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If you are a software developer and communicating in English for you is not an issue, the United Kingdom might prove to be the perfect area for you to look for a new work opportunity. Remote work in the UK has been gaining in popularity even well before the pandemic, but of course, since 2020 the number of such job listings grew exponentially. Are you thinking about applying for remote programming jobs in the UK? If successful, do you know what would be the tax implications of such a contract for foreigners? You will find the answers to these questions in this article.

Where to find remote work in the UK as a software developer?
What type of contract to choose for remote work – employment or B2B?
How to account for remote B2B income from the UK?
Remote work in the UK and IR35 regulations


Where to find remote work in the UK as a software developer? 


Currently, the most popular job listing sites with remote opportunities for software developers in the UK are:


What type of contract to choose for remote work – employment or B2B?

Employment contract

In the United Kingdom there is only one type of employment contract – the general employment agreement. It’s main viable alternative is a B2B contract, which, to put it simply, is a deal signed between two business entities, e.g. a Private Limited Company and a Sole Trader.

Typically, if you’re employed through an employment agreement, your income tax and social security payments are due in the country where you reside, no matter where the employer is located. So, if you live in France or Germany, your income shall be taxed according to French or German tax rules regardless of the company being permanently established in the UK. Usually, it is the employer who is responsible for properly accounting for the employment contracts their, however when it comes to employment contracts with foreigners, companies often include a clause in the contract, saying that it is the responsibility of the employee to account for all the taxes and social security fees resulting from such an agreement. If you’re not familiar with your local employment law, nor do you plan to familiarise yourself with it, this might seem like a bit of a burden. Of course, you can always hire an experienced accounting company to take care of those responsibilities for you, or, which is often the case, choose to sign a B2B contract instead.


B2B contract

Many employers in the UK and other countries, allow their candidates to choose between an employment agreement or a B2B contract, in which case, the employee will sign the agreement as a business entity (e.g. a Sole Trader or on behalf of his or her own LTD company) and not as an individual. In this case, you, that is your company, would be responsible for invoicing the employer at the end of each agreed upon payment period. For some, this might seem overly complicated, but bear with us. There are many benefits to running your own company and being employed on a B2B contract.

With your own company, you will be able to incur deductible expenses – all costs related to your business activities will serve to decrease the amount of income tax your company will be obligated to pay at the end of each accounting period. This is important, since if you are an employee receiving 3 000 or 3 500 EUR monthly, it is entirely possible that your employment cost from the perspective of your employer will exceed 5 000 EUR. All of your expenses afterwards will come from the 3 000 EUR or 3 500 EUR you received.

As an employee, you only receive the income after all necessary taxes have been deducted from it. On a B2B contract, your employer will pay the full, gross, amount of let’s say 5 000 EUR directly to your company’s bank account and you will be able to use this full amount to incur business-related expenses, and only pay the income tax calculated based on what will be left after all of those costs are deducted from your 5 000 EUR. Great, isn’t it?

Additionally, with a business entity, you will be able to easily account for any additional income from one-time or part-time jobs, if you choose to take them. 

Because of these two reasons, we highly recommend taking B2B contracts over employment agreements for any programmers and software developers considering remote work or the life of a digital nomad.


How to account for remote B2B income from the UK? 

Above, we mentioned two most popular business entities chosen by programmers and digital nomads working remotely. Those two entities were: a Sole Trader (self-employment) and a Private Limited Company (an LTD or LLC).

Self-employment is the most popular form of a business entity across the world, however, self-employment is also almost always taxed in the country of the self-emplyed person of taxed residency. That is, the country where he or she spends over 183 days in a year, or where their “place of vital interests” is located. Establishing the country of tax residency can be rather complicated if you travel often, work remotely and are not really tied to any particular place. For example, you will not be able to establish a self-employment type business in the UK if you live in, let’s say, Croatia.

Because of this, for digital nomads, or people aspiring to take on the digital nomad lifestyle some day in the future, we recommend private limited companies instead of self-employment.

If you’re looking for a remote job from a UK-based company, what better way to take it than to sign a B2B contract between the employer and your own, UK-based Limited company, right? As it turns out, this is much easier than it might seem.

Private Limited Companies in the UK take around 3 days to establish, from start to finish, with the whole process performed entirely online. 

When it comes to doing any other, perhaps more risky, deals – the LTD company has got you covered. As its name suggests, it provides limited liability for its shareholders (owners). If you decide to apply for a loan as a limited liability company, the financial institutions will take into account the company’s past performance, assets, etc. – you won’t risk a penny out of your own money.

And of course, last but not least, having a UK-based entity will make dealing with UK-based companies much, much easier. So, if you’re planning to look for a remote job in the UK or do any type of business with UK-based clients, a UK-based LTD company is the way to go.


Remote work in the UK and IR35 regulations

IR35 is a set of regulations introduced in April 2020 which aim to outline the relationship between employers and employees in the UK, when the employee is hired based on a B2B contract. None of our clients have yet faced a formal inquiry into their relationship with a client/employer, because remote work based on a B2B contract is not in contradiction with these regulations, however it is important to be aware of what their scope is and how they might affect your business.

IR35 aims to establish whether an employee shouldn’t be hired based on an employment agreement instead of a B2B contract. The purpose of this is to ensure that employers do not force employees to take B2B contracts instead of employment agreements in situations where the law would dictate otherwise.

For more detailed information regarding IR35 please visit our article on the subject: IR35 and Remote Work in the UK



As you can see, as a software developer you can not only choose from a wide array of job offers, you can also choose the way in which you would like to be employed – remotely on a B2B contract for example.

We didn’t discuss every single aspect of working on a B2B contract compared to an employement agreement, but we hope this article has been helpful and will provide you with perspective at least. With any questions or queries, don’t hesitate to contact us at:


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