Key Information Document (KID)
Working as a Contractor with E-Resourcing Ltd in the UK and the Key Information Document
Prior to April 2021: Depending upon your own personal circumstances, rates of pay, client, duration of contract and other personal factors, up until April 2021, you have a choice of how to engage through E-Resourcing to its clients:
- To be paid via your own Limited Company (aka Personal Service Company), or
- To be paid via an Umbrella Company Payroll which fully employs you on its own PAYE payroll
After April 2021: The client will have to notify you and/or E-Resourcing of your expected status under the changing ‘Off payroll working legislation’, which seeks to amend previous IR35 legislation. From April 6th, 2021 the end user client and you, together, will determine your personal TAX status for a contract engagement using appropriate methods.
- If the client determines this contract engagement to be ‘Outside the scope’ of the IR35 legislation, then you can be engaged through either your own Ltd company or via a Payroll/Umbrella company, it is your choice.
- If the client determines this contract engagement to be ‘Inside the scope’ of the legislation, then you can only be engaged through an approved Payroll Umbrella Company which fully employs you and pays you via a PAYE scheme.
UK Recruitment Agencies are not allowed to engage and trade with Sole Traders, offshore owner run Ltd companies or any other employment status, self-employed, CIS scheme, etc.
Option 1 – Limited Company - personal service company
Often contractors choose to incorporate, creating their own Limited Company (Personal Service Company - PSC) for the delivery of their specialist skills/services. You will need to own more than 50% of the shareholding as you personally need to have control. There are several areas to be seriously considered and specialist help from a qualified Accountant should always be sought. You will be able to find the details of Accountants who provide this service from the internet. If you trade in this manner you would be an Employee and Director of your own company, and therefore you need to be very aware of the impact of the legislation known as IR35, which seeks to determine your tax status and therefore what taxation should be applied. - Example KID for Limited Company
Option 2 – Umbrella Company payroll service provider
Where workers are not engaged via their own Limited Company or are on assignments where the end user client determines that you must be engaged in a manner that full PAYE must be deducted at source, contract workers can engage via an Umbrella Company payroll provider. In this situation E-Resourcing pays the same gross rate to the Umbrella Company as in Option 1, on a business to business basis. Payments made are wholly inclusive of the additional Employer’s National Insurance costs due, apprenticeship levy, your PAYE Tax to be deducted, your Employee’s National Insurance contributions, holidays, pensions, etc. and any fees that are due, to create your net take home pay. Using the services of a specialist Umbrella Company provider ensures compliance with current UK legislation and they may be able to offset certain necessary costs due because of your assignment. - Example KID for Umbrella company
Umbrella Company payroll providers
E-Resourcing has contract workers engaged via pre-approved Umbrella service companies listed below. E-Resourcing receives no inducements or favouritism whatsoever from any provider. These companies have all passed our compliance assessment and are also FCSA members and we have received positive feedback on their service from contractors working through them. These are some of the biggest companies in the UK who provide payrolling services for a large number of IT contractors and provide additional accountancy services where required.
If you choose a company that is not on the list, this will likely result in a delay until the provider you suggest can be validated and approved.
Charges are usually based on ‘how often you wish to be paid, obviously being paid monthly is considerably cheaper than being paid weekly’; most contract workers choose to be paid monthly.
Their websites are generally particularly useful, and you can call them and ask about their service. These providers all charge you for their services, based upon the amount of effort involved and the type and length of your contract with them. Clearly it costs to set you up with an account. It costs to close your account. It costs to process any payments to you in time, administration, and bank charges. You should compare each company’s charges and services yourself.
Typical deductions from the rate E-Resourcing pays to the Umbrella / Payroll provider are costs associated with the service, and of course statutory deductions Employer’s National Insurance charge, apprenticeship levy, your own National Insurance deductions, your PAYE Tax deduction and any Pension arrangements you wish to make.
E-Resourcing’s approved Umbrella Company payroll providers:
E-Resourcing cannot and does not specifically recommend any company listed above or any other specialist payroll provider.
Before your contract assignment is agreed, whether you are to be engaged through your own Ltd Co., or via an Umbrella Company payroll, you will be provided with a ‘Key Information Document’ (KID) that details all deductions made from your pay.
Examples of KIDs for employment via a PSC or via an Umbrella company are shown via the links here: