Frequently Asked Questions
We’ve put together a section to help answer our most frequently asked questions (FAQs). If you still cannot find the answer to any of your queries or would like us to go into more detail, then don’t hesitate to call us. We’re always happy to hear from you.
- I have already started work on a contract and I’m not with an Umbrella Company. Is that a problem?
- Where will I pay my Taxes and National Insurance?
- Can I claim expenses to reduce the tax I pay?
- Are your fees at Liberty Bishop tax deductible?
- I currently own a Limited Company but my agency insist that I use an Umbrella Company. Am I allowed to use your Umbrella Company for the duration of one contract?
- Am I tied into a contract with your Umbrella Company?
- Am I eligible to receive dividends from your Umbrella Company?
- What is a dispensation?
- I have a question about your Umbrella Company services. To whom should I speak?
- What is IR35 and what do I need to know?
- How do I get paid?
- What expenses can I claim?
- What is an MSC?
- Are Liberty Bishop an MSC?
- Can I claim travel costs to and from my place of work?
- What living expenses can I claim?
- Do I need insurance?
- Do you deal with contractors in all industries?
I have already started work on a contract and I’m not with an Umbrella Company. Is that a problem?
Most agencies and clients will insist on paying you via a limited company. This avoids any potential liabilities they could be faced with if they pay you as a self employed individual. You are also required to supply details of your Umbrella Company or Limited Company to your agency to ensure that your contract is drawn up correctly. Without arranging for this, you may run into difficulties should any problems arise once you commence work. Joining our Umbrella Company is simple and free, and we can issue all of our details to your agency quickly. We will also ensure that HM Revenue & Customs are aware of your working arrangements.
Where will I pay my Taxes and National Insurance?
Our UK Umbrella Company will deduct and pay Income Tax and National Insurance to HM Revenue & Customs in the UK on a monthly basis on your behalf.
Can I claim expenses to reduce the tax I pay?
Yes. You can claim allowable business expenses to reduce the tax payable on your income. Expense claim forms should be submitted when you send us your timesheets. Our payroll team will review any claims that you make and tax relief will be provided each time we process your pay.
Are your fees at Liberty Bishop tax deductible?
Yes. You do not need to claim these on your expense claim forms. Tax relief is automatically provided on your fees, insurance and any bank charges incurred.
I currently own a Limited Company but my agency insist that I use an Umbrella Company. Am I allowed to use your Umbrella Company for the duration of one contract?
Yes. You can simply join our Umbrella Company and use our services for a single contract. You can still contract through your existing limited company at the same time if you have other contracts.
Am I tied into a contract with your Umbrella Company?
No. You can join and leave at any time. There are no joining or leaving fees. Our weekly fees are only charged whilst you're working.
Am I eligible to receive dividends from your Umbrella Company?
No. The income you receive from our Umbrella Company will be in the form of a salary and allowable expenses. Employees of our Umbrella Company cannot own shares, so therefore cannot receive dividends. This arrangement ensures that you remain fully protected against IR35 (Intermediaries Legislation).
What is a dispensation?
If an employer regularly reimburses employees for allowable expenses such as work related travel, the employer can apply to HMRC for a dispensation. If granted the employer will no longer have to report the reimbursements covered by the dispensation on a P11d. For larger employers this can save a great deal of administration.
Be aware that some Umbrella Companies have obtained dispensations from HMRC and use them to market a greater take home pay. You should however be aware that a dispensation is not a license to give away tax-free money to employees. This is purely a means of reducing the administration burden. If your Umbrella Company uses a dispensation in this way, you must ensure that you keep records of all expenses claimed and reimbursed to you. It will be your responsibility to prove that amounts reimbursed to you by your employer were not excessive in comparison to the actual expenses you incurred.
Although it may seem like a good deal when you sign up with an Umbrella Company offering vast expense allowances, the consequences could turn out to be extremely detrimental.
I have a question about your Umbrella Company services. To whom should I speak?
Go to our contact page that lists numbers and email addresses for all of our departments. You are welcome to ask questions about Umbrella Companies in general or talk to the people that handle your work, so feel free to ask for them personally.
What is IR35 and what do I need to know?
IR35 (Intermediaries Legislation) was the name given to an Inland Revenue bulletin released in 1999. It was issued in response to a 1990's trend, whereby employees of companies were transferring to contractor status and then carrying on exactly as before with the same employer, same office and same job. The benefit being that as contractors, people could manage things in such a way that they could avoid large amounts of tax and National Insurance quite legally by replacing salary income with dividends. IR35 was introduced to close this loophole.
You can find out detailed information concerning IR35 and Umbrella Companies here.
How do I get paid?
Once our Umbrella Company receives a payment for your invoice, we produce a pay analysis and transmit funds electronically to you that same day. We run a daily payroll to ensure that there is no delay in you receiving your payments. Cleared funds in your personal account will be available three working days from the transaction. You can elect to receive your monies same day for an additional charge of £15.00 per transaction, which is far less than most Umbrella Companies charge.
What expenses can I claim?
A sample list is given in the allowable expenses section. If in doubt include it on your monthly expense claim and let us review it.
What is an MSC?
A Managed Service Company (MSC) is the term used for a Limited Company that is administered and managed by a scheme provider. The scheme provider will typically take on the roles of director and company secretary and will control the financial aspects of the company. There is usually a single employee that uses the MSC to bill for service. The employee will also own 100% of the company’s shares. Umbrella Companies differ from MSCs.
Are Liberty Bishop an MSC?
No. Liberty Bishop is an Umbrella Company and lies outside the scope of this definition. Umbrella Companies are single limited companies with multiple employees. The employees are not shareholders and receive their pay in the form of a salary and reimbursed expenses. Its also fully compliant with HM Revenue legislation. For further information please head to our MSC page here
Can I claim travel costs to and from my place of work?
Yes. Provided that your place of work is deemed as temporary by HMRC you are able to claim these costs. It can be difficult to determine if your place of work is temporary so feel free to contact us for further clarification.
What living expenses can I claim?
Temporary living expenses and subsistence can be claimed when you’re not living at your usual abode.
Do I need insurance?
Employers, Public, Products liability and Professional Indemnity cover is included in your Umbrella Company service up to set amounts. For any additional 'specialist' cover that you may require, Liberty Bishop’s purchasing power ensures that highly competitive rates are always available.
Do you deal with contractors in all industries?
We work with contractors within a wide array of industries. We are particularly experienced in working with IT contractors and are often fondly regarded as the IT umbrella company.