It's not a special employment status. As a contractor in the UK you have fewer rights (pensions, notice periods, unfair dismissal, etc.) than an employee, but used to have not-inconsiderable tax benefits to trade off against this.

Thanks to HMRC reforms known as IR35, a lot of contractors are now considered akin to "disguised employees" and taxed as such - thus being taxed like an employee without the requisite legal benefits.