Preparing for the period between contracts

Knowledge base from Boox

By Jonathan London on 15th January 2015

Preparing for the period between contracts

For most contractors, periods of inactivity between assignments are a fact of life. Some may be voluntary, providing the ideal opportunity to take a break, while others may not be quite so welcome.

Either way, it’s unlikely you’ll be earning money when you’re between contracts, so forward planning in advance will help you deal with this potentially tricky aspect of contracting.

dealing with the period between contracts

There are several ways you can prepare yourself for – and manage – periods of inactivity. These include:


When you prepare your business budget, look at your work schedule for the year. Allow for downtime and try to ensure, through your fees and outgoings, that your income will cover you for the full twelve months.

Managing your cash flow

If possible, try to predict how long you may be between contracts and take steps to minimise your expenditure during this period. Optimising your cash flow will go a long way to helping you through a lean spell.

Optimising your contract

If a client wants to cancel a project early, make sure your contract gives you as much protection as possible in terms of compensation. This is particularly important if you have turned work away to make yourself available to this client.

Marketing your business

Maintaining your efforts to find work for your business is probably the best use of your time when you are between contracts. Fine tune your CV, get talking to recruitment agencies and scour the job boards.

Claiming benefits

If the period between contracts uses up your reserves and affects your ability to pay yourself a living wage, consider claiming benefits such as Job Seekers Allowance, Working Tax Credits and (if you have children) Child Tax Credits.

HMRC, limited companies and extended periods on inactivity

If a period of inactivity extends into several months or more, you may need to justify to HMRC any tax benefits you claim through your limited company. Tax benefits are allowable only against trade or the pursuit of trade, and HMRC may suspect that a non-trading business is using tax perks to subsidise a non-working lifestyle. As always, keep a record of your expenses so you can demonstrate that your claims relate to genuine efforts to find work.

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