Frequently Asked Questions
Payroll Information and FAQ
What is an umbrella payroll company?
An umbrella payroll company acts as an employer to contractors and freelances who usually work under temporary contracts. In simple terms, an umbrella payroll company enables you to have the freedom of contracting and be paid without having to incur the cost and responsibility of setting up and running your own limited company. Joining MSL Forza is a safe, reliable and fully HMRC-compliant employment. At a stroke we take away the stresses that you would normally face in running your own company, by dealing on your behalf with all income tax and National Insurance calculations, invoicing, credit control, expenses etc.
When making your decision on which umbrella payroll company to join, you should ensure that they are fully compliant with tax legislation and HMRC’s regulations and only agree to claim legitimate business expenses for you. They should also provide you with the following:
- An overarching employment contract, which entitles you to full statutory employment rights
- Automatic cover through our insurance policies for professional indemnity and both employer’s and public liability
- MSL Forza-raised invoices from the timesheets you provide and submission of them to your client/agency
- Relationships based on trust and credibility established with your client/agency so that we can collect your money promptly and so reduce the possibility of overdue payments to you
- Ensuring that your expense claims comply with HMRC regulations. We then deduct allowable, legitimate expenses from your gross pay, thus increasing your net take-home pay
- Processing the payments received from clients/agencies, ensuring that the correct income tax and both employer’s and employee’s NICs are deducted in line with HMRC legislation
- SMS text confirmation that your net pay has been paid into your bank account
- Full online access to your payslips, so that you have a comprehensive breakdown of all payments and deductions
- No administrative burden associated with running your own limited company
- Completion and submission of comprehensive VAT and tax computations to HMRC on your behalf and payment of all sums due
- Liaison with HMRC and all statutory bodies on your behalf to ensure that we are always fully compliant with the latest legislation and regulations
- A cost-effective way of utilising the tax advantages and expense dispensations available to contractors, following the introduction of IR35 legislation
- A fixed fee to us: NO hidden charges; you only pay us when you work.
There are many umbrella companies to choose from, many of which look slick and professional, but unfortunately aren’t. Our advice to you, when considering which one to join, is if you are being promised something that sounds too good to be true, then it probably is. The taxman is ever-vigilant and can soon claw back your hard earned cash, plus interest and even penalties, if you have claimed for something you shouldn’t!!
What is an overarching contract?
This is your contract of employment with MSL Forza Ltd. It has been written with the expectation that you will be working on various contracts whilst employed by us. The contract allows your home to be your permanent workplace, from where you can seek out and sign up for new contracts. It allows you to claim legitimate business travel expenses from your home to your temporary work place.
Do you charge for set-up?
No, there is no set-up fee with MSL Forza. You only get charged when you are working.
Do I receive tax relief on your fees?
Yes, you automatically receive tax relief on our fees and the good news is you do not have to claim for them on your expense form.
What if I do not have a P45?
If you have not been given a P45 by a previous employer we can either send you a P46 to complete or you can download a P46 from our website. Send it back to us and we will allocate the relevant tax code according to which statement you sign. Unfortunately we may have to put you on an emergency tax code whilst awaiting notification of your correct code from HMRC. This means you may have to pay a little extra tax before we receive the new notification, but it is recoverable.
Can I claim expenses to reduce my tax liability?
Yes, you can, but only if you have genuinely incurred them in the first place. Legitimate business expenses have to be incurred wholly, exclusively and necessarily in the performance of the duties of your employment. You must keep receipts for all expenses incurred, not least because the taxman has the legal right to audit your receipts at any time!
What is a dispensation?
An employer (umbrella payroll company) can apply to HMRC for a dispensation. If granted, the dispensation allows the employer to reduce their administrative burden by not having to complete a form P11D showing all reimbursed legitimate expenses, at the tax year end. However, this is absolutely not a licence to encourage contractors to claim for expenses that have not been incurred. Only fully-compliant umbrella payroll companies who just allow legitimate business expenses can benefit from such a dispensation. You may decide to work for a company that actually abuses its dispensation by encouraging you to increase your take home pay through non-genuine expense claims. If so, you need to be aware that if the taxman investigates YOU – because it is you they will audit, not the umbrella company – then you must be able to back up your claims with bona fide receipts.
How will I pay my Tax and NI?
MSL Forza will calculate your tax and employer’s and employee’s NICs. We will then deduct these amounts from your gross taxable pay and forward them to HMRC on your behalf.
How often will I be paid?
This will depend on what you negotiate with your agency/client; it will either be weekly or monthly.
If I have more than one contract how often will I be paid?
Depending on your chosen payment frequency, i.e. weekly/monthly, if we receive cleared funds from your multiple sources simultaneously, we will aggregate them and calculate your tax and National Insurance liabilities from the total. We will NOT process one payment one week and hold on to your other payments for the next week.
How will I know that I have been paid?
We will send you a SMS text as soon as your payment has been processed and electronically transferred to your bank account.
Am I entitled to statutory payments?
Yes, under your contract of employment, you will receive the usual UK employee’s rights to Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay and Statutory Sick Pay, provided you meet the qualifying criteria. Please contact your account manager, who will be more than happy to give you further information on these topics.
Am I tied to your umbrella company?
No, you can leave us at any time and you will not be charged a leaving fee. If you do decide to leave us, we will invoice your agency for your final payment, calculate your tax and National Insurance deductions and transfer your net pay into your bank account. We will also issue you with your P45. Of course, we hope you will find yourself delighted with our service, like our other contractors and won’t want to leave us, but if you do rest assured we won’t hold it against you and will welcome you back at any time.
Do you have an online Portal?
We use HMRC-accredited payroll software via a secure online portal. You can use it to enter your timesheets and expenses online, upload copies of your receipts, print off your payslips, track your payments and more. It’s fast and convenient and helps us ensure you get paid promptly and correctly.
Will I be covered by insurance?
Yes, under your contract of employment with us, you will automatically receive both employer’s and public liability insurance, together with professional indemnity insurance. We really do take care of everything at MSL Forza.
Do I still get charged if I don’t work?
No – it couldn’t be easier: you only pay us our fee when you work. Some umbrella companies will charge you a percentage of what you earn but at MSL Forza, we only take a low set fee, depending on whether you choose to be paid weekly or monthly.
What is IR35?
In the 1990s, it was common practice for individuals who had been employed via PAYE to revert to being contractors by working through their own limited companies or personal service companies, to avoid paying excessive amounts of tax and National Insurance. Under these arrangements a contractor was only really a contractor in name as they were actually virtual employees: same job, same employer, same rules etc. They would be paid as a director or shareholder by receiving dividends. The Government finally put a stop to this way of working by introducing the IR35 legislation.
If you join MSL Forza – an umbrella payroll company – you will not have to worry about IR35 as you will be employed by us and be taxed under the PAYE system, while still enjoying the financial benefits of being an independent contractor.
Can I use your umbrella company for the term of just one contract, as I am currently running my own limited company, but the agency that placed me will only allow me to use an umbrella company?
Yes, you can. The good news is you can sign up and use our services for just this contract, while still running your own limited company for any other contracts you have. Just remember that you will have to declare all of your income on your self-assessment tax return at the end of the tax year.