24 Month Rule – Temporary Workplace
As long as a workplace complies with HMRC’s definition of a temporary workplace, an employee of an Umbrella Company can claim back their temporary workplace expenses, as long as the contract duration is never expected to be more than 24 months.
If a contractor or an employer becomes aware that an assignment at a temporary workplace will last for more than 24 months, then it is automatically excluded from being a temporary workplace and therefore expenses cannot be claimed in the same way.
If an assignment with a particular end client continues for longer than 24 months, but the site has changed substantially so as to mean a significant change to the daily journey, then the 24 month rule resets and starts again, and expenses are still allowable.
It’s also important to note that this rule applies to the workplace itself, irrespective of the employment relationship. So, simply changing your Umbrella Company will not reset the 24 month rule.
Agency Worker’s Regulations – AWR
Following an EU Directive, Agency Worker’s Regulations were introduced throughout Europe, including in October 2011 in the UK.
The aim of the new regulations have been to ensure that the lower paid temporary workers are provided with the same rights as their permanent colleagues when it comes to conditions, and also, after twelve weeks, the same rights relating to payment, holiday leave and working hours.
If a contractor is running his own business and is therefore in business on his own account, that individual is exempt from the regulations and AWR is not applicable to their contract. However, if a contractor is employed by an Umbrella Company, consideration to AWR must be given. The Green Lantern Group Umbrella Company works with recruitment companies to understand the conditions of the contract, and provide a solution to the AWR which ensures that the regulations are being fully complied with.
Construction Industry Scheme
The Construction Industry Scheme (CIS) applies to people involved in mainstream construction work and was introduced by HMRC to facilitate tax payments by self-employed construction workers and Green Lantern Group offers a highly unique service to assist in this area.
As a self-employed contractor, all business expenses can be offset against taxes which are deducted by your contracting company at source, before you receive payment. The first stage of registering under the CIS scheme if you haven’t already is to register as self -employed with HMRC, and then for CIS status. You’ll receive a Unique Tax Reference Number, and we will need this in order that we can confirm the kind of taxes that need to be deducted from your income.
Green Lantern Group can help you with your National Insurance payments, and at the end of the tax year, we can complete a self-assessment tax return with you which may well lead a rebate.
Contractor Calculators
Green Lantern Group use our contractor calculators to provide you with an idea of net returns you will be likely to receive based on your own personal circumstances. As well as the circumstances relating to your contract, we think it’s important to make a decision based on the numbers and how they work for you. The calculators on our website are simple and simply act as a guide, for a more detailed illustration, contact us directly.
Green Lantern Group use different contractor tax calculators that are kept completely up to date with all tax rates and comply with all government guidance on calculations, to ensure that we provide you with the most accurate indication of what returns you can expect from each of our services.
You can read about our range of services in the various sections on our website and you can try our Contractor Tax Calculators to compare how much better off you could be by operating through Green Lantern Group.
Contractor Personal Service Company
Independent freelance contractors can often work through their own limited company which will facilitate their contracting business, and Green Lantern Group offer a full limited company accountancy service.
Green Lantern’s accountant will make sure that you’re assisted with your accounts and returns, minimising your administrative burden as soon as possible. Our highly qualified accountants will work with you to recommend the best payment structure for you, which may also include the option of further increasing your take home pay by registering under the Flat Rate VAT scheme, which HMRC run for small business owners.
You can read much more about this service in this website, and use our calculator for an indication as to how much better off you’ll be.
Contractor Tax
With Green Lantern Group, you can forget about tax worries and choose to work as an employee either through Green Lantern Group’s umbrella company and ensure you claim your temporary workplace expenses. With our contractor Umbrella Company employment service all PAYE and National Insurance Contributions are deducted at source from your salary meaning you have no reason to do anything relating to tax at all.
With our other services, including our personal service company accountancy service for those outside IR35, our specialist advisors and accountants ensure that you’re given the full amount of support and guidance, keeping you compliant with everything, including all Contractor Tax. Green Lantern’s accounting service for limited companies provide simple explanations and excellent advice; our accountants provide excellent advice on running your own company and enjoying the benefits of doing so. Alternatively, if you would like to be self-employed, our Sole Trader or CIS services would be perfect for you.
You can be certain that Green Lantern Group will assist contractors to select the service that is best for them.
You can read more about our full range of services throughout our website, and see how much better off you could be by trying our Contractor Tax Calculators.
Contractor Umbrella Company
The introduction of the Managed Service Company legislation in 2007 meant that a contractor cannot benefit from dividend payments unless they incorporate their own limited company, called a Contractor Personal Service Company. This has made employment by contractor umbrella company popular as one of the only viable alternatives
A contractor umbrella company employs contractors who work under temporary contracts, ordinarily recruitment agencies, who only issue contracts to a limited company and not to individuals. The umbrella company becomes the limited company that the recruitment agency contracts with, and it employs these contractors under full contracts of employment.
One of the largest benefits of umbrella company employment is that the contractor could benefit from a higher net income than working as direct employee of a client or agency, as business expenses and expenses incurred by working at a temporary workplace can be offset.
Umbrella company employees have the peace of mind that there are no IR35, MSC or S660 worries and that the services are completely fully compliant, which allows the contractor to focus on enjoying what they love to do rather than dealing with paperwork.
You can read about our range of services here on our website, or why not see how much better off you could be by trying our calculators.
Dispensation
Usually, employer’s have to list all benefits and expenses on a P11 (D) for each employee at the end of the year. A dispensation is a notice from HMRC confirming that for certain expenses, this is not required, and the agreement is reached between the employer and HMRC directly. It can also mean that employees do not have to include details relating to expenses on their own tax returns. A company who holds a dispensation must have a procedure to audit expenses, and the employee must be aware that at any time, receipts can be requested as proof of an expense that has been incurred.
A dispensation does not take away the responsibility for the employee to ensure that they only claim genuine expenses, or to keep receipts for those expenses.
Employee Benefit Trusts
Some organisations providing contractor solutions offer services where income is loaned to the individual by an Employee Benefit Trust. These services offer guarantee a percentage return in the 80% bracket, attracting many contractors with their high levels of return.
Those companies offering EBT schemes work with tax lawyers and QCs that provide ‘counsel opinion’ that support these products, but as they’re offshore, most of the recognised contractor protection organisations wont do business with them, and suggest that contractors and recruitment companies avoid them.
The obviously pitfall with these kinds of schemes is that the contractor receives their income by loans, which can be demanded back at any time. These schemes have been popular for those looking for a high net return figure, but they are now illegal, and have been since HMRC outlawed them in 2010. Read more about these HMRC changes: http://www.hmrc.gov.uk/budget-updates/autumn-tax/tiin2675.htm
Green Lantern Group does not provide any schemes using trusts of any kinds, does not offer employment related loans, or loans through a partnership, and all of the services offered by the Green Lantern Group are fully based in the UK.
IR35 Tax Calculator
Green Lantern’s accountants can assist you to identify the best service for you to help maximise your income whilst best suiting your circumstances, and this applies throughout the life time of your contracting career – we’ll review your circumstances and our services regularly and you will always have access to our experts who will provide thorough guidance.
As part of this, Green Lantern use an IR35 Calculator to calculate quickly and accurately how much of your contract value you will take home after tax, N.I and costs have been deducted across the range of services we offer.
Our IR35 calculator is fully up to date with current tax rates and fully compliant so try our calculator to see how much you could be making by running your own limited company, or any of our other services.
IR35
Introduced by the government in 1999, IR35, or the Intermediaries Legislation, is tax legislation aims to capture any contractors who are receiving their income in a way that is not related to employment; meaning that they pay less taxes, usually via a limited company being paid dividends which save on National Insurance Contributions.
The legislation specifically targets those who are actually ‘disguised employees’ of their client, and therefore should actually be taxed as employees, paying full PAYE and NI.
Green Lantern Group helps many contractors who have concerns about IR35 to understand whether it impacts them, and all of the services offered by Green Lantern are fully compliant with HMRC’s procedures, in this area and every other. If you would like to know more, why not request our guidance notes on IR35, which provide full explanation and practical examples.
If contractors are caught by the legislation, Green Lantern Group can still help as our Umbrella Company service is fully acceptable, no matter what the IR35 status.
Limited Company Calculator
Green Lantern Group use a Tax Calculator to calculate quickly and accurately how much of your contract value you will take home after income and company tax, N.I and other costs have been deducted across the range of services we offer.
Our accountants can assist you to identify the best service for you to help you maximise your income whilst using the service that best suits your circumstances, and this applies throughout the life time of your contracting career – we’ll review your circumstances and our services regularly and you will always have access to our experts who will provide thorough guidance.
Our IR35 calculator is fully up to date with current tax rates and fully compliant so try our calculator to see how much you could be making by running your own limited company, or any of the other Green Lantern Group services.
Limited Company Contracting
Green Lantern has designed a full accounting service for small business owners, including contractors choosing to run their contracting businesses through their own limited companies as directors and shareholders.
Operating this way is often favourable with recruitment agencies as they are provided with the protection of working with a legal entity.
Green Lantern’s accounting service always that the contractor or any other client is provided with access to a fully qualified accountant who will assist in working out the best structure for payments, accountants, and annual returns. The accountant will also assist you with registering under HMRC’s flat rate vat scheme, which can add extra income to your bottom line.
You can read about our range of services and you can compare how much better off you could be by trying our calculator.
Offshore Contractor Tax Schemes
You may have already reviewed the definition of an EBT, and may also have researched these and learned of recent cases involving BN66, and the IT contractor who has been ordered to repay taxes because the offshore scheme he was using, which was fully supported by expert opinion, has been deemed to be illegal. HMRC can go all the way back to 1987, for both tax and interest, and so the advice of Green Lantern Group is that these offshore schemes should always be avoided.
Our advice to contractors is always to review all information available and discuss with other contractors whether something is likely to attract HMRC’s criticism, and whether or not it is supported by leading contractor advice organisations.
As we’ve explained already, EBTs have now been made illegal, however Green Lantern Group is aware of replacement schemes involving self-employment, company loans and parternships.
HMRC may well make an IR35 based challenge the users of such schemes haven’t taken the appropriate steps to ensure you’re genuinely operating as a self-employed person, in addition to mountain challenges similar to BN66 described above.
The Green Lantern Group also advises contractors to discuss the type of service they select with their recruitment company. Most will now refuse to accept those companies registered anywhere other than England and Wales for receiving contractor’s pay, which prevents many contractors from signing up with the offshore schemes. There are schemes out there that use a UK based ‘front’ company and tell the recruitment company there is no offshore involvement to get around this, but this is not a sensible or ethical approach to your contracting business – and poses the very sensible question that if an organisation is prepared to mislead the recruitment companies they enter into contract with in this way, could they also be misleading contractors?
PAYE Umbrella
With the restrictions imposed by the IR35 and MSC legislation, working through a PAYE umbrella is an attractive and straight forward option for many temporary contractors.
Green Lantern Group offers a full UK PAYE Umbrella service which is an employer to many contractors working on temporary contracts, usually through recruitment agencies who contract with the Umbrella Company, although also for those who do not secure their temporary contract through a recruitment company.
Green Lantern Group’s Umbrella service is fully compliant with all legislation including AWR, registered with HMRC for PAYE and VAT, and includes all the necessary insurance for contractors to provide their service with peace of mind.
To see how much better off you can be, see our calculator.
PAYE
PAYE, Pay As You Earn, is the system under which an employer is required by law to deduct income tax from an employee’s taxable wages or salary. The amount is paid directly to HMRC, usually by the 19th of each month.
Green Lantern’s Umbrella Company service makes all necessary deductions of PAYE and National Insurance Contributions, and makes the payment electronically to HMRC each month. A P35 is then submitted annually summarising the payments that have been made.
Recruitment Company
A recruitment company is often could be known as Employment Agency, Search Consultant or Headhunter, and usually acts as an independent conduit between its client companies and the candidates it recruits for a particular position. These companies specialise in understanding the requirements of clients and finding candidates for vacant positions with small or no focus on other employment or HR tasks.
Most recruitment companies tend to specialise in permanent, full-time, direct-hire positions, or contract positions, but some will recruit for all kinds of positions.
Green Lantern Group has excellent relationships with many recruitment companies, and will be happy to discuss with any contractors seeking opportunities how we can assist.
Self Employed Tax
An individual working as a self-employed sole trader will pay self-employed tax.
The sole trader needs to register with HMRC and keep a record of income and expenses and go on to complete a self-assessment tax return at the end of the tax year.
In second and subsequent years of trading sole traders are asked by HMRC to pay an amount of tax in advance which will generally be due in January and July and be based on previous year’s profits – they do this on account of self-employed taxes to make sure sole traders never behind with income tax payments.
Sole traders also need to pay National Insurance Contributions, although do benefit from paying a reduced rate.
Sole traders could also have the option of further increasing their net returns and adding to their profit by taking advantage of the Flat Rate VAT scheme.
Green Lantern Group assists many self-employed sole traders with all of the self-employed tax requirements, including Flat Rate VAT and end of year self-assessments. Try our Self Employed Tax Calculator here to see how much you could be making by running your own sole trader business.
Self-Employed Tax Calculator
Green Lantern Group use self-employed tax calculators to give an indication as to the net returns self-employed sole traders will be likely to receive based on personal circumstances when operating through Green Lantern Group.
Green Lantern Group’s range of tax calculators are completely up to date with all tax rates and all compliance issues to ensure that self-employed sole traders are provided with an accurate result of income levels.
Try our Self Employed Tax Calculator to see how much you could be making by running your own sole trader business through Green Lantern Group.
Sole Trader
Working as a self-employed sole trader is subject to similar rules to the rules that apply to working through a limited company.
Green Lantern Group offer a sole traders a fully IR35 compliant solution to assist in running their own business.
Whether an individual is able to adopt a self employment model will depend on the terms of the contract they are working under and the level of control the end client has over the way the services are provided. Green Lantern Group has excellent procedures to ensure we discuss this with each contractor, and determine whether their circumstances are appropriate for self-employed working.
Working as a sole trader has a number of benefits and is ideal for international workers want the flexibility of accounting for tax in a jurisdiction of their choice.
Green Lantern Group provides a self-employed tax calculator which will enable contractors to see how much better off they can be.
Temporary Workplace
Using an Umbrella Company, contractors often undertake various assignments at the clients’ sites. As long as the assignment won’t be longer than two years, it will usually be classed as temporary. When working at a temporary workplace, contractors are entitled to claim certain business expenses that have been incurred during the course of the temporary assignment.
A temporary workplace is defined as somewhere that is your place of work that the contractor is required to attend for a limited time period to perform a task, or for some other temporary reason. If the contractor learns that it will move to more than two years, it will be classed as permanent and they won’t have the ability to take temporary workplaces into account.
It should also be noted that these rules only usually apply when more that one assignment is undertaken with an employer – and those using an Umbrella Company should remain with that Umbrella Company for multiple assignments. Green Lantern Group offers a unique service to its Umbrella Company contractors, and our professional advisors will be able to assist in this area.
Umbrella Company Calculator
The Green Lantern Umbrella Company Calculator calculates quickly and accurately how much of contract value could be taken home by a contractor after tax, N.I and costs have been deducted by the Green Lantern Group Umbrella Company.
Our accountants can assist contractor to identify the best service for them to help maximise income whilst using the service that best suits individual circumstances, and this applies throughout the life time of their contracting career – we’ll review circumstances and the Green Lantern Group services regularly and contractors will always have access to our experts who will provide thorough guidance.
Our umbrella company calculator is fully up to date with current tax rates and fully compliant so try our calculator to see how much you could be making by using Green Lantern Group’s Umbrella Company, or any of our other services.
Umbrella Company Working
With the restrictions imposed by the IR35 and MSC legislation, working through a PAYE umbrella is an attractive and straight forward option for many temporary contractors.
The Green Lantern Group full UK PAYE Umbrella Company is an employer to many contractors working on temporary assignments, usually through recruitment agencies that contract directly with the Umbrella Company.
The Green Lantern Group Umbrella Company is fully compliant with all legislation, registered with HMRC for PAYE and VAT, and includes all the necessary insurance for contractors usually required by their recruitment company or end client.
To see how much better off you could be with the Green Lantern Group Umbrella Company, see our calculator.
Umbrella Company
The introduction of the MSC legislation in 2007 meant that a contractor cannot benefit from dividend payments unless they incorporate their own limited company, called a Contractor Personal Service Company. This has made employment by contractor Umbrella Company popular. It also works for people who are caught by IR35 legislation, and who as a result cannot receive dividend payments.
A contractor umbrella company is the employer to contractors who work under temporary contracts in the UK. Usually, these contractors work through recruitment agencies, who only issue contracts to a limited company and not to individuals, and so the umbrella company becomes the limited company that the recruitment agency contracts with.
MSC legislation was introduced as part of the government’s intention to ensure that only those contractors with legitimate businesses run by themselves
Contractors will have the peace of mind that there are no IR35, MSC or S660 worries with the Green Lantern Group and that services are completely compliant, allowing them to focus their temporary contract rather than paperwork and taxation.
Working Time Regulations
The regulations are a result of an EU Directive and gives EU workers the right to a minimum number of holidays each year, paid breaks and right to period of rest. They also restrict excessive night work and give a right to work no more than 48 hours in each week.
In the UK, workers can opt out of the specific regulation relating to a maximum number of hours each week, and Green Lantern Group offers this to its Umbrella Company employees.