Many contractors own limited liability companies so that they can invoice clients and remunerate themselves from the proceeds. This is tax efficient because salaries can be subsidised by dividend payments. A portion of those dividend payments are free of National Insurance and personal tax, but before swapping into a contract relationship, contractors must consider IR35. IR35 legislation stops ordinary employees from swapping full time employment for a contract relationship, solely to avoid tax.
Xperian Recruitment’s contracts support IR35 with the key points, as follows:
IR35 - Scope of work
The scope of work defines the work to be completed and it avoids general points of ownership or responsibility.
IR35 - Right to substitution
With reasonable notice, you can substitute yourself for another equally qualified individual during the term of your contract.
IR 35 - Notice period
A supply contract is not an employment contract, so notice periods don't rest comfortably with IR35 compliance. However, the HMRC is lenient with notice periods of no less than 1 month.
IR35...
The Conduct of Employment Agencies and Employment Business Regulations 2003 (CEAEBR) were implemented to ensure proper conduct of employment agencies and employment businesses with the intention of protecting the people using them.
The regulations primarily protect permanent and temporary workers, but there are some specific sections dealing with limited company contractors, so we advise that you should understand them.
Opting in
If you commence a contract for the supply of services, by default you are opted into the CEAEBR and you will:
Have to agree terms prior to commencing a contract
Have the option of working for the client post contact without penalty
Receive guaranteed payments from the client, even without a signed timesheet
There is, however, a big issue with opting in and that concerns IR35 compliance and likelihood of operating more like an employee from a tax perspective.
Opting Out
Opting out of the CEAEBR helps limited company contractors to remain more flexible in their approach to the labour market. The considerable gain for...
There are 3 types of Insurance that you will have to consider for any Contract offered through Xperian Recruitment Limited. They are as follows:
Public Liability Insurance
Employer's Liability
Professional Indemnity
The levels of cover required may vary from contract to contract and those levels are most commonly specified by the Client. You will commonly be required to submit proof of cover to Xperian at the commencement of any engagement and periodically thereafter.
Public Liability Insurance
Public liability insurance covers any damage or accidental injury to a third party or their property caused by you or your employees or your business. It also covers any related costs and expenses such as legal fees, as well as hospital treatment costs (including ambulance charges) that the NHS may claim from you.
Public liability does not cover claims from your employees for damage or injury; you will need to ensure that you have employer's liability insurance.
Public liability insurance protects you if you deal with members of the public;...
An Umbrella company operates as your employer and you will operate as their PAYE employee. The Umbrella signs a contract with Xperian Recruitment Limited and you will have a separate employment agreement with the Umbrella. Once the Umbrella has received your regular timesheets and expense claims, it will invoice us appropriately and then pay you directly.
You will not be an Owner / Director and you will not enjoy the tax advantages of running your own company, but you will benefit from less administration, immediate insurance cover (subject to service) and avoiding the concerns of tax compliance when paying yourself from your own company. The Umbrella will charge you a fee for their services and those fees are commonly deducted at source.
Each Umbrella company offers different services and their charges vary, so our advice is to shop around. Your key criteria should include
reliability of payment to you,
ease of processing,
quality and scale of insurance cover and
fee structure of...
