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Contractors

Frequently Asked Questions

Frequently Asked Questions

Here we present answers to our most frequently asked questions.

What is an Umbrella Company?
What is a Composite Company?
What is IR35?
Why should I use Experia as opposed to running my own Limited Company?
Why should I use Experia as opposed to PAYE?
Why should I use Experia as opposed to other Umbrella Companies?
What if I currently have a limited company but want to move to Experia?
What if I currently use another Umbrella but would like to move to Experia?
How much does it cost?
How much more pay do I "take home"?
When will I be paid?
How will I get paid?
How can I be sure that Experia Financial Solutions system is legitimate?
How will I know you are transacting my timesheet?

What is an Umbrella Company?

An Umbrella Company is a payroll management company that enables contractors to benefit from most of the flexibility and tax advantages of a personal service company, whilst not suffering all the administrative headaches and directorial responsibilities. In addition Experia has secured special dispensation from the Inland Revenue approving its method of reimbursing contractors expenses. You can be sure that you do not need to worry about the threat of IR35.

What is a Composite Company?

A Composite Company has many similarities to an Umbrella Company in relation to payroll and expense methodologies. The main difference is that the contractors are members of the company in that they each have a shareholding in the company and therefore are entitled to dividend payments. It is the opinion of Experia Financial Solutions that this type of company does not pass the IR35 test and it is only a matter of time before the Inland Revenue catch up with this practice. In fact, some may say it is becoming easier to track down those evading tax this way as they are all grouped together in these Composite Companies so making it easier for the Revenue to spot them. Once one has failed the IR35 test, it is relatively easy for the Revenue to “mop up” the rest.

What is IR35?

On 6th April 2000 the government introduced legislation aimed at those contractors working through personal service companies. The aim was to negate the tax benefits enjoyed by those freelancers providing personal services so they pay similar tax and national insurance to their permanent counterparts. The legislation bypasses the limited company and looks at the nature of the service being provided and if it is felt to be that of a “deemed employee”, virtually all of the income is subject to tax and national insurance in the normal way.

Why should I use Experia as opposed to running my own Limited Company?

The taxation advantages of running your own limited company were greatly reduced with the advent of IR35. What you were left with were all the burdens of running your own company without the taxation advantages. It is your responsibility to file statutory documents, and failure to do so can result in prosecution, fine and a criminal record.

You would also be responsible for the day to day administration of the company including, but not limited to, invoicing, cash collections, bank accounts, invoice payment, expenses, VAT, payroll, PAYE, national insurance and corporation tax. You could outsource this to a firm of accountants but the cost would be substantially more than Experia and all of the directors responsibilities would remain with you.

Why should I use Experia as opposed to PAYE?

Working through Experia allows you to take advantage of many of the taxation benefits of running your own limited company with none of the responsibilities attached.

All of the day to day administration including, but not limited to, invoicing, cash collections, bank accounts, invoice payment, expenses, VAT, payroll, PAYE, national insurance and corporation tax is taken care of by Experia at a cost substantially less than that charged by a non-specialist accounting firm.

Why should I use Experia as opposed to other Umbrella Companies?

Experia has the benefit of over twenty year’s experience of operating in the contract recruitment industry. It has close links with many agencies in the industry and can use this experience to circumnavigate some of the problems encountered by other “umbrellas”. In fact Experia will only work with approved agencies.

What if I currently have a limited company but want to move to Experia?

We could advise you of the best course of action which may well be closing down your company. We could review this and quote you a price to handle this process on your behalf. Please note Experia’s fees do not include the closing down of existing limited companies.

What if I currently use another Umbrella but would like to move to Experia?

There is no signing on fee with Experia so you are free to join at any time. You may, however, be subject to contractual restraint and may need to wait until the next break in you your contract. We can advise you of your best course of action.

How much does it cost?

If you require weekly payments, the cost is £35 per week. This, however, is tax deductible working through Experia and in reality can cost as little as £20 depending on your personal tax circumstances.

If you require bi-weekly payments, the cost is £55 per week. This, again, is tax deductible working through Experia and in reality can cost as little as £32 depending on your personal tax circumstances.

If you require monthly payments, the cost is £75 per week. This, also, is tax deductible working through Experia and in reality can cost as little as £43 depending on your personal tax circumstances.
 

How much more pay do I “take home”?

The tax efficiencies of Experia derive from their expense policy. Every £1 you legitimately spend, and claim, for work related expenses reduces your tax liability by £1. The amount you can claim depends on a number of things (how far away from work you live, whether you are claiming hotel bills, phone bills etc). The amount of tax and national insurance you save depends on whether you are a basic or higher rate tax payer. Obviously someone who works a long way from home, has a lot of business related expenditure and is a higher rate taxpayer saves more tax than a basic rate taxpayer with relatively few expenses.

When will I be paid?

Experia has a unique same day service for both invoicing and payments. This system, allied to our close links with the agencies we work with, ensures you will receive funds earlier than most other Umbrellas.

How will I get paid?

You will be paid by BACS which takes two to three days to clear depending on who you bank with. We can, however, in special circumstances effect same day payment for a £25 charge.

How can I be sure that Experia Financial Solutions system is legitimate?

We have special dispensation from the Inland Revenue approving our method of payment to contractors. In addition, we have twenty years experience of the many types of contractor payment from Schedule D all the way through to offshore and limited companies. We know that the only way forward is to be “whiter than white” and to be open and honest in our dealings with the tax authorities. You can rest assured that behind the scenes, communication lines with the Inland Revenue are open and we are shielding you by ensuring our procedures are lawful at all times.

How will I know you are transacting my timesheet?

We will contact you every step of the way during the course of your timesheet process. We will text you:

• When we receive your timesheet
• When we invoice the agency
• When we receive funds from the agency

When we remit your payment we email you a payslip at the same time.