Driving through your own limited company: why most agencies say no, and the one that says yes too easily

8 minute read · Updated 2026-09-23

You set up a limited company because somebody in a services said the money is better. You send your first invoice to the agency and it comes back: we pay PAYE, or we pay through an umbrella, but we do not pay limited companies.

That is not the agency being awkward, and it is usually not negotiable. It is also not IR35, whatever the person on the telephone called it. There are two separate rules and the one that catches drivers is the one almost nobody names.

1. Section 44 comes first, and it is not IR35

The agency legislation, Chapter 7 of the Income Tax (Earnings and Pensions) Act 2003, section 44. It says that where a worker is supplied through an agency and is subject to, or to the right of, supervision, direction or control as to the manner in which the work is done, the agency must treat the payments as employment income and operate PAYE.

Three things about it catch people out:

It applies whatever the size of the end client. The small company exemption everybody talks about belongs to the other rule, not this one.
It does not care that you have a limited company. The test is about how the work is done, not about what is printed on your invoice.
The liability lands on the AGENCY. If they get it wrong, HMRC comes to them for the PAYE and the National Insurance, with interest. That is why a careful agency will not do it, and why the ones that will are worth looking at twice.

2. Why a driver almost always fails the test

Supervision, direction or control is about the manner of the work, and driving somebody else's vehicle on somebody else's operator licence is about as controlled as work gets:

They tell you what time to start and which vehicle to take.
They give you the run, the drops and the order.
Your hours are governed by their tachograph rules and their transport office plans the day around them.
You follow their site rules, their PPE rules and their accident procedure.
And the operator is legally REQUIRED to control how you work. An operator licence carries undertakings about drivers' hours, vehicle condition and record keeping. A transport manager who left you to do it your own way would be risking the licence.

That last point is the one that settles it. It is not that the operator chooses to supervise you. It is that they are not allowed not to.

3. IR35 is the second gate, and most drivers never reach it

The off-payroll rules, Chapter 10, are what people mean when they say IR35. They ask a different question: if the contract between you and the client had been direct, would it have looked like employment?

Where the end client is medium or large, the client decides your status and must give you a Status Determination Statement saying what they decided and why, with a route to disagree with it.
Where the end client is small, Chapter 10 does not apply and your own company decides under the older rules. The size test follows the Companies Act definition, and the thresholds were raised in April 2025, so check the current figures on gov.uk rather than a figure somebody quotes you in a cab.

But none of that rescues a driver who is caught by section 44, because section 44 is applied first and applies whatever the client's size. An agency that tells you the client is small, so you can invoice through your company, has answered the wrong question.

4. So when does limited company driving actually work?

It does exist, and the shape is quite different from agency shift work:

Owner drivers. Your own vehicle, your own operator licence, your own insurance, taking work as a haulage subcontractor rather than filling a shift. You decide how the job gets done because it is your lorry and your licence on the line.
Genuine subcontracted haulage between operators, priced by the job or the load rather than by the hour.
Work with no agency in the chain at all, where section 44 has nothing to bite on, though IR35 may still apply.

What does not work is the common one: your own company, the agency's client, their lorry, their run, their hours, invoiced by the hour. That is a shift with a company number on it.

5. The promise to be careful about

If somebody offers you eighty five or ninety per cent of your gross pay, stop. PAYE on a normal driving wage does not leave that much after tax and National Insurance, so the difference has to come from somewhere, and it comes from a scheme: a loan that is never repaid, an annuity, a capital advance, a payment routed through a company abroad.

HMRC publishes named schemes and promoters in its Spotlight series and names avoidance schemes used in exactly this market. What matters for you is who pays when it unwinds:

The bill goes to the worker, not the promoter. The promoter has your fee already and is often a different company by the time HMRC arrives.
It arrives years later, with interest, for every year you were in it.
"My accountant said it was fine" and "hundreds of drivers are on it" have both been tested in tribunals and neither has worked.

6. What to do this week

Ask the agency, in writing, how they will pay you and under which rule. A straight answer is a good sign. A vague one is information too.
If you are offered umbrella, ask for the Key Information Document before you agree. You are entitled to one, and it must show the deductions and what actually reaches your bank.
Compare what LANDS, not what is quoted. A limited company rate, an umbrella rate and a PAYE rate are three different numbers for the same shift and only one of them is your money.
If you already have a company, it is not wasted. It is useful for owner driver work, for anything outside an agency chain, and for work that is genuinely yours to organise. It is just not a way to change how an agency shift is taxed.

What this board does about it

We publish this because the confusion is worth money to somebody, and it is not to you. An agency that lets you invoice a limited company for a controlled shift is not doing you a favour: it is taking a risk with its own PAYE bill and hoping, and the ones that do it cheerfully are usually the ones you should be slowest to trust with your wages.

If an advert on this site offers a rate that only works through an arrangement like that, tell us. And if you are being offered something that sounds too good, our page on paying to find work covers the other end of the same problem.

This is general information about how the rules work, not advice about your own company, and your accountant knows your numbers. The point of the page is narrower: to give you the right name for the rule, so that when somebody tells you it is about IR35, you know which question to ask next.