In the UK contractors is mainly use umbrella companies or limited companies as their contractor payment vehicle. The main advantage of both of them is you earn a bigger take-home pay.
The main differences between the two of them is with limited company you become the director of the company and there is quite a lot involved in being a director. You have to make sure your VAT is paid up on time PAYE is paid on time and you also responsible to submit a personal tax return. Limited companies involve a lot more in administration.
On the other hand umbrella companies the administration is a lot easier. You actually come an employee of the company and this company makes sure that everything is paid on your behalf. This includes PAYE and National Insurance, plus they’ll also do your personal tax return at the end of the year.