Frequently Asked Questions (FAQ's)
If you're confused about IR35, worried about your P60, or wondering whether CPM can really take care of your tax returns, read on…
- "What
is an umbrella company?"
- "Why should I use
an umbrella company?"
- "What should
I look for in an umbrella company?"
- "What
is a composite company?"
- "When should I
use CPM?"
- "What about
the working time directive?"
- "What about IR35?"
- "Will I get a P45
when I leave?"
- "Will I get a P60
at the end of the year?"
- "Can I claim
expenses and if so what type of expenses can be claimed?"
- "Do I have to become
VAT registered?"
- "Do I have to
pay corporation tax?"
- "Do I have to pay PAYE
and National Insurance?"
- "Do I have to file
accounts at Company House?"
- "Will CPM look after my personal taxes?"
"What is an umbrella company?"
Fundamentally, the umbrella company is a means of outsourcing
your payroll, accountancy, taxation and associated administration.
An umbrella company removes the hassle attendant on
setting up and running your own limited company. Using
an umbrella company allows you to devote all your energies
to the work, not the paperwork; they will take care
of invoicing the agency or client, paying a salary minus
all of the required deductions and ensuring you adhere
to the appropriate taxation requirements. Moreover the
threat of IR35 is removed; when you work with an umbrella
company, you're paid on a PAYE basis - that means no
tax demands to worry about. An umbrella company should
also process your expenses claims and reimbursements.
The umbrella company solution is a very attractive alternative
to running your own limited company - allowing you to
retain all the benefits of freelance contracting, whilst
simultaneously removing the administrative burdens,
responsibilities and hassle of establishing and running
your own limited company.
"Why should I use an umbrella company?"
- To avoid the responsibility and hassle of running
your own limited company.
- If you are a first-time contractor and need a quick
and easy start-up method.
- If you are a self-employed contractor operating
through an agency.
- For a cost-effective solution for undertaking '
short-term ' or ' fill-in ' contracts between permanent
appointments
- Because you're tired of administering your own
company.
-
"What should I look for in an umbrella company?"
Peace of mind.
Not to mention release from IR35; a pension scheme…
….maybe even a company car!
Only CPM can give you all these benefits:
- Prompt payment; week in, week out, on the dot; at
no extra cost.
- Twice weekly payment of salaries and dividends.
You've earned it; we don't keep you waiting for it.
- Same day payment scheme option.
- No fixed charge structure and no hidden extras.
- Payroll and expenses scheme.
- Accountancy service for contractors operating outside
IR35.
- Able to accommodate sole traders.
- Expertise - we are an umbrella company operated
by accountants, not an accountancy firm with an umbrella
service 'on the side.'
Choose CPM for Complete Peace of Mind
What is a composite company?
A composite company is one where you own a share in a company as one of a group of shareholders. This share allows you to earn dividends from the profits of that company. Dividends are subject to tax but not to National Insurance.
When should I use CPM?
CPM offers many benefits over "going it alone".
A few of them are detailed below
You want to avoid the responsibility and hassle of running
your own limited company.
A first time contractor wanting a quick and easy start
up method.
Any short term contract in the UK or overseas that requires
you to operate through a limited company.
Any long term contract where the client does not want
to make you an employee
You are inexperienced in dealing with the legal and
financial implications of UK limited companies.
You are tired of administering your existing company
and of being an unpaid tax collector
You prefer to concentrate on what you do best rather
than on administration
You are working abroad and do not want your existing
company to become resident abroad (If you are a sole
director and you work abroad, the company is resident
where ever you are. This can have a significant negative
and complicated impact on your tax liabilities in that
country)
You are an agency looking to relinquish legislative
burdens (please request our separate leaflet)
"What about the working time directive?"
Not an issue. Because CPM is a personal service company,
the terms of the working time directive are excluded
from any agreement of service.
"What about IR35?"
IR35 is a complex issue. CPM can provide specialist
advice and guidance on how to deal with it; by letting
us deal with it for you! CPM is owned and directed by
Solomon Williams (MBA FCCA) a Chartered Certified Accountant
who can help steer you through the ins and outs; the
ifs, buts and maybes. Refer to "CPM Reference"
for advice, guidance, opinions and countermeasures.
"Will I get a P45 when I leave?"
Absolutely. As soon as you notify us of your intention
to leave, a P45 will be prepared during the next payroll
run. To avoid confusion however we do request confirmation
in writing.
"Will I get a P60 at the end of the year?"
Yes. At the end of each tax year, a certificate of tax
deducted (P60) is prepared and sent out to all contractors
who have not requested a P45. Dividend vouchers are
also sent out at the same time.
"Can I claim expenses and if so what type of
expenses can be claimed?"
Most certainly. Refer to Expenses in "CPM Reference"
for full details.
"Do I have to become VAT registered?"
No.
"Do I have to pay corporation tax?"
No.
"Do I have to pay PAYE and National Insurance?"
No. We pay it for you out of deductions from the funds
received.
"Do I have to file accounts at Company House?"
No.
"Will CPM look after my personal taxes?"
Yes, for a small fixed fee we will prepare and submit
your tax returns for you. Remember not everyone is required
to send in a tax return. As a general rule, if you are
employed, and do not receive one from the Inland Revenue
then you do not have to send one in. Find out about
our ytax services here.
More Questions?
Check out our "CPM Reference" section or contact
us for answers to your specific queries.