On the 9th of December 2010, HM Treasury released the Overview of draft legislation for Finance Bill 2011 announcing legislation targeting schemes to pay remuneration through Employee Benefit Trusts (EBTs).

The legislation will be introduced in the Finance Bill 2011, and become effective from 6 April 2011 onwards. The inclusion of anti-forestalling measures that became effective on the 9th December 2010 mean that from now payments of this type fall within the scope of the new measures.

The proposed legislation states that sums earmarked by trusts or other intermediaries will be treated as though it is a payment of income that is liable to PAYE tax.

Because of this ruling we believe that use of an EBT is no longer an option for your contractors.

If your contractors are using an EBT Company, then they should immediately consider their options as they have now been made a target by HMRC and with the wide ranging MSC legislation this could also prove risky for agencies who are continuing to use these services.

Be aware that EBT providers are trying to find a quick solution which could represent further danger!

How can Redego/Tempo Accounting help?

We will contact your contractors and give them a personalised assessment of their options and the likely impact on their take home pay within a few hours. Click here to request a call back.

The services that we can supply you, subject to your requirements, will all meet the criteria below;

• No off-shore ‘tax avoidance schemes’; UK based services only
• Either limited company or umbrella company services
• No set up or leaving fees and no minimum contract period
• Unlimited advice for contractors by specialist consultants and accountants covering many different technical aspects

Please call 0203 137 64 62 now for a free consultation.

Web-based service SignatureSense.com is gaining momentum in the recruitment industry by allowing contracts to be signed online, by all parties, in a matter of minutes.

The conventional approach to signing and returning contracts (a combination of post / fax and email) is often the ‘bottle neck’ in an otherwise efficient placement process.

Larger big-budget agencies have been using “electronic signatures” to sign contracts for years, however SignatureSense’s low monthly subscription fee for agencies makes this modern business practice available to even the smallest of companies.

Alan Whitford, industry veteran and founder of RCEuro.com, the Pan European community site for recruiters, commented on SignatureSense:

“I think that this offering should be a ‘no brainer’ for recruitment businesses, where the time lost in the administrivia of contract administration can lead to lost revenue and poor client service.  The electronic signature ‘wrapper’ is ideal for confirming NDAs, Terms of Business and Contractor Agreements, all in real time. We will certainly be using the service for our future agreements at RCEuro.”

Jon Richardson, Founder of SignatureSense added:

“We are really excited to see that Agencies find such a direct benefit in using our service.  It’s only a matter of time before electronic signatures are common-place, so the ‘early adopters’ are making the most of a great competitive advantage.”

Redego are now able to offer real-time reporting of working hours to agencies.  This enables agencies to ensure that the Working Time Regulations (WTR) are being complied with and the added ability to plan future projects with reference to hours worked.

Agencies can view reports showing which contractors are close to exceeding their maximum average hours.  This makes compliance and planning much easier for agency consultants.  Whilst we always ensured our workers are given their statutory rights, this new system shows agencies and their clients that we are doing this and gives them the ability to use the data to plan future work.

The new online system is especially useful for workers on project rates where it has been difficult to monitor rest breaks.

Its proving particularly popular with agencies who engage manual workers on project rates – the risks of injury and reducing quality of work are much greater for these categories and end-clients want to know its being managed properly.

The new online system lets workers input their rest breaks with the click of a mouse as they submit their timesheet and is very simple for contractors to use.

Under the WTD regulations, all employers have to ensure that workers have adequate rest-breaks:

• maximum hours worked – avg 48 per week in 17 week rolling period
• adequate rest breaks, so workers do no more than:
  • 13 hours in any 24 hour period (day) – cap of 13 x 6 = 78 hours
  • 1 days off (rest days) in every 7 day period (week)
  • statutory minimum holiday periods (28 days not working in addition to ‘rest days’)

Whilst this is the responsibility of the employer (the umbrella company), most clients and agencies reckonise their responsibilty in ensuring they only use compliant umbrella companies that can show they are acting responsibly to protect workers’ welfare.

Another benefit of the new system is greater accuracy when calculating contractors’ National Minimum Wage (NMW) which is a key contractual element of remuneration in most umbrella companies.  Getting this wrong, can attract attention from HM Revenue & Customs (HMRC) both on breach of NMW legislation but also PAYE/NIC compliance as contractor expense claims are invariably affected by minimum wage.

As part of our mission to help contractor’s work as tax efficiently as possible, here we look at how Redego clients can avoid the National Insurance (NI) increase that is due in April whilst, at the same time, saving for retirement.

Unlike a permanent employee, many Contractors pay both employer’s and employee’s National Insurance on earnings.  This means that the 1% hike expected in April will have a noticeable effect on a Contractor’s take home pay.

The good news is that the Redego Pension Scheme provides a great opportunity to reduce a contractor’s total tax deductions.

By transferring a portion of your income into the personal pension scheme a basic rate tax payer saves upto 39%. Higher rate tax payers can save between 49% and 69%.

This ‘Salary sacrifice’ can counteract the 1% increase by reducing the Income Tax and NI normally paid on earnings.

Why Choose Redego’s Pension Scheme?

Redego works with IFA ContractorFinancials to provide a pension scheme with as much flexibility as possible, allowing contractors to change contributions to match a their contract’s earnings at any time. There is total freedom to decide how much is transferred and contractors can pause contributions at any time.

If a contractor decides to leave iBalance then the pension can either be left to grow, or closed completely with funds moved elsewhere.

The legislation surrounding annual allowances for pension tax relief are changing in April and the new allowance will be £50,000 (down from its current level of £255k).  However, this still offers significant scope for most investors.

Independent Advice Without Pressure

There are no set up costs when joining the Redego group personal pension scheme and the pension advisers at ContractorFinancials are independent of any one company. This allows Redego contractors to take advantage of a full review of any existing pensions in place.  Then, if it makes sense to do so, the advisers will assist in transferring any existing funds over to the Redego pension.

To speak to a pension adviser about the Redego group personal pension or for more information on the scheme, call 0845 062 8888 or email Redego@contractorfinancials.com and an experienced pension adviser will be in touch.

HMRC have issued a new press release on 6 August regarding their concerns about intermediaries offering services to pay temporary workers (such as umbrella companies).

In the last two years HM Revenue and Customs (HMRC) have seen a growth in arrangements which are variously described as ‘Travel and Subsistence Schemes’ or ‘Mobile Worker Schemes’. These schemes are operated by many businesses involved in the supply of temporary workers to end users: Employment Businesses and umbrella companies.

Nine former ministers today rounded on Gordon Brown’s plans to cut childcare, warning the prime minister that he is threatening marginal Labour seats in the runup to the election by axing popular support for hard-working parents.

A blacklist of public sector IT contractors should be drawn up to identify those whose past pledges of value for money were just spin, a Labour MP is urging.

The taxman is making his first appearance on YouTube today in an attempt to increase pressure on savers who have not declared their offshore accounts.

More than half of Britons have not made a will, meaning they have no say in who their assets will be passed to when they die, a survey suggests.