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    Default Advertising

    New to contracting and speaking with my accountants, they have suggested a couple of options to increase tax efficiency

    One is what they call 'advertising'

    Where i pay x to advertise on a b2b directory, and in return i am giving trade points which effectively equal £££ pre-loaded and provided back to me on a credit card

    Still clarifying but i believe the points are x minus small fee

    The points are not subject to income tax

    I cant find much info about this type of option on these boards so just wanted to ask your opinion, if anyone has experience of this type of thing, general thoughts on this?

    It seems a no-brainer which is what makes me a little uneasy..

  2. #2

    Prof Cunning @ Oxford Uni

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    Who are your accountants? What sort of return have they offered?

    It sounds like one of those schemes that offers you 80%+ and should be avoided at all costs!
    Strong and Stable Moderation

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    My post count is Majestic

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    Sounds like evasion to me.
    'CUK forum personality of 2011' - Winner - Yes really!!!!

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    I've got a bridge I'm selling. It's in London, buyer collects.

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    eek
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    Quote Originally Posted by Jay12 View Post
    New to contracting and speaking with my accountants, they have suggested a couple of options to increase tax efficiency

    One is what they call 'advertising'

    Where i pay x to advertise on a b2b directory, and in return i am giving trade points which effectively equal £££ pre-loaded and provided back to me on a credit card

    Still clarifying but i believe the points are x minus small fee

    The points are not subject to income tax

    I cant find much info about this type of option on these boards so just wanted to ask your opinion, if anyone has experience of this type of thing, general thoughts on this?

    It seems a no-brainer which is what makes me a little uneasy..
    It's a scam so run a mile from it. Oh and change your accountant to any of the freeagent ones with references in the recommend an accountant thread above...
    merely at clientco for the entertainment

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    I donít often say this but your accountant is talking nonsense. If the point is to make you look like a ďbusinessĒ then itís clearly not going to work.

    If the point is to get tax relief on the advertising itíll also fail because it obviously isnít a business expense: youíre only doing it for the points, not for new business. Iíd also question whether the points are subject to income tax as it looks kinda b-I-k to me.

    There are lots of ways to structure your income tax efficiently. Iíd suggest this isnít one of them.

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    Nervous Newbie


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    -Accountants: DNS Accountants

    -Theyve stated betwen 70 - 90% return on gross

    -You can keep the bridge

    Whats a reasonable % to expect?

    Appreciate the replies all, thanks.

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    Quote Originally Posted by Jay12 View Post
    -Accountants: DNS Accountants

    -Theyve stated betwen 70 - 90% return on gross

    -You can keep the bridge

    Whats a reasonable % to expect?

    Appreciate the replies all, thanks.
    Depends on various factors, expense levels, IR35, two-year rule etc, and mainly whether you want to draw as little as possible (tax efficient) and keep a war chest in the business, or take it all out personally (not tax efficient) but be able to enjoy a better standard of living. Basically if you want the money personally, it'll be taxed.

    So, the two extremes are roughly 70-73% if you draw roughly 3k a month net from the business, or 55-65% if you draw the lot.

    I doubt anyone with a mortgage and kids etc will find 3k comfortable as a single income, I survived for years as a single father with five kids like that, it was fecking miserable, all for the cause of not giving Hector a cut if I could help it.

    Now I'm in a Director Umbrella (Irish thing), and although Heichtoaigh O'Tacsmanaigh is taking a fair whack, I defiantly prefer it this way.

    There's no way you'll get 90% unless you want to go to prison, even 70% is tough unless you live off a small personal income and leave the rest in the company account earning 0%.

    My view based on experience would be build a watch of say 6-12 mins at the tax break live, say 20-40k, and as soon as that's accrued with all tax liabilities discharged, start drawing more personally assuming you have a contract.

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    % is the wrong question..

    You take your company's income deduct legimate expenses from the company and pay yourself enough to live on. most around here will be taking £10,000 out as salary and another £35,000 from dividends (corporate tax is 19%, dividend tax 7.5% after the first £5k this year)...

    You then ensure you have enough money in the company to cover 6-24 months of personal expenditure and once you've got 6 or so months there start putting up to £40,000 a year into your personal pension fund...
    merely at clientco for the entertainment

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    Cheers folks, very helpful.

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