Contractor Jargon Buster

Our jargon buster contains definitions for a number of different business & finance terms that you may have heard of but weren’t quite sure of their meaning. Have a look through and see if you can find an answer.

Legislation guides

Anti-Bribery Act – This is a piece of legislation that came into force in July 2011 with the aim of modernising bribery law. For more information on the bribery act, click here.

Auto-Enrolment – Auto-Enrolment is a piece of legislation that requires employers to register all eligible employees on a company pension scheme. We have written a jargon-free guide that you may find useful.

Agency Worker’s Regulations (AWR) – Agency Worker’s Regulations were put in place to protect temporary workers by ensuring that they are entitled to the same pay and working conditions as their equivalents in a full-time role after they have been working for at least 12 weeks. For more information, please look at our guide to AWR Legislation.

Employment Agencies Act – This piece of legislation was created to safeguard work seekers, hirers and the needs of the recruitment industry.

IR35 – IR35 was bought into effect to prevent contractors from working as disguised employees. Before the legislation, many full-time workers would leave their jobs only to return to the same position as a contractor a few days later, thus taking advantage of the tax saving benefits that come hand in hand with contracting. To find out more information about IR35, read our free guide.

Managed Service Company Legislation – The legislation is in place to help prevent contractors receiving payment via dividends rather than as general PAYE income, without having the day to day responsibilities that come hand in hand with running a business.

RTI (Real Time Information) – As part of RTI, employers will need to submit PAYE information to HMRC each time they pay their employees, rather than just once at the end of the payroll year.

Working Time Regulations – These are regulations that give EU workers the right to a minimum number of days holiday, paid breaks and the right to a certain amount of rest. Furthermore, workers have the right to work no more than 48 hours each week or undertake excessive night work.

Jargon buster – Generic

Contractor Accountant – A contractor accountant is an accountant who specialises in contracting. They will be able to provide advice on various aspects of contracting, including how to operate in the most tax efficient way possible.

Flat Rate VAT – This is a scheme that has been in operation since 2002 and aims to reduce the cost of fulfilling your VAT obligations. We have written a comprehensive, jargon-free guide to the flat rate scheme and you may find it useful.

Holiday Pay – Most workers in the UK are entitled to a minimum amount of paid holiday each year, known as statutory holiday. This currently stands at 5.6 weeks per year, your contract of employment may offer more than this amount but by law it cannot be less.

Income Tax – Income tax is tax charged on your earnings (less any personal allowances you are entitled to).

Employer’s Liability Insurance – By law, all employers in the UK must have at least £5million employer’s liability insurance to ensure that they can always compensate employees who have to make a valid work related claim.

Professional Indemnity Insurance – This is a type of insurance that is used to protect both companies and their employees from claims that may be made by third parties due to negligence or mistakes that have occurred during the provision of services.

Public Liability Insurance – Public liability insurance is used to protect both companies and their workers from claims made by members of the public who have sustained an injury or had some form of damage caused to them. There is no law that requires you to have public liability insurance but it is highly recommended if your business means that you regularly come into close contact with the general public.

Limited Liability – Any debt is that of the company and the director(s) cannot be personally liable.

Unlimited Liability – Any debt of the company is also that of the owner, meaning that personal assets could be seized to cover any outstanding business debt.

National Insurance – National insurance contributions are deducted from your salary or paid via direct debit if you aren’t subject to PAYE. These payments entitle you to certain state benefits such as the NHS and State Pension.

National Minimum Wage – National Minimum Wage is the minimum amount that someone can be paid per hour in the UK. The rates vary according to age and you can find a comprehensive breakdown here.

Recruitment Company – In a nutshell, a recruitment company is used to recruit staff either as temporary or permanent workers.

Self-Assessment Tax Returns – If you are self-employed, you’ll need to complete a self-assessment tax return each year to notify HMRC of your earnings.

Self-Employed Tax – If you are working as a sole trader you will need to pay self-employed tax. The amount of tax you owe will be calculated through submission of your self-assessment tax return. Futurelink Group offer hassle free Sole Trader solutions, click here to find out more.

Statutory Adoption Pay – If you have adopted a child by an adoption agency, you could be entitled to 52 weeks of statutory adoption leave. This includes 26 weeks of ordinary adoption leave and then you can take an additional 26 weeks should you require it. To qualify, you need to have worked continuously for 26 weeks for your current employer and provide evidence that you have adopted a child.

Statutory Maternity Leave – You have the right to 26 weeks of ordinary maternity leave and 26 weeks of additional maternity leave. To qualify you must be an employee and give your employer the correct notice. Be sure to sit down with your employer and discuss any other entitlements you may have during maternity leave as it can vary from company to company.

Statutory Paternity Leave – To qualify for statutory paternity leave you need to have been with your current employer for at least 26 weeks and be taking time off to support the mother of the baby. Paternity leave usually lasts one to two weeks.

Statutory Sick Pay (SSP) – If you are too ill to work, you may be entitled to Statutory Sick Pay. The standard rate is £81.60 per week and is paid for up to 28 weeks. You’ll usually receive SSP if you are sick for at least four days in a row and have weekly earnings in excess of £102 per week.

Unique Tax Reference (UTR) – A UTR number is a number that you are presented with when you register as self-employed with HMRC. You will need your UTR when you complete a tax return and communicate with HMRC as it’s their way of identifying you. For more information on UTR numbers and why you need one, click here.

VAT – VAT stands for Value Added Tax and it is a tax that is charged on the majority of goods and services in the UK and for some goods and services imported from other countries. As of 2014, once your revenue is greater than £81,000 you are required to register for VAT and start charging VAT at the rate of 20%.

Jargon buster – Umbrella

24 Month Rule – You can claim travel and accommodation expenses if you are working at a temporary workplace. HMRC defines a temporary workplace as somewhere where your attendance lasts no longer than 24 months. For example, if you signed a 36 month contract, this would be considered your permanent place of work and no travel or accommodation expenses could be claimed.

Dispensation – An agreement between HMRC and an employer to reduce the amount of admin and paperwork that needs to be completed for expenses.

PAYE – PAYE stands for Pay As You Earn. It is a system where your employer deducts income tax from your taxable gross earnings. The amount taxed will depend on your gross salary.

Swedish Derogation – A clause in the AWR that means the AWR rights to equal pay of an agency worker no longer exist when agency workers are employed on a permanent basis by their Umbrella Company or temporary work agency and receive pay in-between assignments.

Temporary Workplace Expenses – As a temporary worker, you are entitled to claim certain business expenses that you may incur throughout the day e.g. your travel to and from work. A temporary workplace is a place of work that you need to attend for a limited period of time.

Umbrella Company – An Umbrella Company acts as an employer to contractors who are working on temporary contracts. If you are a contractor and want to get paid in the simplest, quickest and most efficient way possible, our Umbrella PAYE Solution is perfect!

Jargon buster – CIS

Construction Industry Scheme (CIS) – Applicable to all self-employed contractors and subcontractors, CIS requires tax on construction work to be deducted from gross payments. Find out more about CIS and our solutions by clicking here.

CIS Verification – If you start working with a sub-contractor that you haven’t listed on a CIS return in the past three tax years. You can verify a sub-contractor by using HMRC’s online CIS support service or calling the CIS helpline.

CIS Card – A CIS Card is a card that enables you to work legally in the UK as a self-employed construction worker. You’ll receive one when you register on the Construction Industry Scheme.

Jargon buster – Ltd

Corporation Tax – Corporation tax is tax that is due on the profits of a limited company. For more information on corporation tax rates, visit the HMRC website.

Limited Company Contracting – A limited company is a business which is owned by its shareholders, one of the primary appeals of this business structure is limited liability. To register a limited company you need to think of a company name and register with Companies House. The Futurelink Group team can help you with all of this so call us on +44 (0)1923 277 900 or visit our Limited company page to take the next steps to being a limited company owner.

Jargon buster – Self-employment

Sole Trader – A sole trader is someone who is registered as self-employed and is not the owner of a limited company. Sole traders have unlimited liability and need to fill out a self-assessment tax return each year. If you are thinking of becoming a sole trader, our Sole Trader Solution is perfect.

“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 Accountancy Services Ltd (0532 0147), Team Construction Ltd (0493 5270), Horizon RCS Ltd (0620 6202) and Horizon RCS Europe Ltd (0620 6136). Privacy Policy | Terms & Conditions