Frequently Asked Questions About Limited Companies

SAIL can take over the administration for you. Speak to the SAIL team for help.

Yes it does. Your SAIL Account Manager will advise you of the level of salary which is most appropriate for your circumstances.

Except for mileage you must have a receipt for everything. You should also keep all receipts for six years in case of any future audit by HMRC.

If you elect a package in which SAIL acts as your company secretary and registered office then the registered address will be that of SAIL International.

We form your company for you, and assist in opening a business bank account if needed. We will also register you and your company with all of the relevant government bodies. Your SAIL Online Portal will be registered and your welcome pack sent to you with all the details you need. Most importantly, your SAIL Account Manager will be on hand to help with any queries.

Corporation tax is payable on business profits. It is not impacted by the level of dividends which are taxed at different rates in your personal capacity depending on whether you are a higher or basic rate taxpayer.

There is a minimum term of eight months.

If you set up the limited company and then decide not to use our service, then there is a minimum charge of 6 weeks as we cannot use the company for anyone else.

When you submit an invoice to SAIL, you will receive a Client Advice statement which details your PAYE & NI, corporation tax and VAT liabilities.

SAIL will also notify you when you need to pay these taxes to HMRC.

You can claim for expenses that are incurred for performing your contract provided they are business related. These include, but are not limited to travel, accommodation, food and drink, stationery, equipment, training and professional fees.

For food and drink the suggested levels are:

• If you are away from home for more than 5 hours you can claim £5 if you incur the cost of one meal
• If you are away from home for more than 10 hours you can claim £10 if you incur the cost of a meal or meals.

For more information, visit the HMRC website.

Mileage

Business mileage is mileage you travel doing your job. It can include travel to a temporary work place but it doesn’t include:

• normal travel between home (or anywhere that is not a workplace) and your permanent workplace
• private travel

You can currently claim 45p per mile for the first 10,000 business miles you travel in your car each year and then 25p per mile after that. This mileage includes travelling to and from home and your temporary locations and between different sites.

You can also claim 24p per mile on a motorcycle, and 20p per mile on a bicycle. Both have no cap on mileage. For more information, visit the HMRC website.

Training and Professional Fees

If the training or qualification is a requirement for your assignment or professional status then you can normally claim for it. Non-work related qualifications are not considered a legitimate business expense.

The checklist of the HMRC approved organisations. You must be able to provide evidence you actually incurred the expenses if HM Revenue and Customs ever asked you. This is usually achieved by keeping receipts for six (6) years.

When you submit your accounting data through the SAIL Online Portal you will receive an invoice via email which you forward to your agency or end client for payment. This invoice can also be downloaded directly from our website.

There are very few obligations to SAIL. We simply ask that you:

• Complete your time sheet and expense claim form so we can prepare your accounting records.
• Send us a copy of your business bank statements.
• Respond to letters and emails from us.
• Pay our fees each period and do so in a timely manner.

IR35 is tax legislation that affects all contractors and has to be given serious consideration. The legislation applies to each contract you engage upon rather than to your actual company, so IR35 may apply to one contract but not the next.

The aim of the IR35 legislation is to stop people leaving full time employment and then returning to the same job immediately as a contractor and working through their own Limited company to reduce their tax liability and their NI payments.

How can IR35 impact you?
If your contract replicates a permanent employee contract with regard to the same level of risk, responsibility, liability and control as a permanent employee, then you would probably be classed as inside or caught by IR35 legislation.

This means you will have to pay full tax and full National Insurance and reduced expenses. This is because HMRC believe that you are not taking the financial risks nor do you have the same level of control as a director of your own limited company, and therefore should be treated as an employee.

HMRC have twelve tests to consider when deciding on whether a contractor is within or outside the IR35 rules. However, the three key areas to consider are:

1. Control: This relates to things such as start and finish times, when you should work and contract duration. It is crucial to be able to display self-control within the projects that you work.
2. Substitution: This relates to whether it is the contractor who is employed, or whether you or the client can substitute someone should the need arise.
3. Mutuality of Obligation: This asks if the contractor is exclusive to the clients or can take on work from other clients. It also states that neither client nor contractor should have an obligation to offer or accept more work if they choose.

For further information, you should contact HMRC or review their guidance PDF.