sheet total of £7.5 million or less, and an average of 50 or fewer employees, tested over two consecutive financial years.
The clauses, explained
- Parties and services
- Identifies the client and the contractor (as an individual, sole trader, or through their own limited company) and describes the services.
- Right of substitution
- Records whether the contractor can send a substitute to perform the work. A genuine, unfettered right of substitution is one of the strongest indicators of self-employed status — a requirement of purely personal service points the other way.
- Control
- States that the contractor controls how, when and where the work is done, within the bounds of the agreed deliverables — as opposed to being directed like an employee.
- Payment
- The rate, invoicing arrangement and payment terms — paid against invoices, not as a salary, and without tax deducted at source (unless the off-payroll rules require it).
- Mutuality of obligation
- Records that the client is not obliged to offer further work and the contractor is not obliged to accept it beyond the current engagement — a lack of ongoing mutual obligation is another factor supporting self-employed status.
- Intellectual property
- Assigns ownership of the work product created under the contract to the client.
- Termination
- How either party can end the engagement and on what notice.
Requirements checklist
Work through these before engaging a contractor, particularly if they operate through their own limited company.
Employment status is about substance, not labels
Calling someone a contractor in the contract doesn't settle their actual status. Personal service, control, and mutuality of obligation are the factors tribunals actually examine when a status dispute arises.
HMRC — Employment Status ManualIR35 / off-payroll working rules
If the contractor works through their own limited company and you are a medium or large client, you must determine whether the engagement is employment in substance and, if so, operate PAYE on the payments. Small clients are exempt from making the determination — updated small-company thresholds (turnover £15m, balance sheet £7.5m, 50 employees) apply from 6 April 2026.
gov.uk — Off-payroll working rules (IR35)
How to use this template
- Fill in the parties and services. Type the client's and contractor's details into the highlighted blanks and describe the services to be performed.
- Set payment terms. Fill in the rate and invoicing arrangement.
- Consider the substitution and control clauses. The right of substitution clause sits in the contract with its own Add or Remove control. Make sure it and the control clause reflect how the engagement will genuinely work — these are the clauses that matter most if status is ever challenged.
- Check whether IR35 applies. If the contractor works through their own limited company, work out whether you're a small client (exempt from the determination duty) or a medium/large client (must make the determination yourself).
- Sign and download. Both parties sign on the signature lines, then download the contract as a Word or PDF file before work begins.
Frequently asked questions
What's the difference between an employee, a worker and a self-employed contractor?
An employee works under a contract of service with significant control, mutuality of obligation and personal service. A worker sits in between — personal service without full integration — and gets limited statutory rights like the minimum wage and paid holiday. A genuinely self-employed contractor runs their own business, can typically send a substitute, and gets none of these employment protections. The label in the contract doesn't decide which one applies — the actual relationship does.
Do I need to worry about IR35 if the contractor is a sole trader?
No — the off-payroll working rules only apply where the contractor provides services through their own intermediary, typically a personal service company. A sole trader working under their own name isn't affected by IR35, though the underlying employment-status question (are they really self-employed?) still matters for tax and rights purposes.
Who decides IR35 status — me or the contractor?
If you're a medium or large client, you must make the determination and give the contractor a Status Determination Statement. If you qualify as a small client under the Companies Act size thresholds, the responsibility for determining status stays with the contractor's own company instead.
Does a substitution clause actually protect me?
Only if it's genuine. HMRC and tribunals will look past a substitution clause that's never actually used or that the client would in practice refuse — what matters is whether a real, unfettered right to send someone else exists and would be honoured, not just that the words appear in the contract.
What happens if a contractor is found to actually be an employee or worker?
The business can face liability for unpaid tax and National Insurance, holiday pay, and other employment rights the individual should have received — regardless of what the contract said. Under the off-payroll rules specifically, a medium or large client that gets the determination wrong can become liable for the tax itself.
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Disclaimer
This template and guide are provided for general information only and do not constitute legal or tax advice. Employment status and IR35 rules are fact-specific and the small-company thresholds referenced above are current as of the date shown but may change. Consult an employment solicitor or accountant before relying on this agreement for a real engagement.
