Knowledge Centre

Do I still have to pay 123 Contracting if I don’t work for a month?

Yes we’re afraid so. We are just like your car insurance, our monthly fee is just our annual amount broken down into 12 monthly payments. However, if you decide to leave 123 Contracting at any time, all you need do is give us one months notice and cancel your standing order. There are no exit penalties.

What is IR35 and how does it affect me?

IR35 is a piece of tax legislation. It's aim is to try and differentiate between genuine contractors and “disguised employees” who are using the contracting system to save on paying tax. It has been found that in the overwhelming majority of cases contractors are NOT “disguised employees”. 

Providing you have a contract that is outside IR35 (we can review each of your contracts for you and confirm this) - and your working practices reflect that of a standard business and not that of an employee - you will be fine.

If your contract and working practices give the impression that you are inside IR35 legislation, you will have to pay income tax and National Insurance, as well as claim reduced expenses. This basically means that you will earn less money. Our IR35 Contract Review is in place to help you ensure you are outside of IR35. For a small one off fee our IR35 specialist partners will review your contract in detail and advise you on what changes you need to make, we advise all clients to get their contract reviewed by our specialists.

If I am inside IR35, is there any benefit in contracting through my own limited company?

Even if your contract and working practices are inside IR35 you can still claim: Employers National Insurance Contributions, employer contributions to approved pension scheme, professional subscriptions, professional indemnity insurance, Receive interest on the funds held within your own business. Yes, from a financial point of view it can still be worth it. Secondly, any other contract work you undertake that is outside IR35 can also be put through your Limited Company.

How do I form a Limited Company, does it take long and when can I start to pay myself?

You can form your Limited Company in five minutes through our website and your company is usually set up within a few hours/a day. If you are joining The 123 Way then there is no fee to incorporate your limited company.

As soon as your business bank account is open you can receive payment from your clients. You can then transfer money from your business bank account to your personal bank account each month, or whenever you like. We will help you to understand how much you need to put aside for tax and what expenses you can claim.

What insurances will I need?

This is completely up-to you but you’ll probably need:

Professional Indemnity Insurance which costs around £250 per annum depending on what you do. This provides financial protection for you and is designed to meet the cost of defending claims made against you.

Public Liability Insurance which costs around £150 per annum. This protects you against third party claims for injury or damage to people or their property.

Both of the insurances above are claimable expenses through your business.

Am I tied into a contract with 123 Contracting?

There are NO entry fees, exit fees or tied-in periods you simply need to give us one months notice if you intend to leave, this ensures a smooth hand over period.

How do I appoint 123 Contracting?

Appointing 123 Contracting couldn’t be simpler and takes just 5 minutes! Simply fill out our online Join The 123 Way form.