IR35 is legislation introduced by the government in 2000 to ensure ‘disguised employees’ pay their fair share of tax. A temporary assignment is either inside IR35 or outside IR35, and it’s the end hirers' responsibility to make a fair and accurate determination.

A payroll management service streamlines your finances by handling tax deductions, National Insurance contributions, and other payroll-related tasks. This service saves you time, reduces administrative stress, and ensures you remain tax-compliant without the need for self-assessment filings related to your contracted work.

Payroll management companies operate under PAYE (Pay As You Earn), calculating and deducting income tax and National Insurance contributions before paying you. This setup reduces the risk of underpayment or penalties, as taxes are handled directly and in line with HMRC guidelines.

Yes, as an employee of a payroll management service, you are typically entitled to statutory benefits, such as holiday pay, sick pay, maternity/paternity leave, and access to a workplace pension. These benefits provide financial security, especially in contracting roles that may lack long-term guarantees.

Once your timesheet or work hours are approved by the client, the payroll management service invoices them directly. After the client’s payment is received, they calculate and deduct applicable taxes and fees, then process your final payment. This ensures timely payments without additional administrative work on your end.

Most payroll services offer weekly or monthly payment cycles, depending on the agreed terms with your client. You can check with the provider about their specific schedule to ensure it aligns with your cash flow needs.

Yes, fee structures can vary. Some companies charge a fixed weekly or monthly rate, while others take a percentage of your earnings. Be sure to clarify what the fee covers, including any hidden charges, to avoid unexpected deductions from your pay.

When selecting a provider, it’s important to consider their fee structure, reputation, compliance with industry standards, and level of customer support. Look for transparent pricing, positive reviews, and accreditations from industry organizations to ensure a reliable partnership.

As a sole trader, you’re responsible for invoicing clients, managing your taxes, and handling compliance. With a payroll management provider, these responsibilities are handled for you, reducing administrative tasks and ensuring all tax and legal requirements are met.

PAYE (Pay As You Earn) is a UK tax system where income tax and National Insurance contributions are deducted directly from earnings before payment. This method simplifies tax compliance, as it eliminates the need for self-assessment filings for most employed earnings.

In some cases, certain work-related expenses may be eligible for deduction, such as travel or equipment costs. However, recent UK tax regulations limit these claims, so it’s best to check with your provider to understand what expenses are allowable under their policies.

Yes, payroll management companies are designed to ensure compliance with IR35 legislation, as they employ contractors directly and handle tax deductions accordingly. This reduces the risk of additional tax liabilities that contractors might face under IR35 regulations.

If you work as a contractor or freelancer and want to avoid the complexities of managing your own taxes and payroll, a payroll management service can be highly beneficial. It’s particularly suitable for those who have short-term or temporary contracts and need consistent, compliant payment processing.

Many payroll providers offer additional services, such as financial advice, IR35 assessments, and career development resources. These extras can be valuable, especially if you’re new to contracting or looking for guidance on tax planning.

If you choose to end your contract, most payroll management companies have straightforward exit policies. Check the terms of your agreement to understand any notice requirements or other end-of-service protocols.

An umbrella company typically receives payment from the client, deducts its fees and taxes, and pays the contractor through PAYE (Pay As You Earn) payroll. The contractor receives a payslip showing their earnings, taxes, and deductions. The client you work for pays the agency for your services. The agency will deduct fee for placing you with the client and pays the rest of the money (sometimes known as the assignment rate) to your umbrella company. This rate is different to the rate you get paid from the umbrella company, because of the additional costs for the umbrella company, which include: - a margin charge by the Umbrella for their services - employer National Insurance contributions - employer workplace pension contributions - holiday pay - other amounts to cover other specific costs, such as Apprenticeship Levy. The rate paid to the umbrella company by the agency will need to cover the costs of the employer National Insurance contributions. The umbrella company will use this money to pay employer contributions and not deduct the contributions from your gross pay. The sum is your gross taxable pay including holiday pay and before deductions. Your umbrella company might be involving you in a tax avoidance scheme if any of these amounts are labelled as non-taxable. The gross taxable pay is subject to employee NIC and income tax deductions. Additional payments like workplace pension contributions may also be deducted from the gross salary. The remaining amount constitutes your net pay – the amount you take home. Keep in mind that an umbrella company cannot deduct employer National Insurance contributions from your gross taxable pay. Contact your employer if you believe your employer’s National Insurance contributions or any additional deductions were deducted incorrectly from your pay. If you have any concerns about a pay slip from another umbrella provider your dedicated advisor will be happy to speak with you and can ask our specialist compliance team to check it for you and provide some basic advice on what to do to help you.

As the employer, umbrella companies must legally enrol employees into a pension scheme. Usually, umbrellas will have a preferred pension provider that they enrol employees into within 12 weeks. It’s no secret that most umbrella employees don’t like the idea of being opted into a pension. However, it is possible to opt out, but only once the first contribution has been made (but it can be reclaimed). A small selection of umbrella companies can help contractors with salary sacrifice for pensions. This allows employees to contribute a significant percentage of their salary to a private pension scheme tax-efficiently. If this is something you’re interested in, seek an umbrella that can assist with salary sacrifice and ask them for a take-home pay calculation.

An umbrella company offers sustained employment to contractors engaged in fixed-term assignments. Such companies serve as intermediaries between the contractor and their agency or end client. By engaging with an umbrella company, the contractor can maintain their employment status even after the completion of their contract or while seeking new assignments. Additionally, the contractor's employment contract remains valid even if they are working on multiple assignments simultaneously.

Many umbrella companies operate within the law in an ethical way and provide benefits to both the recruitment agency and the contractor. The umbrella company relieves the agency of responsibility for day-to-day financial administration including salary, expenses, tax and National Insurance.

Registration with an umbrella company is a reasonably thorough process. Still, it needs to be for the umbrella to register you legitimately and to be able to process your payroll legally. Usually, you will need to undergo the following stages of registration before you can officially become an employee of an umbrella company (and be paid compliantly): - Request a take home pay calculation to gauge your likely pay retention should you join the umbrella. - If you want to register with an umbrella, you can usually do so over the phone or by completing an online registration form. You will be required to share several pieces of personal information including name, address, date of birth, NI number, bank information, assignment details, and more. - Once you have completed the initial registration process, you will need to provide the umbrella company with proof of your identity and Right to Work (RTW) in the UK. - The umbrella company, as your employer, will send you a Contract of Employment and you will need to read it thoroughly. Only once you have read the entire document and you’re satisfied with its content should you sign and return it. You will also need to provide your umbrella with a P45 document, or a Starter Checklist for PAYE. - When you’ve signed and returned the Contractor of Employment, you will need to understand the processes involved for you to be paid on time (e.g. uploading timesheets etc.). At this stage, registration is complete and you will be an employee of the umbrella.

- No joining or leaving fees: None of our umbrella’s charge you when you join or leave, just when you use their services. - Simple sign up: digital sign forms delivered to your inbox instantly so that you can start your next assignment without delay. - Time saving: Signing up with the right umbrella will save you time, paperwork, and work seamlessly with your agency. - Inclusive insurance: All your insurance needs covered. Employers liability, public liability and professional indemnity. - Dedicated account managers: A friendly professional who understands exactly what you need, and only one call away. - Same day payments: No delay in the transfer of funds from your agency to the umbrella, then paid into your bank account on the same day. - Secure online portal: Access your contracting information when you need it through our intuitive portal HMRC compliant and accredited: Peace of mind that you are working with a compliant umbrella company.

The main advantage of working through an umbrella company is convenience. It is a quick and straightforward process to set up, provided that you can provide the necessary paperwork to prove your eligibility to work in the UK. Additionally, working through an umbrella company typically involves less administrative work, responsibility, and cost compared to having your own limited company. The umbrella company manages all aspects of payment administration on your behalf. You can also benefit from being employed, which includes receiving statutory payments if you are unable to work and the option to enrol in a workplace pension to save for your retirement.

Certain umbrella companies have formed associations to promote themselves as accredited providers. While we collaborate with some of these companies, Exel Consultancy also conduct our own supplementary vetting to guarantee that your funds are secure.

The Construction Industry Scheme (CIS) is a scheme designed by HMRC to minimise tax evasion within the construction industry. Tax is deducted at source from the subcontractor by the contractor and then paid over to HMRC on their behalf. CIS rules apply to all payments made by a contractor to a subcontractor for construction work as defined by HMRC.

Contractor: Verify subcontractors Make deductions Submit CIS returns Make payments Send deduction statements Subcontractors: Verify with the contractor Invoice the contractor Claim deductions

Construction Alteration Repair Extension Dismantling & demolition Work forming part of the land Installation of systems Internal & external cleaning Painting & decorating Integral works Preparatory works Finishing activities

The Domestic Reverse Charge (DRC) came into effect from 1 March 2021.

A contractor is a business (limited company, partnership or self-employed individual) that pays subcontractors for construction work. Private householders are not counted as contractors so are not covered by the scheme. A subcontractor is a business (limited company, partnership or self-employed individual) that carries out construction work for a contractor.

Contractor: You must register as an employer, before any payments to subcontractors. Please be aware it can take up to 20 working days to receive an employer PAYE reference number. To register online, please click here. Subcontractor: To register online please click here. You can also ring the HMRC CIS helpline to register or receive help with the online application: 0300 200 3210.

The aim of the DRC is to reduce fraud within the construction industry; VAT will no longer be paid to the business/individual undertaking the construction service (eg. subcontractor) and instead it will become the responsibility of the contractor to account for the VAT.

A VAT registered customer who is not intending to undertake further ongoing construction services. The Domestic Reverse Charge does not apply to End Users.

VAT and Construction Industry Scheme registered businesses that are connected or linked to End Users. If intermediary suppliers buy construction services and re-supply them to a connected or linked end user, without making material alterations to their work, they are also treated as an end user and the Domestic Reverse Charge does not apply.