FAQs
Please find below our most frequently asked questions. Use the links below to jump to the section you are most interested in. If there are any questions you would like to ask personally please call us free on 0800 195 3750 or email info@ics.me.uk
If you would like to learn more about IR35 please click here to visit our dedicated page.
Independent Contractor Services FAQ
Why should I choose ICS?
ICS is led by two guiding principles: care and compliance. We make sure we get the basics right – from ensuring you are paid the correct amount at the right time, to being available when you need any advice.
Our team of experts in employment and tax law includes a leading London QC and we are in regular contact with one of the 'Big Four' accountancy firms to ensure full compliance with all current regulations, including IR35 and MSC legislation
We offer a number of inclusive services that you may not find elsewhere, including free IR35 reviews and professional indemnity. Unlike some providers, ICS is run by accountants with many years of experience in the contractor marketplace.
What services do ICS provide?
ICS provides distinct services to ensure we can meet the individual needs of UK contractors effectively. The services we provide are the Limited Company Service, Umbrella Service, Sole Trader Service and CIS Service. We would be delighted to discuss your unique situation in confidence and explain the benefits we can offer to you directly. Call 0800 195 3750 for free confidential advice on how we can improve your net income oremail info@ics.me.uk.
Limited Company Service FAQ
Is a limited company right for me?
As a contractor you have the opportunity to take home more of your income each month, but it's important to make the right decision about how you achieve that aim.
Get it wrong and you could be facing a mountain of paperwork or even a fine from HMRC. Get it right and you can enjoy higher returns and a life free of administrative stress.
ICS Accounting Ltd specialises in providing individual accountancy, tax advice and administrative services to professional contractors.
This guide is intended to help you make the right decision by providing you with clear and honest advice about your options. We also offer a free phone number – 0800 195 3750 – which you can call at anytime to speak in confidence with one of our specialist consultants or accountants.
We will never pressure you into making a decision, because we believe that presenting you with all the facts up front is much more likely to lead to a longer term relationship.
Should I choose a Limited Company or Umbrella Company
A limited company is often considered the most prudent option if you are outside of IR35 (although it can also be an option if you are within IR35), as in many cases you will take home a greater proportion of your income than through an umbrella company. This is because you can benefit from the Flat Rate Vat Scheme, lower National Insurance contributions, and the option to claim back tax on a broader range of business expenses.
The following table is a guide to show how much you could potentially take home through an Umbrella Company compared to a Limited Company. In order to discover the best solution for you, however, we strongly recommend contacting us for a discussion and an individual quote based on your specific circumstances.
We offer a free IR35 status review, which may be useful in your decision-making and we would be happy to discuss your general contracting needs and requirements. Simply call our team on freephone 0800 195 3750 or email info@icsaccounting.co.uk.
Should I go solo or work with an accountancy company?
If you choose the limited company option then the first decision is whether to go it alone or work with an accountancy and administration company like ICS Accounting Ltd. The benefit of doing it yourself is there may be less to pay, but the downside is that you will have to grapple with mostly mundane and often quite complex paperwork and processes.
Many contractors choose to work with an accountancy company because it leaves them with the time to focus on their work and family life, without the need to worry about invoices, tax returns, IR35, professional indemnity and other matters that many think are best left to qualified accountants and administrators.
If your time is valuable and your interest in accountancy is limited then working with a limited company service provider is probably the right choice for you.
Which limited company service provider?
Almost any firm of local accountants can help you to set-up a limited company for a fee, but they will almost certainly not have the specialist knowledge required to ensure you are compliant with specific contractor legislation such as IR35 and MSC.
Every specialist provider offers a slightly different range of services and pricing structure. This can make choosing the right one difficult.
To help you decide we have detailed exactly what you get for your monthly fee with ICS Accounting on pages 4-6. We have also included a Frequently Asked Questions section at the end which we hope is useful.
Why set up a Limited Company?
Setting up and running your own limited company, where you become a director and shareholder, is often the most tax efficient way of working and has a number of advantages.
· Retain complete control over your financial affairs
· Protect your company name so no other company can use it
· Give your suppliers and clients a sense of confidence in your business.
Contrary to general belief, running your own company is not difficult and, with the assistance of our experienced and knowledgeable team, it is no more challenging than any other form of trading - so by utilising our services you can enjoy the benefits of running your own limited company, without the organisational headaches.
How do I get started?
If you’ve made the decision to contract under your own limited company, with ICS you will be allocated a personal account manager who will be happy to guide you through the application process and answer any questions you may have.
If you return your completed and signed questionnaire we will send your Limited Company Service pack containing your company registration and company bank account documents. If you already have a limited company, please let us know.
ICS Accounting Limited will make this as straightforward as possible by providing the necessary support to enable you to undertake your work without distraction.
What is IR35?
IR35 legislation was introduced by the government in April 1999 to eliminate the avoidance of tax and National Insurance Contributions (NIC) through the use of intermediaries, such as Personal Service Companies or partnerships, in circumstances where an individual worker would otherwise be regarded as an employee of the client for tax and NIC purposes.
What is the Flat Rate VAT Scheme?
The scheme was introduced by HMRC in 2002 to simplify paperwork for small businesses when accounting for VAT. Limited companies that turn over less than £150,000 (excluding VAT) in any financial year are eligible for the scheme.
It means that contractors can charge clients 17.5% VAT as normal but when they come to reconcile their VAT, they pay HMRC a percentage of turnover, rather than calculating the VAT on all purchases.
Contractors who work working through limited companies and who opt for the flat rate VAT scheme can significantly reduce their administrative burden and, in some cases, even end up with a cash surplus.
What are the financial benefits?
· You can claim a wider range of expenses
· There is a greater opportunity for tax planning
· You have access to the Flat Rate VAT scheme
· Faster payment and administration process
What are my responsibilities?
Limited companies have certain responsibilities, including registering with, and submitting annual accounts to, Companies House along with an annual return updating your company details.
Your company must have at least one director, whose job is to make sure the company is run in accordance with company law.
Please speak to your personal account manager if you have any questions regarding your obligations or responsibilities as director of your limited company.
Can I pay myself dividends?
Yes, the net profits of a limited company can be distributed to its shareholders in the form of dividends. Dividend income is not subject to National Insurance contributions and will be tax free if you are a basic rate tax-payer.
You will pay 25% income tax on the amount of dividend income received above the basic rate tax threshold.
As owner of your company, it is entirely up to you how you choose to take funds from the business.
What expenses can I claim?
We will provide you with an Expense Claim form and an Expenses Policy to highlight the most common expenses that can be incurred by your business and to ensure expenses are claimed correctly, avoiding any potential personal tax charges.
Please note that when operating through your own limited company, it is important to record all necessary expenses and it is your responsibility to ensure that any expense claims and receipts are submitted in a timely manner.
What insurances will I need?
Comprehensive insurance is a wise investment for any business. Included as part of our popular Gold and Platinum services, ICS Accounting is pleased to provide you with the following range:
· Employers’ Liability insurance up to £10,000,000
· Public Liability insurance up to £2,000,000
· Products Liability insurance up to £1,000,000
· Professional Indemnity insurance up to £1,000,000
What if I decide to go permanent?
We can assist you in closing your business at no extra cost. Alternatively, you can leave your company dormant in case you return to contracting and we will handle the necessary administration.
How do I open a bank account?
We will provide you with all the necessary details to open up your company bank account, unless you already have one. Please contact us for further information.
Do I need to register my company for VAT?
You must register for VAT if your taxable turnover reaches more than £67,000 within 12 months.
At ICS, our service to you includes your application for VAT registration and submission of your quarterly VAT returns.
Will I need to complete a tax return?
Yes, the UK tax year runs from the 6th April to 5th April the following year.
If you use a tax agent to lodge your self assessment tax return, you have until 31st January of the following year to pay any tax which may be owing to you.
To facilitate completion of your Self Assessment Tax return, we will provide you with the following information:
· P60 – showing gross salary and tax deducted up to 5th April of that year
· P11D – showing expenses and benefits
We will also complete your Self Assessment Tax return on your behalf under the Platinum Service.
Click here to learn more about our Limited Company Service, call us free on 0800 195 3750 or email info@ics.me.uk
Umbrella Company Service
What is an umbrella company service?
An umbrella company engages employees by way of an umbrella contract of employment. This is an over-arching contract of employment which provides continuous employment to an employee whether they are working on assignment with a client or not.
Our Umbrella Service provides a complete and professional employment service for contractors. Our aim is to remove the burden of administration by providing useful services at every stage of your working life. Our dedicated team of experts will process your timesheets and expenses; invoice your client or agency and chase late payments; take care of your PAYE and National Insurance obligations; and transfer payments to your personal bank account on the same day we receive them.
We offer a personal service, and your Account Manager will be available if you need help or advice. We offer comprehensive Professional Indemnity, Public and Employers Liability Insurance for complete peace of mind. We will also provide financial advice, and references for mortgages if required.
Our Umbrella Service is fully compliant with all government regulations and legislation, including IR35.
How do I get started?
Our registration process is simple and can be done electronically, or by telephone. We require the following information, either by fax, post or scanned and attached to an email:
· A completed ICS Umbrella Personal Details form
· A copy of the photo pages of your passport or your photo driver’s licence
· A copy of a valid work visa/permit (if applicable)
· A P45 from your last employer or a P46
Upon receipt we will contact your agency or client and request that your contract is issued to ICS Umbrella Ltd. Please note that a copy of the contract will be sent to you for review before we sign it on your behalf.
You will then receive a Contract of Employment with ICS Umbrella Ltd, which you will need to sign and return.
What happens at the end of my current contract?
You may continue to use our Umbrella Service when you change contracts or restart after a break from contracting. Simply keep us up to date with your circumstances.
How do I submit my expenses and timesheets?
It is important to record time spent on assignments on the timesheets provided by the agency or client. Expense claims which are chargeable to your agency or client are usually completed following their own processes. It is your responsibility to ensure that your timesheets and expense claims are approved and submitted according to the processes outlined in your contract.
Expense claims that are not chargeable to the agency or client are to be submitted by completing an ICS Umbrella Employee Expense form, following the guidelines in our Expenses Policy.
Please forward copies of all timesheets and expense claims by email or fax to us at:
· Email: info@icsumbrella.co.uk
· Fax: 01524 428201
You will appreciate that delays in submitting this information may lead to a delay in payment of invoices and receipt of cleared funds. We keep accurate records of all weekly/monthly timesheets received, however, kindly let us know when you do not work to ensure we can detect any timesheets that may be missing.
What insurance does ICS Umbrella provide?
We have a comprehensive range of insurance in place to protect you and the business, including:
· Employer’s Liability insurance up to £10,000,000
· Public Liability insurance up to £2,000,000
· Products Liability insurance up to £1,000,000
· Professional Indemnity insurance up to £1,000,000
I don’t have a current P45. What should I do?
If you do not have a P45, please ask us to send you a P46. The Inland Revenue will then advise us of your correct tax code.
Can I get same day transfers?
Yes we do use same day transfers at no extra cost to you.
How do I prove my earnings if I want to apply for a mortgage?
We can provide you with the necessary documentation in this respect and indeed put you in touch with specialists who facilitate mortgages for contractors.
Am I a Director or Shareholder of the company?
No, our employees are not directors or shareholders and they are not paid dividends. Instead we pay a salary to you.
What happens at the end of the tax year?
If you are required to submit a tax return, we will provide you with a P60. We can arrange for your tax return to be completed. Please contact us for details.
What does “self billing” mean?
Some agencies are described as being self billing. This is an arrangement between the agency or client in which they prepare the invoice and forward a copy to the Umbrella Company.
This means that as you enter your timesheet, the agency or client raises their own invoice to be billed each time a payment is made. The main benefit of self billing is the removal of the requirement to supply invoices, therefore resulting in a more efficient payment process.
How do I register?
Simply call us on our freephone telephone number 0800 195 3750. We will complete the application form with you in a matter of minutes and send you the details that you need to sign and return via email. Naturally we are happy to answer any questions that you may have.
What do I do if I wish to leave you or have got a permanent job?
Once you have informed us that you are leaving, we will collect all outstanding funds and make a final payment to your bank account. We will immediately issue your P45 so you can give it to your new employer.
Is there a minimum period I must work through you?
No, there is no lock in period – you can leave at any time without penalty.
Do I get tax relief on your weekly fee?
Yes, depending on your tax band, the actual cost to you will be £15.18 per week or £44.85 per month, or even less if you are a higher rate tax payer.
Can I work on more than one contract at the same time?
Yes, you can work on multiple contracts at the same time at no additional cost.
How do I know when I’ve been paid?
On the same day we process your payment, a payslip will be emailed to you. This will show the net figure being transferred to your account as well as the deductions made for PAYE, national insurance and our fees. The expenses processed will also be shown on the payslip.
What tax do I pay?
As a contractor you will incur PAYE, Employees and Employers National Insurance. With ICS Umbrella, we will take care of all your VAT, PAYE and NI liabilities on your behalf.
Do you have a HMRC Dispensation?
Yes, however, having an expense dispensation from HMRC does not mean that an umbrella company is an ‘approved’ vehicle, nor does it mean that you can claim expenses without keeping receipts – contrary to some umbrella companies’ claims.
We feel that expense dispensations can be misleading and lead contractors to claim expenses that they have not actually incurred. You as the individual claiming the expense will need to keep receipts or you face the possibility of being fined and penalised if your expense claim is challenged by HMRC.
Will I need to keep receipts?
Yes, it is very important that you keep receipts for any expenses that you claim, including fuel receipts for mileage and for any subsistence during the day. If we do not have copies of your receipts we will be unable to process the expenses. If you are found to have claimed expenses that don’t have a corresponding receipt, you will be penalised by HMRC for doing so and will have to repay your tax underpayment, as well as any additional penalties HMRC may impose.
Is there a limit to what I can claim each week?
No, however, it is best not to store up receipts but put in your claims regularly. If we cannot pay all your expenses in one week, we will carry over any outstanding to the following week. Unfortunately we cannot carry outstanding expenses from one tax year to the next but you can claim these directly from HMRC at the end of the year. We will provide you with a statement of expenses for that purpose.
Am I protected from investigation from the Inland Revenue if I register with an umbrella company?
No company can offer you complete protection against an HMRC investigation. ICS Umbrella will only pay expenses that you are legally entitled to, however, if you have submitted an expense claim that are you are not entitled to, then HMRC could reclaim the tax underpayment and impose a large fine.
Do I need to be concerned about IR35?
No, all contractors using an umbrella company service are deemed to be working within IR35 and as such you will not fall under IR35 rules. You will be paid via PAYE only and will not receive dividends in any form.
How does the new legislation regarding Managed Service Companies (MSCs) affect me?
From April 2007, the only legal way to receive dividends is through your own personal Limited Company, over which you have complete financial and administrative control. We pay you through PAYE so you are safe in the knowledge that you are totally compliant.
Can I make any money referring colleagues or friends?
Yes, we operate a referral reward scheme to anyone who makes a recommendation of a colleague or friend who joins us. Please contact us for further details.
Do you provide reference letters for financial institutions?
Yes, we will provide reference letters to financial institutions free of charge.
What is my employment status?
You are employed by ICS Umbrella. We enter into a legally binding contract with your agency or client. This contract states that we will supply them with the contractor who has the necessary skills to satisfy the client’s requirements. The agreed rate for the services performed will be paid to ICS Umbrella over a prearranged period of time.
The agency or client will choose to use a contractor rather than a permanent employee if they do not wish to assume the ‘employments rights’ that are associated with permanent employees.
ICS Umbrella has assumed these obligations and employs you. Your status as a contractor will not be affected and your working processes will not be altered but you will have the assurance that you are working in a manner which is completely compliant with current employment and financial legislation.
Click here to learn more about our Umbrella Company Service, call us free on 0800 195 3750 or email info@ics.me.uk
Sole Trader Service FAQ
How do I get started with the sole trader service?
Our registration process is simple and can be done electronically, or by telephone. We require the following information, either by fax, post or scanned and attached to an email:
· Completed ICS Sole Trader Personal Details form
· Copy of the photo pages of your passport or your photo driver’s licence
· Copy of a valid work visa/permit (if applicable)
Can I submit expenses?
Expense claims which are chargeable to your client are usually completed following their own processes. It is your responsibility to ensure that these are approved and submitted according to the processes outlined in your contract.
Expense claims that are not chargeable to the client may be offset against your income to reduce your tax liability. We recommend that you keep detailed records and receipts in respect of your costs.
Please forward copies of all expense claims by email or fax to us at:
· Email: info@icsumbrella.co.uk
· Fax: 01524 428201
You will appreciate that delays in submitting this information may lead to a delay in payment of invoices and receipt of cleared funds.
Can I get same day transfers?
Yes we do use same day transfers at no extra cost to you.
How do I prove my earnings if I want to apply for a mortgage?
We can provide you with the necessary documentation in this respect and indeed put you in touch with specialists who facilitate mortgages for sole traders.
What happens at the end of the tax year?
If you are required to submit a tax return, we will provide you with a schedule of income and expenses that we are aware of. We can arrange for your tax return to be completed. Please contact us for details.
How do I register?
Simply call us on our freephone telephone number 0800 195 3750. We will complete the application form with you in a matter of minutes and send you the details that you need to sign and return via email. Naturally we are happy to answer any questions that you may have.
What do I do if I wish to leave you or my circumstances change?
Once you have informed us that you are leaving, we will collect all outstanding funds and make a final payment to your bank account.
Is there a minimum period I must work through you?
No, there is no lock in period – you can leave at any time without penalty.
Do I get tax relief on your four services?
Yes, you can offset the costs of using our sole trader service when you submit your annual tax return. We can help you with this for an additional fee.
Can I work on more than one contract at the same time?
Yes, you can work on multiple contracts at the same time at no additional cost.
How do I know when I’ve been paid?
On the same day we process your payment, we will email you.
What tax do I pay?
As a sole trader you incur Income Tax and National Insurance liabilities. We pay you Gross after the deduction of our fees, so you are responsible for payment of all taxes to HMRC. We can help you with this if required and you can ask us to complete your tax returns.
Will I need to keep receipts?
Yes, it is very important that you keep receipts for any expenses, including fuel receipts for mileage and for any subsistence during the day. If you are found to have claimed expenses that don’t have a corresponding receipt, you may be penalised by HMRC for doing so, as well as any additional penalties HMRC may impose.
Do you complete my tax return?
This is an additional service that we can undertake for you at a cost of £150. Simply discuss your requirements with us.
Click here to learn more about our Sole Trader Service, call us free on 0800 195 3750 or email info@ics.me.uk
CIS Service FAQ
Introducing our CIS Service
The Construction Industry Scheme (CIS) was introduced by the Government to set rules about how payments are made for construction work.
We introduced our CIS Service to help contractors that wish to provide services to the construction sector, or that are already working within CIS. By working through our CIS Service contractors can benefit from typical tax rates of 20% (subject to individual circumstances) without the burden of endless paperwork.
With rates at just £22 a week (or £65 a month), our service is a highly cost effective way to work within CIS.
Below we have outlined the most commonly asked questions about CIS and our CIS Service, which we hope you find useful. If you would like any additional information please do let us know by contacting us on freephone 0800 195 3750 or by emailing info@ics.me.uk.
How do I register for CIS?
There are two steps. Firstly, if you have not done so already, register for self-employment by calling HMRC on 0845 915 4515 (opening times are 8am-8pm on Monday to Friday, and 8am-4pm on Saturday and Sunday). You will then be sent a Unique Tax Reference (UTR) number.
Secondly, after you receive your UTR number, call 0845 366 7899 to register for CIS (opening times are 8am-8pm, 7 days a week). You will need your National Insurance number for this call. After completing the above two steps call ICS free on 0800 195 3750.
What if I am already registered for CIS?
If you are already registered for CIS we can help you look after your affairs immediately. Simply call 0800 195 3750.
What do I need to sign-up with ICS?
Signing-up with ICS is simple. Call us free on 0800 195 3750 and we will provide you with a registration form. We will also need a signed copy of your contract and some photo identification (e.g. your passport). If you are registered for VAT please also inform us of your VAT number. After we have verified your details with HMRC we can commence paying you.
How do I know when I’ve been paid?
On the same day we process your payment, we will email you. We will also provide you with a tax deduction voucher showing your gross payment and the tax deducted under CIS. You will need to keep this voucher as evidence of tax deducted which can then be set off against your tax liability when your Tax Return is submitted.
How do expenses work?
ICS can assist with managing your expenses – simply complete our expenses form and you may receive a tax refund depending on your individual circumstances. Expenses are subject to tax relief.
Will I need to keep receipts?
Yes, it is very important that you keep receipts for any expenses, including fuel receipts for mileage and for any subsistence during the day. If you are found to have claimed expenses that don’t have a corresponding receipt, you may be penalised by HMRC for doing so, as well as any additional penalties HMRC may impose.
How much tax will I pay through CIS?
This is dependent on your CIS status, but is usually set at 20% (CIS4) if you have been verified for CIS.
What about National Insurance?
As a self-employed contractor you will pay Class 2 and Class 4 National Insurance contributions.
The current rates are as follows:
- Class 2 National Insurance contributions are paid at a flat rate of £2.40 a week.
- Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 8 per cent on profits between £5,715 and £43,875, and a further 1 per cent on profits over that amount.
Class 2 National Insurance contributions are paid either monthly by Direct Debit or by quarterly bill. Class 4 National Insurance contributions are paid when you pay your Income Tax. If your profits are expected to be less than £5,075 you may not have to pay Class 2 National Insurance contributions.
What do I need to do about Self Assessment?
As a self-employed contractor it is necessary to file your Self Assessment Tax Return by 31 January of each year if done online, or the previous 31 October if not submitted online. Fixed penalties are imposed if these deadlines are not met. The tax you pay will be calculated after you claim your expenses. ICS can complete your tax return for you – just ask for a quote.
What do I do if I wish to leave you or my circumstances change?
Once you have informed us that you are leaving, we will collect all outstanding funds and make a final payment to your bank account.
Is there a minimum period I must work through you?
No, there is no lock in period – you can leave at any time without penalty.
Click here to learn more about our CIS Service, call us free on 0800 195 3750 or email info@ics.me.uk |
