Frequently Asked Questions

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What is a Sole Trader?

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A Sole Trader, also known as a self employed individual, is a person who has started a business. A Sole Trader is also a type of business entity, where there is no legal distinction between the owner and the business.

I already have a Limited Company; can I move it to your services?

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Yes, all you need to provide us with is the name of your current accountant (if you have one).  We will do the rest!  If you do not have an accountant, simply provide us with the following documents:

  • A copy of your Certificate of Incorporation
  • A copy of your Memorandum and Articles of Association
  • A copy of your latest accounts

Contact us for further information on our Limited Company Solution.

Can you help me with setting up a Limited Company bank account?

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As soon as your company has been registered at Companies House, the next stage is opening a business bank account. We work with Barclays on a fast-track basis for your registration. If you wish to use Barclays, we will arrange for them to give you a call to make an appointment with your local Business Manager. However, you do not have to choose Barclays, all high street banks offer business banking facilities.

What advantages are there of trading through a Limited Company?

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There are various advantages to trading as a Limited Company, such as:

  • It can be a more tax efficient way to work than under PAYE
  • You can give a share of the business to others
  • Limited Companies can allow you to “plan your tax” – money earned can be left in the Limited Company and taken as income in future years
  • Obtaining bank loans can be easier
  • Some companies will only deal with other Limited Companies

Contact us for further information on our Limited Company Solution.

What administration am I required to do when setting up a Limited Company?

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We can take care of most of this for you, however, inevitably there will be some paperwork you are required to sign, as you will be Director of the Limited Company.  We will take care of as much of this as is possible, leaving you free of the often time consuming admin involved in setting up a Limited Company.

How do I set up my own Limited Company?

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We can set up your Limited Company for you.  All you need to do is complete our short “New Client Form” and return it to us.  Your company could be incorporated within as little as 24 hours of us receiving your completed form. Please contact us for further details.

Is there any benefit for referring friends and colleagues to Umbrella PAYE Lite?

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There is no referral bonus for the Umbrella PAYE Lite solution, however, you can refer unlimited friends or colleagues to one of our other contractor solutions and claim a bonus of £75 for each.  Please contact us for further details.

What expenses can I claim as an Umbrella PAYE Lite contractor?

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Through the Umbrella PAYE Lite solution you are not able to claim expenses.  If you start on Umbrella PAYE Lite and your contract assignment changes, meaning you begin to incur expenses, you can easily upgrade to the Umbrella PAYE solution so that we can process these for you.

What happens if I leave the Umbrella PAYE solution?

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If you decide to leave, you need to let us know so that we can issue your P45.

Will I need to complete a tax return as an Umbrella PAYE employee?

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As an employee of the Umbrella PAYE solution you should not need to complete a tax return.  This is because tax and National Insurance are deducted at source from each payment you receive. If you have additional income of any nature (i.e. operating your own Ltd Company, properties, shares etc) alongside your arrangement with our Umbrella PAYE solution then you will be required to submit a return. In this case HMRC will send you a notification through the post.

What expenses can I claim under Umbrella PAYE?

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The general rule for expenses is that claimable costs must have been incurred wholly, necessarily and exclusively for the performance of the assignment. Please see our quick guide to employee expenses, alternatively contact us for advice if you have any questions regarding what expenses are allowable under the current rules.

Do I qualify for holiday pay, sick pay and maternity/paternity pay?

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Statutory amounts of sick pay, as well as maternity/paternity pay, can be claimed as long as you meet government guidelines. The rules for holiday pay are that you have to be paid for 24 days in a year providing that you work 5 days per week. The best way to deal with this is to allocate part of your income to holiday pay (calculated as a percentage of your gross pay at the current prevailing rate).  We then pay it to you inclusive of your net pay. As a contractor holiday pay is not a benefit you are entitled to receive – you negotiate your own rate of pay with the agency or direct client.  When you do this you should take into account what amount would cover you as holiday pay.

Will I get a P60?

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Yes. P60s are issued at the end of each tax year. It’s vital that you keep this safe as duplicates cannot be issued.

How do I pay tax and National Insurance?

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As an employee of our Umbrella PAYE solution, we deduct all tax and NIC’s from your payments on a PAYE basis. All deductions are made at source when we receive your payment from your agency or direct client.  This means there are no unexpected tax bills at the end of the financial year to worry about.

What notice period do I have to give if I want to leave?

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There is no notice period, just let us know you no longer wish us to receive and process payments on your behalf.

What is the commitment for using your services?

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Some people use us for a few weeks, some for years. We do not tie anyone down to a fixed contract, we can simply be used as and when payment is required. The service we provide is fully portable, you can take us from contract to contract to handle your payments.

Who is responsible for paying CIS tax and NI?

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If you are registered with a UTR number we will deduct your 20% tax from your income at source. You will be responsible for your weekly Class 2 NI payments and Class 4 at the end of the financial year. Please see www.hmrc.gov.uk/cis for further information.

How do I register for the CIS?

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You need to register for the Construction Industry Scheme directly with HMRC, there is qualifying criteria you will need to meet before HMRC will provide you with a UTR (Unique Tax Reference) number. For further information please contact us or visit theHMRC website.

What is CIS (Construction Industry Scheme)?

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CIS is a tax deduction scheme developed by HM Revenue & Customs (HMRC) for the construction industry. Contractors and sub-contractors must be registered with HMRC and hold a UTR (Unique Tax Reference) number. HMRC provide a detailed booklet called CIS340, Guide to the Construction Industry Scheme, available via their websitewww.hmrc.gov.uk. Find out how we can help you with our CIS tax service.

What is the VAT Flat Rate Scheme (FRS)?

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HMRC introduced the FRS to simplify VAT returns for small businesses. You will charge the full VAT rate (20%) on your invoices to clients, but will pay a significantly lower percentage to HMRC to account for the VAT reclaimable on purchases. The percentage paid to HMRC will depend on your main business activities.

Important facts about the FRS:

  • The highest flat rate percentage is 14.5%, the lowest is 4%. Your allocated rate can be anywhere on the scale between these two amounts, depending on your business activity.
  • In the first year of VAT registration you can receive a further 1% reduction on your flat rated amount (therefore making the highest and lowest flat rate amounts 13.5% and 3% respectively), until the day before your first anniversary of becoming VAT registered. Note that the entitlement to apply the reduction runs for the 12 months following the date of registration for VAT and not the date you join the FRS.
  • If your turnover is anticipated to be higher than £150,000 in your first year, or reaches over £230,000 (VAT inclusive) at any point, then you must exit the scheme.
  • Members of the FRS are unable to claim back the VAT on any purchases that value under £2000.

What is the VAT Annual Accounting Scheme?

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This scheme allows you to make 10 monthly or 3 quarterly payments of the same amount towards your VAT liability for the year. You then make one final payment for the balance due. The scheme makes it much easier for you to manage your company’s cash flow.

How often do I have to make VAT payments and at what rate?

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This is dependent on which VAT scheme you join and payment frequency could vary from monthly to quarterly payments. We will advise you of how much VAT you need to pay and the different payment options available to you.

How do I register for VAT?

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As a Sole Trader Premium customer we will do this for you and complete all of your subsequent VAT returns. We will also advise if any of HMRC’s VAT schemes could be beneficial to you.

Do I have to register for VAT as a sole trader?

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If you earn (or expect to earn) over £73,000 per annum, then you will need to be registered for VAT and charge VAT on your invoices. If you earn under £73,000 per annum there may be benefits to registering voluntarily for VAT. Please contact us for further information.

How do I know how much VAT and Income Tax I have to pay?

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We will notify you of the amount of tax and VAT you have to pay or put aside on a quarterly basis – as long as we receive your regular monthly expenses and all related financial information from you in adequate timescales. Without an update on your expenses and additional income, we will not be able to provide this information for you, or an end of year Self-Assessment tax return.

Do I need insurance as a Sole Trader Premium contractor?

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In all likelihood the companies you contract with will require you to have insurance. As a Sole Trader Premium contractor you will be covered by:

  • Professional Indemnity Insurance for each week you work. This is financial security in the case that a claim is made against the work you have carried out.
  • Employers and Public Liability Insurance for each week you work. This protects you against claims for damage or injury to people or property.

Other more specific industry insurances are available and can be quoted for through our specialist insurance partners, alternatively you can arrange your own cover elsewhere.

What accounts and records do I have to keep as a sole trader?

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You will need to keep track of your in-comings and outgoings to ensure you pay the correct amount of tax. We will provide you with a monthly expense template with which to do this. HMRC requires that you keep copies of any receipts for 7 years. We will text you each month to remind you to send your completed expense form to us. This will enable us to complete your annual Self-Assessment tax return and produce a set of annual accounts for you.

What is your sole trader solution management margin?

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The management margin for our Sole Trader Solution is a flat 3%, the management margin for the Sole Trader Premium solution is a flat 6%, so will therefore vary depending on the invoice total.

Please note: to benefit from all the services offered within the Premium solution a minimum number of payments must be made. Please contact us for further information or read more about our sole trader solutions.

What do I need to earn to become a Sole Trader Premium customer?

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Your turnover will need to be above £50,000 per year to benefit from the Sole Trader Premium service. If your income is below £50,000, our standard Sole Trader solution will bring you the best benefits.

I have already registered as self-employed but it is half way through the year, can I still use your Sole Trader Premium service?

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Yes, you will need to provide us with details of your income and expenses to date. You will become eligible for a Self Assessment tax return at no cost when you have used Sole Trader Premium for a minimum of 6 months. After 9 months you will also become eligible for a set of annual accounts. If you have not met these criteria, for an additional fee, a Self Assessment and set of accounts can still be produced. Contact us for more information.

What is IR35?

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IR35 is the government’s process to determine your employment status. In short it is in place to determine whether you are a genuine contractor; or whether you should be employed and are avoiding paying PAYE on your full earnings. For more information, visit www.hmrc.gov.uk/ir35/.  We can arrange an assessment of your contract terms if you would like to undertake one for a small additional charge. 

Do you provide any insurances?

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We don’t provide insurance directly ourselves, however, we have teamed up with specialist brokers to offer a range of insurances to contractors. Cover for Employers and Public Liability Insurance at £10 million and £5 million respectively is included with all of our solutions free of charge. Professional Indemnity Insurance can be arranged, if it is a requirement of your contract, at £11 per week and only applies the weeks that you work. Site Accident Insurance is automatically provided. 

Do I need to complete a tax return?

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Yes. Once you have registered with HMRC as a Sole Trader they will automatically send you a self assessment tax return to complete. Here you can detail all of your work related expenses, which should then reduce your overall tax liability. If you require assistance in completing your tax return please contact us on 01923 277 900.

What is your sole trader management margin?

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Our Management margin for our Sole Trader solution vary depending on the invoice total and start from as little as £5.00 per week.  Contact us for more information.

Who pays the VAT?

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When we handle your payroll we charge VAT on invoices to your UK clients.

You don’t need to be VAT registered yourself unless the value of your taxable supplies in the past 12 months or less has exceeded the current VAT registration threshold (£73,000 as at January 2012) or the value of your taxable supplies in the next 30 days alone is expected to exceed this threshold. You would then need to register for VAT and add VAT to your invoices. We would add this amount of VAT to your payment.

If you are VAT registered you can claim back VAT on goods and services that are used in the business. Ensure that you keep all receipts.

Who pays the tax and NI?

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If you work as a sole trader using our Sole Trader Payroll solution you are responsible for your own tax and Class 2 NI. At year-end you need to complete a Self Assessment Tax Return.

If you want help with this, look at our Sole Trader Premium solution, which includes a self assessment tax return as part of the  package or call us on 01923 277 900. 

Business expenses are tax-free and are deducted before tax and NI are calculated.

How much National Insurance do I have to pay?

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As at January 2012 the rates are:

Class 2 NIC’s are paid at a flat rate of £2.50 a week.  From April 2011, your Class 2 NIC’s payments will become due on 31 January and 31 July, the same as a Self Assessment tax bill. You pay Class 2 NIC’s either monthly or six monthly by Direct Debit, this will require completing a Direct Debit form, which we can send you if you wish. 

If your profits are expected to be less than £5,315 you may not have to pay Class 2 NIC’s.

Class 4 NIC’s are paid as a percentage of your annual taxable profits – 9 per cent on profits between £7,225 and £42,475, and a further 2 per cent on profits over that amount. Class 4 NIC’s are paid when you pay your Income Tax.

What taxes/liabilities do I have to pay?

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As a Sole Trader you will be liable to pay tax on the income you make from self-employment. You will have to pay class 2 National Insurance Contributions (NIC’s) as standard and in addition you may be liable for Class 4 NIC’s on any profits you make.  Click here for further information on how to register for tax and National Insurance.

What happens if I get a permanent job or don’t want to be self-employed anymore?

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If you don’t want to be self-employed anymore, or you go back into full-time PAYE employment, simply let us know and we will suspend your account with us and any associated services. 

Is there a benefit for referring friends and colleagues?

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Yes. If you introduce a friend or colleague to our payroll services and they join for a minimum period of 6 weeks you will receive a bonus of £75 per person you refer

How do you confirm payments made to me?

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If you are registered to use our online portal you can access your payment information at any time and view what payments have been processed for you.  Otherwise you will receive a remittance slip by email or post with a full breakdown of your earnings, you will also receive a free text message confirming your payment. This informs you when the funds should clear in your account. Texts are only available where we have a record of your mobile number.

Please note: payments will only commence once we have received a complete registration form from you along with all relevant supporting documentation, including certified photographic ID.

How do I get paid?

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When we have received funds from your client/agency, we will pay your money directly into your bank account on the same day.  

How do I invoice my clients?

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We will take care of this on your behalf. You will simply need to provide us with your time sheets or confirmation of the hours you have worked for your client(s) and we will either invoice them directly, or via your recruitment agency (if applicable). 

How do I register and work as a Sole Trader?

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More good news – it’s not difficult. If you are new to self-employment you have 3 months to inform HMRC that you are running your own business. You must register to pay Class 2 NI. You will receive an HMRC tax return in April each year and have until 31st January of the following year to pay your tax (although you could be assessed every 6 months in arrears).  Click here for further information on how to register.

Do I need to send you my P45?

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Yes. It tells us which tax code we should be using for you. If you do not have a P45 please complete a P46 and send this to us.

What is the advantage of being a Sole Trader?

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As a Freelancer, Independent Contractor or Sole Trader you can benefit from the kind of flexible financial arrangements usually only enjoyed by shareholding directors of small limited companies. However, you don’t need to form a limited company and therefore avoid all the legal and administrative responsibilities that entails – which is great news! Sole traders can be around 15% better off than their PAYE counterparts. You can be self-employed in any type of industry, but typically self-employment is found in education, medical, IT, Industrial, construction and manufacturing fields. Futurelink provide sole trader solutions to help you enjoy being a self-employed but without all the paperwork.

“I’ll most certainly pass on your details to people I know. You run a great service there, keep up the good work.”

William Cadden, Self-Employed Contractor

“For me, Futurelink Group was the best solution, as a foreign and a lack of knowledge of the UK rules, they were extremely helpful in all aspects. Always fast in answering all my questions. I almost didn’t do anything and they put me on track to invoice and receive my payments. I can fully recommend them.”

Ronaldo, Umbrella PAYE contractor

“WS Contractors Ltd are extremely happy with the services that Futurelink provide. The efficient and friendly staff are always willing to help and assist. The feedback from our operatives is positive and pleasing. We would recommend Futurelink to all new recruits joining our team.”

Michelle Hughes, WS Contractors Ltd

“We at Gemini would like to thank you and your team for all your help and support in connection to payroll solutions. We find Futurelink Groups approach to be responsive to action when required with a courteous and bright manner – keep up the good work!”

Frank Mcfarlane, Gemini Security Services Ltd

We have strict compliance procedures in place, we are ISO:9001 accredited and we also carry out regular independent audits of our processes so you can be sure you are in safe hands. Companies within our group have been accredited with the following:

Futurelink Group consists the following companies, all incorporated in England & Wales: Futurelink Group Ltd (0620 6129), Futurelink Umbrella Ltd (0532 0148), Futurelink Accountancy Services Ltd (0532 0147), Team Construction Ltd (0415 9963), Team Administrative Services Ltd (0493 5270), Horizon RCS Ltd (0620 6202) and Horizon RCS Europe Ltd (0620 6136). Privacy Policy | Terms & Conditions