Always efficient quick and well organised very efficient whenever I have had to phone - answer all queries quickly and easy
David
The Gabem Glossary
Authorised and Regulated by the Financial Services Authority
Quoting from the FSA website: “Once firms are regulated by us, we require them to meet the standards set out in our Handbook of Rules and Guidance and to supply us with information, so that we can monitor their business.” Gabem has been Authorised and Regulated for over 2 years now allowing us to provide financial services and the insurance we offer.
Back up Site
We have invested in an alternate site, which is updated live with all data from here at Waterside. It can be manned within 30 minutes and is there to make sure that you don’t experience any disruption in your payments, should the worst happen. We also have backup generators at both sites in case of power outages.
CIS
The Construction Industry Scheme is the taxation scheme which sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry.
Gabem holds gross payment status under the scheme (this replaced the old CIS5 card), meaning that your agency or company do not have to make a 20% tax deduction at source (as they would have to under standard deducted status, formerly CIS4) This appeals to them as it reduces their administrative burden.
Composite Company
Composite companies are what Gabem started out with but we, and the rest of the industry, have moved on as laws and regulations changed. You might find people still referring to us as a composite company by mistake, even though we stopped creating composite companies years ago.
A composite company was a system where a number of people were placed within the same limited company and were paid a portion of their income as a dividend on a share, saving them tax, national insurance and allowing them to claim expenses. This system is no longer profitable as it falls within last year's MSC legislation and is a potential IR35 risk
Contracted Pay
When you work through a Gabem Umbrella Company you are contracted to work at the National Minimum Wage. You receive additional payments as profit related pay.
Dispensation
HMRC may grant dispensations for certain catagories of expenses. This means that the umbrella company does not need to declare these expenses on a P11D. It doesn't mean that you can claim expenses without appropriate receipts.
Expenses
Expenses are the main way you benefit from a Gabem Umbrella Company; they are reimbursed from your Gabem Umbrella Company and form part of it's business costs.
Any expenses must be solely and necessarily incurred for the performance of your duties as per HMRC guidelines. Tax laws are very strict in defining which expenses can be claimed. The total amount of the expenses you claim (not including mileage which does not need to be shown) will be shown on your form P11D. We send this to the HMRC on your behalf at the end of each tax year. If the HMRC chose to review your individual case and rule that some of the expenses claimed were not legitimate, you would become personally liable for any tax due as a result.
Gumbo
This is an internal term occasionally used by Gabem employees to refer fondly to the Gabem Umbrella system that we introduced in 2007. It was never intended to be used outside the company.
HMRC
Her Majesty’s Revenue and Customs. This is what once was the Inland Revenue. This was formed as the merger of the Inland Revenue and Customs & Excise. Their new website is at: www.hmrc.gov.uk
Holiday Pay
All companies must provide paid holiday for 24 days per year including Bank Holidays. This must be pro-rata across the year (ie if you worked six months, you get 12 days). Your umbrella company will reserve enough money to pay holiday pay according to the hours you've worked. Holiday pay is reserved at minimum wage, your contracted pay rate (ie the minimum wage).
Insurance
Accident Insurance
Our accident insurance is one of the most competitive in the market at only £2.50 per week. The payouts are excellent if you are off work for more than 15 days and the exclusions are extremely reasonable. We like to be able to reassure any recruitment agency or company that contracts with us for our client’s (your) services that all Gabem operatives have accident insurance as this is a really big selling point for you and makes you more attractive to a prospective client. Of course, if you have your own insurance, we are happy to sign you out of ours as long as we have been able to verify that it covers you for the same type of accidents as ours.
We also offer an optional 24 hour cover so you can be covered away from work as well.
Employers Liability Insurance
For employees we pay this – it’s at no cost to you. This means that the people you go and work for will be happy as their insurance will be kept lower and they will be safe in the knowledge that, should the worst happen, they will be able to claim on our insurance. Unfortunately offshore workers, miners and power linesmen are excluded from this.
Professional Indemnity Insurance
We can secure this insurance for you – we have actually already got it in place for those professions we and our insurers deem to be in need of it. So if you are responsible for decision making which can then impact on others (such as a surveyor) you have no worries as you are safe and fully insured with us.
Public Liability Insurance
For employees this is paid for by us – you don’t have to worry and can relax knowing that if you do cause an accident that affects others, our insurance company will be right onto it. Unfortunately offshore workers, miners and power linesmen are excluded from this.
IR35
The IR35 legislation was designed for HMRC to determine, through a series of questions, whether a temporary worker is deemed to be an employee of the client due to the nature of the working relationship or not. This has historically proved a very difficult piece of legislation to enforce. However, you can be fully assured that if you are being paid through the Gabem Umbrella Company, the basis of your engagement is already one of employment, with all your income paid as a mixture of salary and allowable expenses. In other words, if all your earnings are through Gabem, all your PAYE and NIC is paid according to HMRC rules, therefore you will minimise the chance that you have an additional tax bill to pay, or your employment status to prove.
Limited Company
This is the type of company that forms the basis of the umbrella company system. It has limited liability for the directors or shareholders. It is this company that contracts with a second party for the provision of services (here at Gabem we have a contracts team that sorts all this out for you).
Managed Service Company
The MSC is responsible for the operation of PAYE and NIC with the possibility of unpaid debt of the MSC being transferred to third parties - ie the MSC provider (MSCP), agencies and end users.
Up until April 2007, contractors had been able to legitimately reduce their tax burden by using a corporate structure where they took the majority of their income as a dividend, thereby minimizing their taxation and NIC. In 2007, HMRC brought in the MSC legislation which in essence was designed to stop contractors taking advantage of a corporate structure when they were not involved in the day to day management and running of that company. HMRC argued that this was a huge risk to the exchequer as it was missing out on what it perceived was the correct amount of Tax and NIC. These companies were termed Managed Service Companies, and the provider who operated them, Managed Service Providers. This created a huge shift of contractors away from this type of managed company, into Umbrella solutions, and for higher paid contractors to run their own limited company.
National Insurance
Employers National Insurance
'Class 1 employed earner’ NI contributions are deducted in a Gabem umbrella company. In 08/09 the first £105 per week of gross earnings is NI free and anything above this attracts NI at a rate of 12.8%.
Employees National Insurance
As a Gabem umbrella employee you pay ‘Class 1 employed earner’ NI contributions. In 08/09 this means the first £105 of gross earnings per week is NI free, the next £665 is at a rate of 11% and anything over £770 in the week is at a rate of 1%. If you are over state retirement age and have provided us with your ‘Age Exemption Certificate’ then you will be exempt from paying employee NI.
National Minimum Wage
The government has set a minimum wage all employers must abide by. Each year this is reviewed (normally in the Autumn), and it is increased in line with inflation. Since October of the 2008-2009 tax year the minimum wage for workers aged 22 and over is £5.73 per hour.
Offshore Companies
Some payroll service providers for contract workers pay their members through Offshore Companies. These are companies incorporated outside of the UK mainland, and where there may be little government control and / or low taxation regimes. If your work is mainly carried out within the UK mainland, using such a service puts you at significant risk of HMRC’s tax-avoidance measures and you may be liable for unpaid taxes.
With Gabem’s compliant payroll service, which is registered in the UK and complies with all UK taxation and employment law, you make the most of the money you earn while being confident that you are paying the correct levels of tax under current HMRC legislation, eliminating your risk of receiving a substantial and unwelcome tax bill.
P11D
A P11D is a statement of any expenses you’ve claimed during any given financial year. P11D's don't include mileage expenses. Your P11D should arrive around July the 6th each year that you have claimed expenses.
P45
A P45 should be issued by your employer when you leave. It is there to provide your new employer with your correct tax code and your previous pay and tax. It will also advise HMRC that your employment has ended ensuring that you do not pay too much tax in your new employment.
P46
A P46 is a form you should fill in if you have not received a P45 from your previous employer. It will allow HMRC to assess the tax you have paid and notify your us of the tax code you should be on, although this can take a number of weeks to resolve. If you have not handed us your P45 nor filled in a P46 you will have to be placed on a basic rate tax code (sometimes incorrectly referred to as an emergency tax code) so it is vital that you hand in one or the other.
Reserve Scheme
We offer an extra service whereby you can choose to have a nominated sum of money held back from your net pay every time you get paid. This is held in reserve for whenever you want or need it. The money in your fund can be paid directly into your bank account on any working day you require as long as a written request (text, fax, email, letter) is received before 3pm.
Salary Sacrifice
This is the method by which you can contribute to a pension scheme and at the same time pay tax and NI on a lower amount of money. On your instruction we reduce your pre-tax pay and send an equivalent amount straight to the pension we have set up for you.
Statutory Payments
Statutory Sick Pay / SSP
SSP is paid to employees who are unable to work due to illness. As the name suggests this is a statutory payment but there are conditions that have to be met before a person qualifies.
If you do qualify the payment set down by the government is currently set at £75.40 per week for employees that have average weekly earnings exceeding £90.00.
Statutory Maternity Pay / SMP
SMP is a payment made to women who are about to or have just had a baby. It is intended to replace any payment that you would otherwise have earnt during your pregnancy and subsequent early months of your baby's life, allowing you to keep yourself and your baby healthy.
The amount you are entitled to is set down by UK law but is available for a maximum of 39 weeks. For more information on Statutory Maternity Pay, click here.
Statutory Paternity Pay / SPP
SPP is a payment made to a man who's about to become a father. The amount is £117.18 or 90% of your average weekly earnings, whichever is lower. For further information on Satutory Paternity Pay, click here.
Umbrella Company
An Umbrella Company is a payment system for temporary contract workers. Umbrella company schemes are not included within the Managed Service Company (MSC) legislation 2007, therefore using an Umbrella company to administer your PAYE earnings carries none of the MSC debt transfer risks to the contractor.
As an employee of a Gabem Umbrella Company, all income is paid as a combination of salary and legitimate business expenses. Thus you can maximise your take-home pay while being secure in the knowledge that the necessary deductions for PAYE tax and NIC are being made. At the same time you take advantage of Gabem’s efficient and friendly service, as well as the legal benefits of being employed eg. holiday pay, statutory sick pay.