Umbrella Company, Umbrella Companies, CIS

Umbrella Company – A service company that enables contractors to receive payments, without the need of setting up and running their own Limited Company.

Timesheet – Timesheets are used to authorise time worked at your client site. Contractors will need to send signed timesheets to their agency and relay these details to Maddison Group so an invoice can be raised for payment.

Invoice – A payment request, detailing hours worked and rate, issued by Maddison Group, after timesheet details have been submitted by the contractor. BACS – The standard bank transfer method (Bank Automated Clearing System). A BACS transfer takes 2-3 working days to clear in your bank account.

IR35 – IR35 is a term used to denote United Kingdom tax legislation designed to tax "disguised employment" at a rate similar to employment. In this context, "disguised employees" means workers who receive payments from a client via an intermediary and whose relationship with their client is such that had they been paid directly they would be employees of the client.

HMRC – Her Majesty’s Revenue & Customs (formally the Inland Revenue) is responsible for collecting revenue for the government and policing current legislation to make sure companies are compliant.

P45 – An official record of taxable earnings and tax paid to date in the current tax year which will be supplied to you when you leave an employer. This should be passed on to your new employer.

P60 – An official record of your total earnings and tax paid for a particular tax year, issued by your current employer at the end of the financial year.

P46 – A P46 form should be completed if a P45 is not available. Your employer can use the P46 to determine which tax code to use when processing your payments.

Gross Pay/Income – Your earnings before any deductions for tax, national insurance and any other statutory payments.

Net Pay/Income – Your earnings after tax, national insurance and any other statutory payments i.e. the amount you receive Self-billing – If an agency are self-billing, this means they pay directly from the timesheets you submit rather than from Maddison Group’s invoice.

MSC – An MSC (Managed Service Company) is a third party service that makes dividend payments to its contractors. This type of service became illegal with new legislation introduced in April 2007.

Dispensation – A dispensation allows Umbrella Companies to process your expenses without having to record them on a P11d form. Without a dispensation, Maddison Group would need to ask to see receipts for every expense you claim. It does not dictate the expenses that you are entitled to claim. Maddison Group provide advice on our expense page as to what receipts we require and what you’re able to submit.

Self-assessment – If you have received earnings outside of PAYE, you will need to complete a self-assessment form and declare your earnings from the previous tax year to HMRC.

Expenses – Certain costs that you may incur, as a direct result of your contract, can be claimed as an expense and offset against your tax liability.

PAYE – Pay As You Earn is method used to determine the tax and national insurance contributions due on your weekly/monthly earnings.