A-Z of Terms

Accommodation

To claim for accommodation you must retain all the relevant receipts from either the Hotel or B&B. You can not claim for staying with friends. If you’re claiming rental cost for accommodation, you will need the original, signed rental agreement. This means you are already renting or owning a property and are renting a 2nd property to facilitate your contract. You will, however, need to state that you are claiming only for the working week (5 out of 7 days).

BACS

This stands for Banker’s Automated Clearing Services. This is a payment that the bank will process and normally clears within 2 working days.

Company Director Disqualification

You can be banned (‘disqualified’) from being a company director if you don’t meet your legal responsibilities.

Anyone can report a company director’s conduct as being ‘unfit’.

‘Unfit conduct’ includes:

  • allowing a company to continue trading when it can’t pay its debts
  • not keeping proper company accounting records
  • not sending accounts and returns to Companies House
  • not paying tax owed by the company
  • using company money or assets for personal benefit

Learn more

CRB Check

This stands for Criminal Records Bureau. People who work in teaching, healthcare, the social services, and professions that involve contact with children and elderly people are required by law to have a CRB check. This check ensures they do not have a criminal record and are not listed on the sex offenders register. The cost of the check can be offset as an expense.

Dispensation

A set amount offered to an umbrella company by HMRC to reduce administration of expenses, subject to audit and assessment.

Employee Benefit Trust, EBT

An Employee Benefit Trust is a scheme that enables remuneration and other benefits that are indirectly paid to employees. The trust was designed to minimise the tax liabilities of employees and employers.

Gross Pay

This refers to the amount of money you earn before any deductions have been subtracted in regards to income tax and National Insurance.

HMRC

The acronym means Her Majesty’s Revenue & Customs. It is a department of the British Government responsible for the collection of taxes. The HMRC also set the guidelines for the calculation of taxes and National Insurance contributions.

IR35

The legislation put in place by HMRC in April 2000, as part of the Finance Act, aimed at addressing the £900 million loophole in the tax law, allowing contractors and freelancers to avoid large amounts of tax and National Insurance by using a personal service or composite company.

Journal, Manuals and Text Books

All are eligible to be claimed on expenses, as long as they are pertinent to work or contact.

Legislation

Terminology for any and all laws passed by an official body or organisation.

Managed Service Company, MSC

Managed Service Companies (MSCs) are composite company structures. Within these structures, individual contractors will be listed as the shareholders of the company, but have no participation in the management of the company. The Company is managed by a service provider. A contractor would then receive a % of dividend and salary payments.

Net Pay

This is the term for the amount of money you receive once Tax and National Insurance contributions are deducted.

National Insurance Contributions, NIC

National Insurance (NI) contribution system consists of mandatory payments paid by employees and employers on earnings, and by employers on certain benefits-in-kind provided to employees.

One Click Umbrella

Probably the best umbrella company around, you really should join up! They’re fast, efficient and help you get the most from your pay.

PAYE

This stands for Pay As You Earn, a method of paying tax. The employer deducts tax from the employee’s wages before paying the wages to the employee. The tax is then paid in portions over the whole year each time the employee is paid, and it is the responsibility of the employer to deduct rather than the employee. The amount of PAYE contributions is determined by the employee’s personal tax code.

P45 and P60

P45 - A form issued by your last/previous employer to both yourself and HMRC which details your earnings to date in the financial year, in addition to your current tax code.

P60 - A form issued In the UK and Ireland, which is a statement that records the tax and National Insurance paid to HMRC in the previous financial year.

Rechargeable Expenses

These are the agreed expenses included in the contract terms that the client will reimburse to the contractor, and are paid along with the time stated on an invoice.

Subsistance

This relates to expense claims for travel to and from any external place of work and living claims such as food and drink.

Tax Codes

Your tax code can be found on a P45 and P60. Multiplying the number in your tax code by ten will give you the total amount of income you are able to accrue in a year before becoming liable to pay tax.

Umbrella Company

An umbrella company is a company that is set up to act as an employer to any agency contractor worker, who works under a fixed-term contract, usually through a Recruitment Agency.

Undischarged Bankrupt

An undischarged bankrupt is someone who is still going through the process of bankruptcy, which usually takes a year. They'll have certain restrictions placed on them, such as:

  • not being able to borrow more than £500 without informing the lender of their bankruptcy
  • not being able to hold certain positions in public office or act as a company director

Learn more

VAT

This stands for Value Added Tax, and is a tax that is added to various goods, items and services (currently at 20%).

Visas and/or Permits

Issued by the UK border Authority, these prove an individual’s eligibility and right to work within the UK/Europe.