David Davies, of umbrella company Bar 2, was kind enough to supply this guide to tax returns for contractors.

It is normally about this time of year when we start to get a number of enquiries from employees who are worried about completing their self-assessment tax returns.

The first thing to consider is which method of payment you have been using?

If you are using the Umbrella service, then you are an employee of the umbrella company. As such, all the necessary income tax and National Insurance would have been deducted at the time when your payment was processed, however, if you have been sent a self-assessment tax return you will still need to complete it. On the other hand, if you have been paid via CIS, then you are a self-employed individual and as such you have a legal obligation to complete a self-assessment return and if you haven’t received one you need to call HMRC and request that they send you one.

Umbrella employees

Ordinarily, as an employee, you should not receive a request from HMRC to complete a self-assessment and there should be no need to complete a return if you have worked exclusively through one umbrella company this tax year.  If you have received one and the Umbrella Income was your only income you can request that HMRC remove you from the self-assessment system. Because all legitimate umbrellas are based on the PAYE system, all necessary tax and NI deductions should have been made from every payment processed on your behalf, and these deductions have been calculated on the basis of the tax code you have provided via a P45 from your previous employer, or a P46 form if one has not been issued.

The situation becomes slightly more complicated if you have additional income from another source, for example you also run your own business; do some work on a self-employed basis; have income from property or investments etc.  In such cases, a self-assessment return may need to be completed and any earnings that an umbrella have processed on your behalf should be recorded on a supplementary employment page. You should refer to HMRC’s guide How to fill in your tax return for more details.

When you complete the supplementary “Employment” page, you simply need to detail your gross earnings and tax deducted by your umbrella for the relevant tax year. If your employment with the Umbrella company ended before 5^th April 2011, these figures can be obtained from the P45 issued to you. If you were still employed by the Umbrella company on 5^th April 2011, these figures will be on the P60 issued earlier this year.

When completing the return, there is no need to do anything with the expenses you have claimed via your umbrella company. The Section from the supplementary “Employment”page headed “benefits from your Employment – use your P11D” can be ignored in respect of expenses which you have submitted to us for processing. This section of the return relates only to expenses which are taxable. There is no need to detail any travel-related or subsistence-related expenses on the form as the umbrella company you use, (your employer) have already correctly processed these on your behalf.

CIS subcontractors

As a self-employed subcontractor, you are obliged to submit a self-assessment tax return each year.

The tax year runs from 6^th April to 5^th April and as a self-employed subcontractor you will need to submit your completed return by 31^st October if you are completing a paper return, or by 31^st January if you are submitting your return online which is far quicker and simpler.

Self-employed individuals pay their tax in three instalments. The first payment is “on account” by 31^st January and is usually half of the previous year’s tax bill. A second payment, usually the same amount as the January payment, is due by 31^st July. Finally, on 31^st January the following year you must make a balancing payment, calculated from your actual profits for the year.

Submitting a self-employment return is also vitally important if you are to claim tax relief on any expenses you have incurred during the year – for example the travel to and from your workplace, replacement tools etc.

In summary

• You should not have to complete a self-assessment tax return if your only income for the tax year in question was via an umbrella company although if you have been sent one you will need to submit it
• As an umbrella employee, if you are required to complete a self-assessment tax return for other income, your earnings with the umbrella should be declared on a supplementary employment page
• You do not need to declare expenses claimed via the Umbrella company
• If you are a CIS subcontractor then you are obliged to complete a self-assessment tax return each year, if you don’t have one you must ask for one.

A major change for many will be the decision to extend the State retirement age to 67. This means that for everyone who was born after 1960, your working life will be longer. Though not coming into effect until 2026, allowing peace of mind for those due to retire in the next 14 years, you’ll have to factor an extended working life into your plans if you’re to be affected by the changes. This could have significant consequences if you run your own business, with the extension in working years meaning you have to make suitable alterations to business projections. However, if you’ve already retired and claiming a pension then the outlook for 2012 look positive, with next April noting a £5.30 rise per week, offering the older generation £107.45 pre tax pension income per week.

Whilst the pensions market has noted a significant change, the housing market continues to enjoy the 0.5per cent base rate set by the Bank of England 32 months ago. For almost 10m predicted homebuyers, mortgages will note less interest, allowing you to keep more of your monthly income. Compared to four years ago, the average individual spends less than a third of their monthly income on housing loans instead of half, allowing many British individuals to be better off and have more savings in the bank.

Additional positive news has come if you’re looking to gain a foot on the property ladder as 50% discounts will become available for the ‘Right to Buy’ scheme, allowing you the possibility to buy social housing at reduced prices. The proceeds of these sales will then be put towards building new homes in an attempt to bolster the construction and housing markets in 2012, providing more suitable locations for residents to live.

With the government also assessing the need to encourage small businesses, they have also introduced a new ‘no fault dismissal’ process. If you have a company with less than ten staff members it will now be easier to dismiss staff, allowing you to grow your business as you see fit. In addition, you may see the benefits of a new investment scheme whereupon there will be a 50% income tax relief for investors putting money into small and start-up companies. More relief for contractors and business ventures will be the personal tax allowance increase to £8,105, allowing those running small businesses more income without heavy tax rates set upon them.

Whilst the government have no doubt taken steps to create more income to pay off debt, there is positive movement for individuals to further both their business and personal lives and, with more opportunities for purchasing homes and growing small companies, 2012 may be brighter year for all.

It’s a myth that construction recruitment grinds to a halt during December. The festive period has always traditionally been a busy period and here at Project Resource we have found that December/January is a busy trading period, which is often down to the proactive mentality of our consultants.

The first quarter of a new year is a busy period for many contractors as it’s the last quarter in their financial calendar, thus needing to complete projects and tie up accounts for their year end. Often this leads to a state of urgency amongst our clients.

What does this mean for us?

Fill gaps in manager’s diaries: This is an excellent time to arrange client visits and win business for the year ahead or tie down interviews for January starts.

Increase in contract recruitment: Mangers will often hire support staff over the festive period to help cope with peaks in work; this often extends into the New Year and can lead to permanent placements.

Budgeting for the new financial period: Companies will often have budgets agreed and will want to get ahead of their competitors to secure the best permanent candidates on the market.

An influx of job seekers – New Year, new job..!!

How can jobseekers benefits from our work?

Websites: This is an excellent opportunity to update your CV and register as a job seeker on the Project Resource website, visit to search for the latest live jobs in your area or set up job alerts to receive new jobs automatically by email.

Maximise use of social media: Make sure you are connected to your relevant Project Resource consultant and a member of the Project Resource Group on LinkedIn. We also have a Twitter and Facebook page so follow or like us for the latest vacancy updates and industry news.

Pick up the phone: We have recently expanded with two new offices opened this year in Manchester and London in addition to our existing offices in Reading and Birmingham. Please call and find out who the relevant consultant is in your area and work together to find that perfect job.

How does this benefit Employers?

With an extensive network of candidates which is growing daily, especially over the festive period, we can supply the best jobseekers on the market for our core professions of Quantity Surveying & Cost Management, Planning & Project Controls and Design Management.

We are able to supply contract or interim staff to cover shortfall of staff over the festive period or for increased workload in January.

We are looking forward to a busy 2012 and would like to hear from job seekers or employers that would can benefit from our expertise. Please contact your nearest regional office and speak to a dedicated consultant.

To help us answer this question we turned to the contractor services or umbrella companies that we work in partnership with, as they are experts in understanding and advising contractors on the best payment option to suit the indivdual.

In previous posts we featured the response of Bar2 who shed some interesting light on the subject. Today’s post comes to us from OrangeGenie, another of the contractor service companies we work in partnership with. They have provided this excellent matrix to help contractors compare and contrast the various options available to them, trading options are listed along the top and key considerations down the side:

It has been reported that there has been an increased take up of registrations with
Personal Service Companies in recent weeks. Some agencies, and end-client “hirers”, are now saying they prefer – and in some cases insist, that contractors use their own limited companies rather than using umbrellas. The rationale behind this is that umbrellas are most definitely caught by AWR legislation but the perception is that PSCs are generally outside of scope – but is that an accurate summary of the situation? Quite simply the guidance is not 100% clear on whether using a PSC takes you out of scope of AWR and the picture will inevitably become clearer in the New Year as the first challenges under the legislation and tribunals start to materialise.

In order to genuinely be outside of the scope of AWR, a PSC worker has to pass the self-employment tests contained in Regulation 3 of the AWR. There will be a large number of

PSCs that probably won’t pass this test, however most of these workers are unlikely to bring any claim for breach of AWR as they will claim they are outside of IR35, and bringing a claim under AWR may risk this status. It is likely that any claim brought under AWR would cost them more in tax than they would stand to gain from a successful AWR claim.

In the professional services sector where there is often a genuine choice for contractors between PSCs and umbrellas, and where agency workers generally earn more than PAYE equivalents in any case, AWR compliance will be relatively straightforward and use of the umbrella solution remains a perfectly viable and practical option for contractors.

The planned changes are expected to deliver an additional 200,000 homes as well as 400,000 construction jobs.

Under the scheme council tenants would receive further discounts in order to help them buy their homes. The government would then reinject this cash into the housing sector by building another home under the affordable rent model.

It is expected that these changed, along with the coalitions build now pay later scheme which allows housing developers to build on land and then pay for it once the house has sold, will help breath some much needed life back into the industry.

Mr. Cameron said “The housing market isn’t working. Why isn’t it working? Because of the debt crisis, the banks are bunged up with debt, so the banks aren’t lending, the builders aren’t building and the buyers can’t buy because they can’t get the mortgages that they need.

“So this government isn’t just sitting back, we are rolling up our sleeves and saying right, we’re going to make over government land to house-builders on the basis that they can build now and pay for the land when they sell the homes.”

“That could build 100,000 homes, 200,000 jobs in our economy. We’re not stopping there, we’re saying let’s bring back the right to buy your council house, with proper discounts that Labour got rid of, and let’s use that money, as people choose to buy their council home, let’s use that money to build homes for rent, for low rents for families that are currently stuck on housing lists.”

The government is also expected to release thousands of acres of public land and make it available for housing development. This comes amidst concern from environmental groups as to the safety of the green belt under the new National Planning Policy Framework. The Prime Minister was sympathetic to their views but emphasised that:

“let’s get the balance right. The proportion of England that is currently built up is 9%. Yes, 9%.”

“There are businesses out there desperate to expand, to hire thousands of people – but they’re stuck in the mud of our planning system.”

We at Project Resource were delighted by the PM’s announcement. Faster, more straightforward approval and funding for housing projects will hopefully get many job seekers, who have been unable to find work in their chosen sector since the recession, back to work which can only be good for the economy, the country as a whole and, of course, for us as a business.

To read more of the latest construction, civil engineering or infrastructure news, vist our website.

To help us answer this question we turned to the contractor services or umbrella companies that we work in partnership with, as they are experts in understanding and advising contractors on the best payment option to suit the indivdual.

The first response we wanted to share with you comes from Bar2:

If you are new to contracting, then one of the first decisions you need to make is what payment option will suit you best?  When you are directly engaged in a permanent role, you have just one payment option available to you; i.e PAYE, where the whole of your income is subject to tax and NI deductions. The situation changes when you enter the world of contracting, rather than having just one choice of payment options, you are faced with choosing between three options which are available to you;

• Traditional agency PAYE
• Limited company (Personal Service Company)
• Umbrella company

Of the three choices available, traditional agency PAYE is generally the least favoured option and the rates of pay offered by agencies for contractors wishing to be engaged in this way are generally up to 25% lower than comparable limited company pay rates. As a result, most contractors tend to lean towards the Personal Service Company (PSC) or Umbrella company options, both of which offer the potential of increasing net take home pay.

So what should a contractor bear in mind before deciding which option to choose?

Personal Service Company

The PSC option is generally favoured by experienced contractors, who intend to undertake contract roles on a long-term basis. Typically they will earn in the region of £20+ per hour; will be in a professional or skilled trade; and will not mind dealing with all the additional paperwork and accounts that go hand-in-hand with running your own business. It is without doubt the most tax-efficient method of pay and allows the greatest percentage retention of income, but the tax benefits that can be gained are wholly dependent on whether or not the contract falls inside or outside of IR35 legislation. Contractors falling outside of IR35 will normally be better off with a PSC. Those falling inside IR35 will generally be better off with the Umbrella solution.

A change in legislation known as the Managed Service Company legislation back in 2007 means that the PSC option is no longer a service that Bar 2 can provide, however, it remains a valid option for many contractors and should you decide this is the best option for you, then it is worth contacting a reputable accountancy practice for further advice.

Umbrella company

An umbrella company is a limited company solution for contractors which is based on the PAYE system, but allows you to claim tax relief by offsetting genuinely incurred employment expenses and getting these processed as a tax free element of your gross pay. Because the structure is a fully managed service, it can offer many advantages for anyone new to contracting:

• Because umbrellas are a PAYE based service, all tax and NI deductions are made at source from every payment meaning there will be no unexpected tax liabilities to worry about at a later date and no need to engage an accountant or to complete self-assessment tax returns at the end of the financial year.
• The service is totally flexible and there are no setting up or winding down costs. All umbrella companies will work on a no work, no fee basis.
• Registration is simple and immediate – unlike PSCs which are generally more involved and complex.
• The umbrella solution can be used with any agency that finds you work.
• Under the umbrella, you are an employee of the umbrella company operating under an overarching contract of employment and as such you enjoy full employment rights such as statutory sick pay, holiday pay etc.
• Because the umbrella is an employment-based service, there is no need to be concerned by IR35 as these rules do not apply.
• The umbrella company will have all the necessary insurances demanded by your agency already in place.
• Since you are able to claim tax relief on expenses incurred, you can typically expect a net increase in pay of around 15% over the PAYE equivalent.

So there you have it.  We thank David Davies of Bar2 for his input, please be sure to mention Project Resource if you speak with David, who can be called on 01923-690910.  Alternatively we are here to help you, so feel free to either ask us questions in the comments below or speak with our experienced recruitment consultants.

In his speech at the Construction Procurement Conference, Mr Maude outlined the governments commitment to the investment saying that full details on the figures as well as where and how the money would be invested would be released this Autumn.

It is expected that the biggest beneficiaries of this pledge will include Education, who are expected to receive £4.6bn and highways who will receive £4.3bn including £1.3bn for maintenance and a further £1.7bn for new projects.

In addition, health projects are expecting to see up to £2.2.bn whilst the Home and Communities agency are hoping for £4.3bn to go towards repair work and new construction projects.

Mr Maude said: “The Government’s construction strategy is reducing costs by up to 20% by reforming the way we procure construction projects across all sectors. However, we are still investing billions of pounds annually; with the same money we will procure more schools, hospitals, courts and prisons. Despite an incredibly difficult economic climate we are investing in and prioritizing our construction industry.”

“The Government and the construction industry have a shared obligation to cut waste and find new and better ways of doing business. This is especially important when we are talking about creating first class, modern, fully functioning public service delivery buildings like hospitals and schools.”

At Project Resource we are extremely excited by this planned investment. It is our hope that the increase in public funding, particularly in areas such as healthcare and education will help to increase construction jobs, civil engineering jobs and infrastructure jobs, particularly after government spending cut backs like the scrapping of the BSF scheme.

Full details of the governments strategy can be read here:

http://www.cabinetoffice.gov.uk/resource-library/government-construction-strategy

This is often a hard question to answer as different employers often have different opinions as to what is most important when they view CVs; for some it’s the most recently held position, especially if they want to hire someone who can hit the ground running, in other cases they may be most interested in your time with your previous employer.

What do you think an employer looks for first when reviewing your CV? We’d love to hear your thoughts and would invite you to take part in our poll on the left hand side of this page or click here.

For more career advice, please visit our website where you can register for job alerts to receive email updates when we register jobs that match your exact criteria.

This time around I wanted to talk to you about Facebook. Whilst many of us use Facebook as part of our personal lives it offers some interesting opportunities for the serious job seeker. Here are some of my top tips for making Facebook an effective job seeker’s tool:

1) Remember who’s looking – The first, and arguably most important thing to remember, is that Facebook is a public website. Anything you put on your profile, especially your pictures, can be viewed by a prospective employer. Make sure that anything you put online is fit for consumption by a potential employer and reflects you in your best and most professional light.

2) Make sure you fill out every relevant part of your CV – Whilst an employer might be interested in your favorite films and what you like to eat, odds are a recruiter wont be. They will however be very interested in your educational and employment backgrounds, so make sure you complete these thoroughly. Ask yourself ‘what sort of person is best suited to do the job I want to get’ and then present yourself as that person.

3) Make sure you’re you – Make sure your unique personality comes across on each and every one of your pages, make sure you’re on point and that you have all the relevant information, but remember that this is a Facebook profile, not a CV. People are expecting a bit more energy and individuality so don’t be afraid to put your own spin on things.

4) Shout your successes – Don’t be afraid to include as much about your successes as you can, whether they’re educational, professional or personal achievements like sporting. Include photos if you have them and add comments explaining what you were doing and how you got there; this not only helps build a strong case for you as an employee, it also personalizes you further.

5) Put your network to work – If you’re looking for work, say so. Post it on your wall and keep doing so on a regular basis. Facebook’s biggest strength as a job seeking tool is your social network. It’s a fact that people tend to have at least some friends in their industry, who will have friends in their industry, who will also have friends in their industry. Saying that you’re looking for work and what you’re looking for will get people to notice you and hopefully pass on your details to the recruiters within their organizations.

6) Show your knowledge – Get involved in conversations, post comments, links and pictures on your wall. Make it obvious to anyone looking that you are both knowledgeable and passionate about your industry.

7) Expand your network – Do everything you can to expand your network, from adding a link to your Facebook page to your email signature to performing searches on Facebook for people or companies you want to work for and with. Remember that almost everyone will have some of their work colleagues in their friends list, so if a friend of yours works for a company you would like to work for, go through their friends list and look for colleagues of their that you can become friends with, engage with and hopefully demonstrate your potential to. If you get involved in a conversation or a group, be sure to add the other participants to your friends list and keep on engaging with them!

Whilst Facebook certainly isn’t a guaranteed success for job seekers it has great potential in that it makes people aware of you, what you can do and what you’re looking for. In the same way that you would look to your friends to help you find work in times of need, look to your greater social network!

I hope you’ve found this information useful and are able to put it to good use making Facebook an integral part of your job hunting strategy.