Philip Hammond delivered what as some are seeing as another blow to contractors and consultants in the form of changes to the VAT Flat Rate Scheme.

In his first (and last!) Autumn Statement speech he announced that from 1^st April 2017, a new 16.5% VAT flat rate will be introduced for businesses who have limited costs. These businesses have been termed a ‘limited cost trader’.

Are the changes necessary

Well, HMRC obviously think so. They state on their website that the changes are being introduced in order to tackle “aggressive abuse of the VAT Flat Rate Scheme”. These are very hard hitting words.

HMRC believe that some businesses are abusing the VAT Flat Rate Scheme and believe that the change will help to reign in this abuse.

How will the new 16.5% work?

The Flat Rate Scheme was introduced to simplify the process that businesses use to calculate the amount of VAT that they have to pay to HMRC. Our article Choosing the right VAT route explains in great detail how the Flat Rate Scheme works. It is worth having a read of it, if you are unfamiliar with the Flat Rate Scheme.

Businesses will now be required to determine if they are a ‘limited cost trader’ by completing a simple test. If their business, matches the criteria set out for a ‘limited cost trader’ they will have to use the 16.5%, instead of what they previously used as outlined in HMRC’s trade sector list.

What is a limited cost trader?

A limited cost trader is defined as one that spends less than 2% of its sales on goods (not services) in an accounting period.

When working out the amount spent on goods, it cannot include purchases of:

• capital goods (such as new equipment used in a business)
• food and drink (such as lunches for staff)
• vehicles or parts for vehicles (unless running a vehicle hiring business)

A firm will also be a limited cost trader if it spends less than £1,000 a year, even if this is more than 2% of the firm’s turnover on goods.

This definition covers businesses that are labour intensive and includes contractors and consultants.

Don’t delay, start preparing today

The new rules come into force on 1^st April 2017, but may affect invoices issued and goods bought, from now on. Further details are available in section 8.2 and 9.7 of the HMRC’s updated Flat Rate Scheme leaflet.

Further details of this change will be made available on 5^th December when the draft secondary legislation will be published.

Even though these changes may reduce some of the benefits that the Flat Rate Scheme gives, we believe it will still be more cost effective for certain contractors and consultants to be on the scheme than not.

If you have any questions about how the changes will affect you, give our team a call on 020 8952 2234, who will be delighted to answer any of your questions.

For weeks now, senior figures from the world of business have been at pains to point out just how important this year’s Autumn Statement will be.

The new Chancellor, Philip Hammond, stepped up to the despatch box to give his most significant speech since he took charge of the Treasury during the summer.

If his predecessor George Osborne, now watching from the backbenches, had come to be defined by his ongoing battle to balance the books in the wake of a financial crisis, the start of Mr Hammond’s tenure was always going to be overshadowed by one word. Brexit.

Businesses across the UK – and indeed overseas – were watching closely to see how the Government intends to steady the economy ahead of the UK beginning the formal process of leaving the European Union.

In his opening remarks, Mr Hammond laid out his stall.

“We will maintain our commitment to fiscal discipline, while recognising the need for investment to drive productivity,” he said.

• Economic overview
• Business and Enterprise
• Transport and infrastructure
• Property
• Personal tax
• Pensions and savings
• Tax evasion, avoidance and aggressive tax planning
• End of the Autumn Statement
• Summary

Economic overview

The Chancellor will have been acutely aware, as he rose to address the Commons, that many headlines tomorrow would be dominated by the economic outlook and in particular the fall in growth forecasts.

He sought to extenuate the positives, pointing out that employment levels were at a record high, the deficit was falling as a share of GDP and that the economy had shown resilience in the wake of the summer’s referendum.

But he also acknowledged that the Brexit vote meant it was more imperative than ever to tackle any frailties in the nation’s finances, adding that the Government was committed to tackling these challenges head-on.

Growth is expected to be 2.4 per cent lower over the forecast period as a result of the uncertainty arising from the referendum result.

The Office for Budget Responsibility (OBR) has calculated that growth will be 2.1 per cent this year, falling to 1.4 per cent in 2017.

“That is lower than we would like, but still higher than many of our European neighbours,” said Mr Hammond.

Borrowing, meanwhile, will be 3.5 per cent this year, dropping to 0.7 per cent by 2021-22.

While acknowledging that the Government no longer expected to balance the books by the end of the decade, the Chancellor announced three new fiscal rules: to achieve a surplus in the next Parliament and reduce borrowing to two per cent by the end of this one, to get net debt falling by 2020 and to ensure welfare spending is kept within a cap set by the Government.

Business and Enterprise

The Chancellor was unequivocal that he wanted the UK to retain its reputation as a top destination for businesses.

He reiterated his predecessor’s commitment to reduce Corporation Tax to 17 per cent, although speculation that he may announce a further reduction (perhaps to 15 per cent) proved to be wide of the mark.

There was news of a two per cent reduction in the transitional relief cap, which will be overseen by the Communities Secretary, and Rural Rate Relief will increase to 100 per cent. This will be worth up to £2,900 for eligible firms.

Conversely, employers will have to make preparations for another increase in the National Living Wage next year. The statutory wage floor will increase from £7.20 an hour to £7.50 as of April 2017.

As part of efforts to make the UK a “world leader” in 5G broadband, ministers will also be offering 100 per cent business rates relief on new fibre infrastructure from April next year.
Finally, £400million will be pumped into venture capital funds, via the British Business Bank, to help unlock £1billion in finance for expanding businesses.

Transport and infrastructure

Mr Hammond said that the Government was committed to high-value investment in the nation’s infrastructure and that all of the UK would feel the benefit, acknowledging that too much onus had been placed on London in the past.

At the core of proposals are plans for a new national productivity investment fund, a £23billion pot which will be used to fund innovation and infrastructure.

There was also a commitment that investment in research and development will increase by £2billion annually by 2020, a £1billion digital infrastructure fund (with an emphasis on improved broadband) and the promise of a £1.1billion in additional spending on England’s transport network.

Property

As had been widely trailed before the speech, Mr Hammond confirmed that he would be banning fees charged by letting agents to tenants.

The move, which had actually been Labour policy at the last General Election, was designed to address the fact that fees were continuing to spiral upwards despite the efforts to regulate them. It had nonetheless attracted criticism in some quarters as another “assault” on landlords.

Mr Hammond admitted that a large section of the population continued to struggle to get a foot on the property ladder and said that the Government would shortly be publishing a new white paper to address some of the pressing issues relating to housing.

The Chancellor also confirmed plans for a £2.3billion Housing Infrastructure Fund, which will lay the ground for the construction of 100,000 new homes. In addition, there will be a £1.4billion investment to deliver 40,000 additional affordable homes.

As part of ongoing efforts to increase home ownership, there will be a “large-scale regional pilot” of Right to Buy for housing association tenants.

Personal tax

There was welcome news for many taxpayers in the form of an increase to the personal allowance. This will rise from its current level of £11,000 to £11,500 from April 2017. And Mr Hammond said that the Government remained committed to raising it still further (to £12,500) by the end of this Parliament.

Meanwhile, the 40p rate will increase to £50,000 over the course of the same period.

As regards National Insurance (NI), from next April the employee and employer thresholds will be aligned at £157 a week.

There was good news for the nation’s motorists, with the announcement that the Treasury would be cancelling the proposed rise in fuel duty for the seventh year running. On average this is calculated to save car drivers £130 a year and van drivers £350.

However, insurance premium tax will rise to 12 per cent (up from 10 per cent) which some have suggested is likely to wipe out any savings arising from the crackdown on fraudulent whiplash claims.

Tax savings relating to salary sacrifice and benefits in kind are also to come to an end, although exceptions will be made for pensions, childcare, cycling and ultra-low emission vehicles.

Pensions and savings

There were comparatively few announcements on pensions, although Mr Hammond did confirm that the Government would usher in a ban on pension cold-calling.

The Chancellor said that the Government was also committed to helping the nation’s savers and set out plans for a three-year investment bond, offering a 2.2 per cent interest rate on deposits of up to £3,000.

Tax evasion, avoidance and aggressive tax planning

Mr Hammond said the Government had a proud record of tackling tax avoidance and evasion and that the tax gap was one of the lowest in the world.

As part of the ongoing drive to ensure that businesses pay their fair share, he outlined plans for a new penalty for those who enable tax avoidance, which HMRC later challenges and defeats.

Overall it is calculated that the various anti-tax avoidance measures will raise in the region of £2billion over the forecast period.

End of the Autumn Statement

One of the biggest surprises was the news that this year’s Autumn Statement would be the last.

Next year will be the last time that the Budget takes place in the spring. After that it will be moved to the autumn, and while there will be a Spring Statement, this will be used principally to respond to OBR forecasts rather than as a platform for any major announcements.

Mr Hammond said that having just one financial announcement each year would bring the UK in line with the IMF’s best practice.

Summary

Ahead of today’s speech, the Chancellor seemed to play down the prospect of any dramatic new policy announcements, instead placing emphasis on a tax and spending plan which would prioritise prudence and stability.

Certainly, this wasn’t a delivery sprinkled with giveaways and perhaps the biggest surprise – given that the media had been briefed in advance about many of the headline announcements – was that Mr Hammond’s first Autumn Statement would also be his last.

The decision to condense all the major tax and spending plans into one annual summary is partly designed to give businesses greater stability and this may well be welcomed in the current climate.

Mr Hammond is unlikely to get away from the fact that uncertainty surrounding Britain’s departure from the EU is calculated to have created a £122billion black hole in the national finances.

This week’s article has been supplied to us by Caunce O’Hara, award winning insurance brokers.

In our previous article ‘How responsible are you?’ we discussed the responsibilities of a limited company director. In this article, Caunce O’Hara explains why it is important that directors’ and officers’ ensure they have adequate protection.

Why directors’ and officers’ need liability insurance.

Directors and officers have specific responsibilities, powers and duties relating to the positions they hold. Those duties and responsibilities are usually noted in their terms of reference (or job description), but when a director or officer of a business is found to have acted outside of their terms of reference, proceedings (whether criminal, civil or regulatory), can be brought against them. Such actions can be brought by employees, shareholders, investors or third parties.

What is Directors’ and Officers’ Liability Insurance?

Company directors and key employees should consider acquiring Directors’ & Officers’ Liability Insurance (D&O Liability Insurance). This insurance is designed to respond to cover the cost of defending proceedings brought and provide compensation costs that may arise from a defence that is not successful.

In the absence of D&O Liability Insurance directors and officers can run the risk of not being able to defend themselves against actions that, for example, could include: criminal prosecution which can lead to fines or even imprisonment; civil proceedings that could incur significant legal costs, awards or damages; disqualification from holding director status, to mention but a few.

A robust D&O Liability Insurance policy will only respond to claims made against individuals for wrongful acts and not companies as a whole. Actions brought by the Health and Safety Executive (HSE) or the Office of Fair Trading will be covered as will claims brought in relation to insolvency or breaches of European legislation. Most policies will allow extensions, most commonly Employment Practices Liability Insurance that will cover employee discrimination claims for matters such as unfair dismissal or harassment.

Wrongful acts by directors, officers and key employees are far reaching and include breach of duty, breach of trust, error, neglect, misleading statements and wrongful trading. D&O Liability Insurance is becoming more relevant as company board members consider the complex and litigious world they operate in. It’s a specialist area of insurance and independent advice from a qualified and regulated insurance professional should always be sought.

Board meeting for one

Yep, if you are the sole shareholder of your own limited company, you will find yourself holding a board meeting for yourself.

I know it sounds strange but if you want to draw down money from your limited company in the form of dividends, it is a procedure that you have to follow.

This week’s article gives you the low down on taking dividends through a limited company.

What is a dividend?

A dividend is retained profits that can be distributed to shareholders. A retained profit is money that is left in the limited company after you have paid for things like expenses and liabilities and taxes (such as VAT and Corporation Tax).

Freelancers, contractors and consultants who work via their own limited company (and who are not caught up by IR35) choose to take a small salary and the remainder through dividend payments. In the majority of cases, this is the most tax efficient way to operate as National Insurance Contributions are not payable on company dividends.

How to take a dividend

There are certain rules and procedures that you must adhere to even if you are the sole shareholder in the company. As we mentioned at the beginning of this article, you will, in theory, have to hold a board meeting with only you in attendance.

The minutes of this board meeting have to be recorded in the company records.

Dividends must be paid to the shareholders in amounts that match the percentage of the shareholding they own. For example, if you are the sole shareholder, you will own 100%. If there is a second shareholder, you may decide to split this 50/50. In this case, each shareholder will receive 50%.

There is no set time when dividend payments have to be paid. As long as the company is in profit, you, as the limited company director can determine when the dividends can be paid. If you have concerns, please speak to your accountant and they will be happy to advise you on this.

Each shareholder must be issued with a dividend voucher that shows:

• Date
• Company name
• Names of the shareholders being paid a dividend
• The further amount

Also, a copy of the dividend voucher must be kept in the company records.

The dividend voucher can be printed and physically given to the shareholder, or, it can be sent electronically (attached to an email).

Either way, we recommend that this is done straight away. If you leave it, it is very easy for it to get forgotten. And, as a company director you have a legal responsibility for making sure that the company paperwork is completed on time.

Tax on dividends

The way that taxes on dividends is worked out changed on 6th April 2016. The old system was replaced with a fixed tax rate. A £5000 ‘dividend allowance’ was also introduced.
The table below shows how dividend income is taxed:

Source: HMRC

To make it a little easier to understand we have included the following example:

Bini is an Engineering contractor, her personal allowance has been used up by taking a gross salary of £11,000. The remainder of her income is taken in dividends.

She decides to take a dividend of £32,000 which is taxed at 7.5%. However, the ‘dividend allowance’ means the first £5000 is not taxed. Meaning, that £27,000 is taxable at 7.5%.

Dividends that fall into the higher tax band are taxed at 32.5%. Dividends in excess of £150,001 are taxed at the additional rate of 38.1%.

If you would like to discuss this in further detail,  please give us a call on 020 8952 2234, and we can discuss your requirements in more depth.  

Next week’s article will look at if you need to add a second shareholder and how you can do this.

In a previous article, we briefly touched upon the topic of limited company directors’ responsibilities.

We thought it would be a good time to go back to this and discuss limited company directors’ responsibilities and duties in further detail.

As we have previously mentioned, there are various ways you can operate as a contractor. It is common for contractors to choose to operate via their own limited company. When you incorporate your company with Companies House you must name somebody as a director, and this is often you.

What is the role of a limited company director?

Looking at it in its simplest form, the director is responsible for the day to day running of the company, and making sure that it is run in accordance with UK Company Law.

Who can be a limited company director?

Generally speaking, anybody can be a limited company director, but there are some exceptions:

• Company directors’ must be aged 16 or over. There is currently no maximum age limit.
• If you are an undischarged bankrupt or have been disqualified from being a director of another company, you are not allowed to be named as a director of a new company.
• At least one director must be ‘natural’ i.e. a human being not another company.

Responsibilities of a limited company director

As a director of a limited company you are obliged to act honestly and lawfully and make decisions for the benefit of the company and its shareholders. Specific responsibilities are outlined on the .Gov website and these are listed below:

• try to make the company a success, using your skills, experience and judgment
• follow the company’s rules, shown in its articles of association
• make decisions for the benefit of the company, not yourself
• tell other shareholders if you might personally benefit from a transaction the company makes
• keep company records and report changes to Companies House and HM Revenue and Customs (HMRC)
• make sure the company’s accounts are a ‘true and fair view’ of the business’ finances
• file your accounts with Companies House and your Company Tax Return with HMRC
• pay Corporation Tax
• register for Self Assessment and send a personal Self Assessment tax return every year – unless it’s a non-profit organisation (eg a charity) and you didn’t get any pay or benefits, like a company car

Company Records

It is important to note that the company records must be kept at the companies registered office, if they are not, you must inform Companies House of their whereabouts.
Information that must be kept as part of the company records, include:

• details of the directors, shareholders and company secretary (if applicable)
• share purchase transactions
• details of any loans or mortgages that have been made against the company assets
• the results of shareholder votes and resolutions

You must keep your records for a period of at least 6 years from the end of the last company financial year. You may be required to keep them longer, if:

• they show a transaction that covers more than one of the company’s accounting periods
• the company has bought something that it expects to last more than 6 years, like equipment or machinery
• you sent your Company Tax Return late
• HMRC has started a compliance check into your Company Tax Return

Marketing your limited company

Most contractors work on site, but if you do have an office you are legally required to a display a sign with the company’s name, at all times. If you produce any promotional materials such as brochures, newsletters, pens etc. These must have on them the company name (including the words Limited or Ltd), registered number and registered address, as well as where the company was registered i.e. England, Scotland or Wales.

Taking the ‘w’ out of work

Reading through this list, it may seem that this is a lot of work. However, you don’t have to manage this on your own. Hiring the services of a specialist contractor accountant, can save you a lot of time and in the long run, money as well. A contractor accountant will: tell you what forms need filling and when they need submitting by, and keep you updated on the ever changing tax rules.

Further details are available in our Directors’ Responsibilities guide, download it here. Our team at Cogent Accountants we have been supporting contractors and freelancers for over 20 years. If you are looking for expert and uncomplicated advice, give us a call today on 020 8952 2234.

Taking a salary and PAYE 

Working as a contractor you have a few options: such as working through an umbrella company or setting up and working through your own Limited Company.

If you decide to work through an umbrella company you sign a contract with them and the umbrella company will invoice the end client for work you have done. The client will pay the umbrella company, and they will pay you minus Income Tax and NI.

Some contractors decide to set up and work through their own Limited Company. Depending on the individuals circumstance this may make more financial sense, as it is normally the most tax efficient manner in which to operate (assuming you are not caught by IR35 legislation) . The Limited Company then invoices the end client for the work that has been done. The end client pays the limited company and you get paid from the limited company through a combination of salary and dividend payments.

Taking a salary through a Limited Company

When you register your Limited Company you will be required to name someone as a director and this is usually you. In doing this, you become an employer and an employee of the Limited Company. And, become responsible for recording and collecting taxes (Income Tax and National Insurance) owed from the salary you take.

These taxes are calculated through the monthly payroll (you can choose to do this yourself, or as we advise get your accountant to do this for you) and are set aside and paid to HMRC via PAYE.

When taxes have to be paid

The amount of tax that is collected depends on your tax code. Further information about the rates and thresholds is available on the .Gov website.
Taxes owed must be paid monthly if the combined Income Tax and NI of all employees averages £1,500 or more per month. As most contractors choose to take a minimal salary and the remainder via dividends, this is usually less than £1,500 and can, therefore, be paid quarterly instead.

These payments must reach HMRC within 14 days of the end of the tax month. This usually falls on 5th of each month. Therefore, by the 19th of each month (or 22nd if making an electronic payment) HMRC must receive the money.

Penalties for late payment

It is your responsibility to make these payments on time. However, there may be a time for some reason when a payment is late or not paid in full. If this happens, HMRC can (and mostly likely will) issue you with a penalty.

How much this is outlined in the table below:

Source: .Gov.uk

N.B: The first failure to pay on time does not count as a default.

A 5% additional penalty of the amount due will be issued if you pay less than what is due and the payment is not made in full after 6 months. This is known as an ‘additional penalty’. A further 5% will be charged if it is not made after 12 months. This is explained in further detail on .Gov website.

Can I appeal?

If you are issued with a penalty charge you are able to make an appeal in writing or online using HMRC’s Online Service. Some of the reasons you can appeal on are:

• data on the returns was incorrect
• ill health
• theft
• death / bereavement

An extensive list of some of the grounds for appeal is available on the .Gov website.

If you are looking for advice and assistance on setting up a Limited Company, give us a call on 020 8952 2234 or Request a Call Back and a member of our team will be in touch at a time convenient for you. 

We recently attended a networking event organised for freelancers, and the most asked about topic was ‘how to handle late paying clients’.

I didn’t realise how much of a problem this is for freelancers. Well, after some research, I found out it is a massive problem. I couldn’t find any exact figures relating to freelancers, but according to SME Insider, SME’S are now owed more than £255 billion in late payments.

If an SME is paid late, their cash-flow is messed up, meaning they end up paying their suppliers late. It’s a vicious circle.

So, how do you handle late paying clients?

Burying your head in the sand and hoping it will solve itself, will not work. Follow these steps to help you stave off late payers:

Carry out pre-relationship checks  

For any new client, you are thinking of taking on, try to find out as much about them as possible. If they are a limited company

So, how do you handle late paying clients?

y, their details will be registered with Companies House. Information available on the company includes: their registered business address, accounts and annual returns. All important information, in deciding if they will be able to pay you for the work you have done.

If they are not registered with Companies House, take to the internet to see what you find on them on review sites and freelance forums.

Get your own house in order

Set out your T&C’s at the start of your working relationship. These should clearly state your invoice and payment terms. Normally, payment is due 30 days from when the invoice is issued.

Track every step of the payment process: the date the invoice is issued, when payment is due, the date you issued a reminder for payment and the extended payment deadline. What system you choose to use for this, is up to you. You may find a simple spreadsheet is sufficient, or you could invest in using an online accountancy portal that automatically issues invoices and reminders for late payments.

Don’t be shy about speaking up

If a client is late in paying, don’t feel awkward about reminding them that payment is overdue. It could just be an oversight on their behalf.

When you contact them, initially do it by phone (make sure you know who to contact about payments) and follow this call up by an email. Ask them to reply by email as well. It is important to document all communication in writing, in case any disputes do arise.

Be prepared for the break-up

If all attempts at getting paid fail, be prepared to tell them that all future work will be put on hold until they clear the overdue payment. This action could see the end of your working relationship. But, if it comes to this, do you want to work with them anyway?

This shouldn’t be the end of it, as they still owe you money. Depending on how much they owe, it may be worth claiming it through the small claims court. The .gov website explains in detail how to go about it and the fees involved.

In summary, always air on the side of caution when dealing with clients. The majority of them will pay you on time (hopefully), but you will occasionally come across one or two who are frogs. In that case, be prepared to make them ‘croak up with the cash’. 

Why a contractor accountant is a valuable addition to your company 

Deciding to become a contractor is a life choice. Most contractors say they love the freedom it gives them and they enjoy being able to offer their specialist skills to different projects.

If you intend to make contracting a life-long career choice you have to decide on a set-up that is the most financially beneficial. Most contractors find that working via their own Limited Company is the most tax efficient way to work as a contractor.

When you incorporate your Limited Company, you will more than likely register yourself as a director of the company. With this directorship comes a number of responsibilities. Managing the financial affairs of the Limited Company is one of these.

There are a number of sophisticated online / cloud accountancy software packages available on the market that allow you manage the company accounts yourself. Deciding to ‘do it yourself’ may seem like an easy task and a money saving option.

However, the savings you think you may be making through not paying for the services of an accountant could actually be costing you money. The time you spend on; learning how to use the software, understanding tax rules and making yourself familiar with relevant regulation and legislation. Is time taken away from doing paid work.

A specialist contractor accountant will:

• save you time – the time you spend on doing paperwork and working on your accounts could be time spent on working and earning money
• give you advice on what forms need filling and what information needs to go on the forms
• keep you updated on the ever changing tax rules
• help you operate in the most tax efficient manner
• advise you on what taxes need paying and when. Therefore reducing your risk of receiving a penalty notice for incorrect or late payment.

We recommend reading our article ‘Looking for a match made in heaven: Tips for choosing the right accountant’ which looks at how to find the accountant that is right for your business.

Alternatively, give us a call on 020 8952 2234 and we would be delighted to discuss your requirements in further detail.

Are you protected? It may be a contract stipulation, so read on….

It’s becoming more common for contractors to acquire liability insurance policies. Contracts, more often than not, state that contractors must have professional indemnity insurance and/or public liability insurance.

Where contracts don’t make reference to insurance specifics it’s still the case that the prudent contractor considers relevant policies to give peace of mind.

Increasingly, litigation in many sectors means that contractors can be in the firing line if things go wrong. This has become one of the main reasons why Professional Indemnity Insurance has become a “must have“ policy opposed to an option.

What is Professional Indemnity Insurance

As we mentioned above it is not always compulsory to have Professional Indemnity Insurance, but if you provide expertise, skills or advice to clients, or have access to clients’ confidential information, or produce materials that could cause offence or infringe intellectual property rights and provide a professional service and could be challenged on your work, then we strongly recommend that you purchase Professional Indemnity Insurance.

Do I need insurance?

Our philosophy is that it is better to be prepared than be caught out. Your work may be top rate and you have never had a problem in the past. However, if the time comes and a client does think you have made a mistake that has financially cost them, your Professional Indemnity Insurance will cover you. Without it, it could be catastrophic for your business.
Professional Indemnity Insurance will cover you for the legal costs involved of defending yourself in a professional negligence case, including any compensation pay-out at the end.

Public Liability Insurance

Public Liability Insurance offers protection to your business if you deal with the public, if you have clients visiting your offices or if you or a colleague need to make visits to client’s premises. For example, if a client visits your office and they drip over a chair and injure their leg, then Public Liability Insurance will cover you for this.
You may feel that this is type of insurance is not applicable to you, but some clients now insist that you have some level of cover, generally a minimum of £1M.

What does Public Liability Insurance cover?

Public Liability Insurance will cover you for legal costs and damages if someone brings a claim against you and you are found liable.

Is it an expense my business can afford?

Professional Indemnity Insurance and Public Liability Insurance premiums are dependent on the type of work you do, the level of cover you require and the number of employees you have. They can start from a low level and increase accordingly.

To put it into a perspective, if a court case is brought against you, it could cost your business thousands. You need to ask yourself, can my business afford this if I don’t have insurance?

This article was provided to us by Caunce O’Hara, a commercial insurance broker, offering a full range of insurance products to contractors and freelancers. Visit their website: https://www.caunceohara.co.uk/