Consultancy Agreement in the UK: Template and Key Clauses (2026)

A consultancy agreement in the UK is a contract between a business (the client) and an individual or their personal company (the consultant) who provides services as an independent contractor, not as an employee. It is the right document when you engage a freelancer, an interim specialist or an adviser who runs their own business and is not on your payroll. The agreement must do two jobs well: set out the work, and support a genuine self employed relationship so that employment rights and the wrong tax treatment do not attach by accident. This is general information, not legal advice. Employment status and tax are decided on the real working relationship, not just the words, so take advice where the position is unclear. ## Key clauses, clause by clause 1. Parties. The client and the consultant, or the consultant's personal service company if they contract through one. 2. Services. Describe the work or deliverables clearly, ideally in a schedule. Focus on outcomes rather than hours, which supports self employed status. 3. Status and no employment. State plainly that the consultant is an independent contractor, not an employee or worker, is responsible for their own tax and National Insurance, and is not entitled to employee benefits. 4. Substitution. A genuine right for the consultant to send a suitably qualified substitute is one of the strongest signs of self employment. Include it only if it is real. 5. Control and how the work is done. Let the consultant decide how and when to carry out the work, within reasonable deadlines. Day to day control points towards employment. 6. Fees. Set the rate, whether daily, hourly or fixed, how to invoice, expenses and VAT. The consultant usually bears the risk of their own costs. 7. Equipment. Note that the consultant generally provides their own equipment, another marker of being in business on their own account. 8. Intellectual property. By default a contractor often keeps copyright in what they create, so if the client needs to own the output the agreement must assign the intellectual property in writing, with the consultant agreeing to sign any further documents needed. 9. Confidentiality. Protect the client's confidential information during and after the engagement. 10. Term and termination. Set the length and the notice to end it. Keep notice short and commercial; long notice and a guaranteed term look like employment. 11. Tax indemnity and IR35. Address the off payroll working rules, known as IR35. If the consultant works through a personal company and the client is a medium or large business, the client may have to decide status and deduct tax. State who bears any extra tax if status is wrong. 12. Data protection and governing law. Cover personal data under the UK GDPR and the Data Protection Act 2018, and choose the governing law and courts. ## Keeping self employed status genuine Status is judged on substance. The classic tests look at personal service and the right of substitution, mutuality of obligation (is the client obliged to offer work and the consultant to accept it), and control over how the work is done. A consultant who can send a substitute, decides their own methods, uses their own kit, takes on other clients and carries financial risk looks self employed. A consultant tied to set hours, closely managed and treated like staff does not, whatever the contract says. The off payroll rules sit on top of this and can shift the tax responsibility to the client. ## Common mistakes to avoid - Copying an employment contract and changing the title to consultant, leaving in holiday, sick pay and fixed hours.

• Claiming a right of substitution that both sides know is a fiction.
• Ignoring IR35, then facing a tax bill when HMRC recategorises the engagement.
• Leaving intellectual property silent, so the client cannot use or sell the work it paid for.
• A long fixed term with generous notice that makes the consultant look like an employee. ## Expenses, insurance and other business markers Small terms can reinforce that the consultant is genuinely in business on their own account. State how expenses are handled and that the consultant bears its own overheads. Require the consultant to hold its own insurance, such as professional indemnity cover, where the work carries risk. Confirm the consultant is free to work for other clients, subject only to confidentiality and any narrow conflict rule. Each of these points on its own is minor, but together they help show a self employed relationship rather than disguised employment, which is what HMRC and a tribunal look at when they weigh the whole picture. ## Managing consultancy agreements over time A growing business signs many consultancy agreements, each with its own rate, renewal, IP position and status risk. The ongoing work is tracking who is engaged, on what terms, when each agreement ends, and whether the IP was properly assigned. Spread across emails and folders, that picture is easy to lose, and a missed IP assignment or an IR35 slip is expensive. Adira is an AI workspace, built on Claude, where you can draft a consultancy agreement from a tuned template, review it for risk such as a weak IP clause, sign it electronically, and track its terms and dates in one place, with public per seat pricing and a 7 day trial. It is India first and global capable, and a command centre view of active engagements is on its roadmap. The underlying lesson stands alone: make the relationship genuinely self employed, assign the IP in writing, and keep every engagement visible.