Hi,
Before I set out...I want to point out that I'm not trying to avoid tax in any way...simply maximise my income.
I've been trying to find out more information on this from searching this and other sites, but have been unable to find anything, so hopefully someone here can help. I've taken my first foray into IT contracting after my previous employer went into liquidation. As there was a bit of a rush to get into somewhere, I initially went with an umbrella company. Now that I'm in, I looking at ways of maximising my take home pay. I came across a company called The Pay Hub. They seem to offer similiar services to an umbrella, but claim reduced tax liability as they are based in the Isle of Man. That being said however, my agency claim that I can only be paid either through one of the Umbrellas on their preferred supplier list...or through a limited company which I am director of, so it seems that I will not be able to use The Pay Hub.
I was wondering if what I can operate a similiar arrangement by setting myself up as as a self employed person for a limited company based in the Isle of Man.
From my understanding, I would obviously still be liable for Income Tax in the UK....however, my liability for NI payments would be less (I believe 8% ?). Also....if I am correct, I would pay tax only on what money is left over after business expenses have been paid...ie I only pay tax on profit.
So for example....if one year my company was to earn £50,000. Of wich I would pay 8% in Class 4 NI and £2.30 per week for class 2. This would leave £45,896.50. Then say I claim for £5,3896.50 in business expenses....this would leave me with £40,000 profit. Would I be correct in thinking that I would only pay income tax on the £40k profit that is made...or have I got it all completely wrong?
Thanks
Before I set out...I want to point out that I'm not trying to avoid tax in any way...simply maximise my income.
I've been trying to find out more information on this from searching this and other sites, but have been unable to find anything, so hopefully someone here can help. I've taken my first foray into IT contracting after my previous employer went into liquidation. As there was a bit of a rush to get into somewhere, I initially went with an umbrella company. Now that I'm in, I looking at ways of maximising my take home pay. I came across a company called The Pay Hub. They seem to offer similiar services to an umbrella, but claim reduced tax liability as they are based in the Isle of Man. That being said however, my agency claim that I can only be paid either through one of the Umbrellas on their preferred supplier list...or through a limited company which I am director of, so it seems that I will not be able to use The Pay Hub.
I was wondering if what I can operate a similiar arrangement by setting myself up as as a self employed person for a limited company based in the Isle of Man.
From my understanding, I would obviously still be liable for Income Tax in the UK....however, my liability for NI payments would be less (I believe 8% ?). Also....if I am correct, I would pay tax only on what money is left over after business expenses have been paid...ie I only pay tax on profit.
So for example....if one year my company was to earn £50,000. Of wich I would pay 8% in Class 4 NI and £2.30 per week for class 2. This would leave £45,896.50. Then say I claim for £5,3896.50 in business expenses....this would leave me with £40,000 profit. Would I be correct in thinking that I would only pay income tax on the £40k profit that is made...or have I got it all completely wrong?
Thanks
Comment