UK Contractor Index
New UK IT consultancy companies rose 43.4% between 2016 and 2025
A sourced, monthly read on new limited-company formations in contractor-heavy sectors, a proxy for personal service company (PSC) formation, drawn from Companies House public records. Covering 13 professional and technical SIC codes from IT consultancy to engineering and design. Updated Apr 2026.
Key facts
- New IT consultancy companies (SIC 62020) grew from 20,384 in 2016 to 29,239 in 2025, a rise of 43.4%.
- In the 12 months to Apr 2026, 138,275 UK companies were incorporated across all 13 contractor-sector SIC codes.
- IT consultancy formations peaked in 2024 04 at 2,952 new companies in a single month, the highest in the series.
- The all-contractor union rose 64.3% over the decade, from 80,015 to 131,495 annually, reflecting broad growth across IT, consultancy, engineering and creative work.
- Year-on-year growth in Apr 2026 was +0.2% for IT consultancy companies.
Source: Companies House Advanced Search API, under the Open Government Licence v3.0. The most recent 2 months of incorporation data are provisional (Companies House indexing lag) and are excluded from the headline figures above. Figures may be cited with attribution to Contractor Tax Accountants.
IT consultancy company formations by year
Each bar shows the number of new companies incorporated in that calendar year under SIC code 62020, information technology consultancy activities. Only complete calendar years are shown. IT consultancy is the single largest contractor sector by company formation and the clearest signal of the limited-company route into independent work.
The monthly trend
The same measure shown month by month across the series. The dashed tail marks the most recent 2 months, which are provisional because Companies House indexes very recent incorporations with a short lag.
Did IR35 kill the PSC? The two reform dates
All-contractor company formations (the deduplicated union across all 13 SIC codes) by year, with the two off-payroll (IR35) reform dates marked: April 2017, when the rules extended to the public sector, and April 2021, when they extended to medium and large private sector engagers, the point at which most of the contractor market became affected.
| Era | TTM union formations |
|---|---|
| 12 months to Mar 2017 (before the public sector reform) | 83,127 |
| 12 months to Mar 2021 (before the private sector reform) | 104,946 |
| 12 months to 2026-04 (latest settled data) | 138,275 |
- Public sector reform era (Apr 2017 to Apr 2021): +26.2% in trailing-12-month union formations (+6.0% CAGR over 4 years).
- Private sector reform era (Apr 2021 to latest): +31.8% in trailing-12-month union formations (+5.6% CAGR over 5.08 years).
As independent context, HMRC's own published estimate is that the private sector reform raised an additional £4.2bn in tax, National Insurance and the Apprenticeship Levy between October 2019 to March 2023, affecting around 120,000 contractors. That figure is a separate HMRC estimate, not derived from this dataset; the formations trend above is this site's own independent read on the same question. HMRC, Impacts of the 2021 off-payroll working rules reform in the private and voluntary sectors (updated).
By contractor sector
The table below breaks down new company formations in Apr 2026, grouped into the four contractor divisions the index tracks. It shows where independent limited-company working is concentrated across the professional and technical economy.
| SIC code | What it covers | New companies |
|---|---|---|
| IT and software | ||
| 62011 | Ready-made interactive leisure and entertainment software development | 285 |
| 62012 | Business and domestic software development | 3,818 |
| 62020 | Information technology consultancy activities | 2,660 |
| 62090 | Other information technology service activities | 1,764 |
| Management consultancy | ||
| 70210 | Public relations and communications activities | 205 |
| 70221 | Financial management | 245 |
| 70229 | Management consultancy activities (other than financial management) | 4,284 |
| Engineering and technical | ||
| 71121 | Engineering design activities for industrial process and production | 131 |
| 71122 | Engineering related scientific and technical consulting activities | 547 |
| 71129 | Other engineering activities | 574 |
| Creative and other | ||
| 73110 | Advertising agencies | 1,272 |
| 74100 | Specialised design activities | 662 |
| 74201 | Portrait photographic activities | 73 |
| All 13 codes (deduplicated) | Unique companies across all contractor SIC codes | 12,759 |
Over the most recent complete year, IT and software accounted for 77,118 new companies, management consultancy 49,559, engineering and technical 13,466, and creative and other 23,671.
Methodology and sources
Incorporations. For each month, we query the Companies House Advanced Search API for companies incorporated under each of the 13 contractor-heavy SIC codes spanning IT and software (Division 62), management consultancy (Division 70), engineering and technical consulting (Division 71), and creative and design work (Divisions 73 and 74). The deduplicated union counts each company once even where it registers under multiple of these SIC codes. Counts are gross: the Advanced Search API counts companies by incorporation date across all company statuses, so companies that have since been dissolved are still included in the year they were formed and the series carries no survivorship bias. The most recent 2 months are provisional and excluded from headline figures.
Proxy, not a census. The index measures limited-company formation in contractor-heavy sectors as a proxy for personal service company (PSC) activity. It does not capture umbrella workers, sole traders, or contractors working through an existing company, and a new incorporation is not always a newly self-employed person. It is best read as a directional signal of the limited-company contractor market.
Licence. Companies House data is published under the Open Government Licence v3.0, which permits free reuse with attribution. This index, and the CSV export below, are free to cite and republish with attribution to Contractor Tax Accountants.
Updated. Incorporations to Apr 2026 (settled data). Data generated Jul 2026.
- Companies House Advanced Search API (Companies House)
Download the incorporation data (CSV)
Free to cite and republish with attribution to Contractor Tax Accountants. This page is a data summary and does not constitute tax advice on any individual situation.
Going limited? Model your take-home first.
The rise in contractor-sector companies reflects how most independent professionals now work: through their own limited company. Whether that is right for you turns on your IR35 status. Our calculators show what you would actually keep, inside or outside IR35, on 2026/27 rates.
Frequently asked questions
What does the UK Contractor Index measure?
It counts new companies incorporated each month across 13 contractor-heavy Standard Industrial Classification (SIC) codes, drawn from Companies House public records. The headline figure tracks SIC 62020 (information technology consultancy activities), the archetypal personal service company (PSC) sector, alongside the deduplicated union of all 13 codes as a broader all-contractor figure. It spans IT and software, management consultancy, engineering and technical consulting, and creative and design work. Counts are gross: the Companies House Advanced Search API counts companies by incorporation date across all statuses, so companies dissolved since formation are still included in the year they were formed and the series carries no survivorship bias.
Why use company incorporations as a proxy for the contractor economy?
Most independent contractors and freelancers in IT, consultancy and engineering trade through their own limited company, the personal service company (PSC). New incorporations in these professional and technical SIC codes are therefore a reasonable proxy for the rate at which people are setting up to work independently. It is a proxy, not a census: it does not capture umbrella workers, sole traders, or contractors operating through an existing company, and a new incorporation is not always a new contractor. Read alongside the wider picture, the trend still tracks the health of the contractor market.
Where does this data come from?
All incorporation counts come from the Companies House Advanced Search API. Companies House is the UK register of companies, operated by His Majesty's Government, and its data is published under the Open Government Licence v3.0. The figures are updated as Companies House releases new records, though the most recent two months are provisional due to indexing lag.
What does 'provisional' mean on the chart?
Companies House indexes very recent incorporations with a short lag of four to six weeks. The two most recent months in the series are therefore provisional: they will be revised upward as late-indexed records are captured. These months are shown with a dashed line on the chart and are excluded from all headline figures and decade comparisons to avoid understating the trend.
How does IR35 affect contractors setting up a limited company?
Whether a limited company is the right structure depends on your IR35 status. If your contracts fall outside IR35 (genuine self-employment), a personal service company is usually the most tax-efficient way to work, drawing a small salary plus dividends. For 2026/27 the dividend ordinary rate is 10.75% and the higher rate 35.75% after the £500 dividend allowance. If your work falls inside IR35, the off-payroll rules treat your income largely as employment income, which narrows the advantage of a company. Our take-home calculators let you compare both positions before you decide.