CXC Global are experts in the contracting industry. We are more than happy to answer any questions you may have no matter how insignificant you think they may be. Here are just a few answers to the questions we are most frequently asked:

What is the difference between a Contractor and a Perm?

A contractor is a worker who is employed on a temporary or contractual basis.

A perm is a worker who is employed on a permanent basis and therefore receives an annual salary.

What are your employment options whilst contracting in the UK?

When entering the contracting/freelance market, you have three choices in terms of the payment structure that you want to take. These are:

• PAYG – Pay As You Go
• PAYG - Umbrella Company Structure
• Limited Company Structure

What is IR35?

IR35 is a term that is used to denote UK tax legislation that is designed to tax “disguised employment” at a rate similar to employment.

Before IR35 was introduced, contractors who were the director of their own limited company (or composite company) were allowed to receive revenue from their clients directly as company profits could be distributed as dividends which are not subject to National Insurance (NI) payments only UK corporation tax.

Prior to the introduction of the legislation, an individual could avoid being taxed as an employee on payments for services and paying Class 1 NIC by providing those services through an intermediary. The worker could take the money out of the intermediary, normally a Personal Service Company, in the form of dividends instead of salary.

As dividends are not liable to NICs, the use of a dividend remuneration strategy results in the worker paying less in NICs than either a conventional employee or a self-employed person. And PAYE would not apply to the dividends.

The legislation ensures that, if the relationship between the worker and the client would have been one of employment had it not been for an intermediary the worker pays tax and NICs on a basis which is fair in relation to what an employee of the client would pay.

What is an Umbrella Company?

Basically, an umbrella company is when you outsource your payroll. It acts as an employer to independent or self employed contractors who work under temporary contracts. The advantage of an umbrella company is that you are able to eliminate much of the costs and hassle associated with setting up your own limited company.

With an Umbrella Company Solution:

• You do not have to be a director of the company
• You do not have to take on board any of the responsibilities of directing and owning your own company
• Your umbrella company provider would look after all of the tax and accounting duties
• Your umbrella company provider would look after all administrative duties
• Typically, the umbrella company will invoice your recruitment agency and once this payment is made will pay you thorough PAYE
• Umbrella companies have become more prevalent in the UK since the UK government introduced the “IR35 Legislation”. This legislation makes it more attractive to go through an umbrella structure rather than start your own limited company
• If you are an Australian of New Zealand candidate then an umbrella company allows you to salary package

What are expenses?

What Employment Regulations

As a contractor in the UK, you need to be aware of the various employment regulations and how they can affect you. With CXC Global, there is no need to worry. Leave that to us, it's our job!

Opt In or Opt Out of EAA Regulations

When you are about to take up a contract with an employment agency, they will ask if you want to "Opt In" or "Opt Out" of the contract offered.

What are the EAA Regulations?

Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the Regulations) govern the conduct of the private recruitment industry and establish a framework of minimum standards that clients, both work-seekers and hirers, are entitled to expect.

From 6 July 2004 the Conduct Regulations are to be extended to cover work seekers who supply their services through a limited company, known as Limited Company Contractors.

Should I opt in or out of the rules?

Once you have accepted a contract, you will be issued with a contract from the recruitment agency that also includes an “Opt Out Notification”.

Regulations are designed to protect employees working with agencies, however as you are operating through a limited company you are not an employee of the agency which is governed by the rules.

Please note that this is an outline of the rulings and you should get independent tax and legal advice before making a decision.

Where can you get more information?

You can find further information by going to www.dti.gov.uk or to www.rec.uk.com

For more information or to speak to a friendly CXC Global consultant today email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call us on 020 7374 6957.