Kingston UK is proud to be supporting the Chartered Institute of Public Relations (CIPR) this month by sponsoring an event for its members from across Kent.
The CIPR, which represents freelancers and contractors (as well as other types of workers in [...]
BACS – electronic processing of financial transactions, which usually takes three days to clear. Stands for ‘Bankers’ Automated Clearing Services. Kingston UK’s contractors and freelancers are paid via BACS (once funds paid by their client to Kingston UK have cleared). Many banks have fast track systems, meaning money may often be cleared in the contractor’s account the same day.
CHAPS – payments made directly into your bank account with no bank processing delays, so you receive money on the same day. Stands for ‘Clearing Housing Automated Payment System’.
Kingston UK offers this service for a charge of £30 per payment (incorporatng a £20 charge levied by the bank and a £10 admin charge from Kingston UK).
Dispensation – issued by HMRC to Kingston UK, this means we can pay out ‘legitimate business expenses’, free from tax and NICs and without reporting onto a P11D form.
In order to claim business expenses, sole traders and limited company directors would usually need to complete one of these forms at the end of the tax year.
Employers’ liability insurance - Employers’ liability insurance enables employers to meet the cost of compensation for their employees’ injuries or illnesses, whether they are caused on or off site. Kingston UK’s contractors and freelancers are covered by up to £10million in employers’ liability insurance.
ENICs – Employers’ National Insurance contributions. This is a deduction made direct from gross pay based on earnings.
This charge is passed on to contractors/freelancers via Kingston UK’s flat fee of £25 per payment, but is far outweighed by the expenses that may be reclaimed under our umbrella.
Gross pay - total pay before tax (PAYE), National Insurance and any other deductions are taken.
HMRC – Her Majesty’s Revenue and Customs, which is the government’s combined customs and tax collection agency. Formerly called ‘HM Inland Revenue and Customs & Excise’.
IR35 - term given to the legislation introduced to increase the amount of tax and class one National Insurance paid by contractors and to remove the contractor’s right to dividend pay.
IR56 – the legislation HMRC uses to determine whether someone is employed or self-employed, which plays a key role in determining the way and amount of tax and National Insurance you pay
Legitimate business expenses – out-of-pocket costs incurred and paid wholly and exclusively by the contractor/freelancer in the performance of their duties.
Net pay - total pay after tax (PAYE), National Insurance and any other deductions are taken.
NICs - National Insurance contributions, deducted with tax from gross salary. Kingston UK ensures that it deducts the correct amount of NICs from contractors and freelancers and pays this directly to HMRC.
P45 – form that an employee receives from their employer when they leave that employment. It states gross salary, tax, NICs and other deductions paid from the start of the tax year to the last day in the job. When you begin contracting or freelancing with Kingston UK, you will need to give us your P45 from your last employment or complete a P46.
P46 – issued to a new employee who does not have a P45. This is to find out their current tax and National Insurance information to date.
P60 – certificate of pay, issued at the end of the tax year. It provides the employee with the totals of pay, tax and National Insurance contributions accumulated within the year. Kingston UK’s contractors and freelancers receive a P60 as an employee would do.
PAYE – Pay-As-You-Earn, a system used for deducting Income Tax from an employee’s pay. Contracting or freelancing under Kingston UK’s umbrella means you are paid on a PAYE basis.
Professional indemnity insurance – provides cover for claims made against the policyholder due to their professional negligence. Kingston UK’s contractors and freelancers are covered by up to £1million in professional indemnity insurance.
Public liability insurance – covers liability exposures of individuals and businesses for damage to property and injury to individuals. Kingston UK contractors and freelancers are covered by up to £2million in public liability insurance.
Retainer - each of Kingston UK’s contractors and freelancers have their own retainer fund into which they contribute £30 per payment (when their gross pay exceeds £300).The retainer fund exists so that holiday pay can be paid out to the contractor/freelancer in line with their entitlement. The money in the fund belongs to the contractor/freelancer and is accessible to them whenever they request it.
Once the retainer fund reaches £450, paying into it is optional (max. £1,000). Tax and NICs have already been paid on the money in the retainer fund, so the contractor is not taxed on it again when he/she requests funds to be paid out to them from it.
Salary/bonus – Payment term appearing on contractor/freelancer’s payslip. ‘Salary’ is the contracted hourly rate to KUK plus any ‘bonus’, which is the difference between minimum wage rate and the actual rate at which their client is paying them.
SC2 form – is the contractor or freelancer’s statement of sickness, which must be completed by them and submitted to Kingston UK following three consecutive days of sickness absence in order to be considered for statutory sick pay.
Sick note – alternative way to claim statutory sick pay (after three consecutive days of sickness absence) instead of self-certificating with the SC2 form. Can only be issued by a GP and sometimes at a cost to the patient.
Statutory sick pay – money paid by employers to its who are away from work because they are sick. Kingston UK is responsible for paying out sick pay in line with statutory requirements.
