Loans from EBTs and other Trusts

[pastalista]

Fred,
Presumably you are referring to the marginal rate of tax on your Company's turnover, and not counting the personal income tax on the dividends you're taking?

There it is again. Another poster stating that they get "a few percentage points below the 85%" without having to worry about being in an EBT.

I have pleaded before and am doing so again; share. If you are able to achieve this legally then it would be incredibly helpful (and would presumably put the poster at no risk) if you shared, in detail how this is achieved.

I assume that most contractors would be very willing to be limited if they felt that they could achieve these kind of returns legitimately and without fear of investigation for EBT related "crimes".

Please - for the greater good of the community - share.

Thanks

Pastalista

[DaveB]

There it is again. Another poster stating that they get "a few percentage points below the 85%" without having to worry about being in an EBT.

I have pleaded before and am doing so again; share. If you are able to achieve this legally then it would be incredibly helpful (and would presumably put the poster at no risk) if you shared, in detail how this is achieved.

I assume that most contractors would be very willing to be limited if they felt that they could achieve these kind of returns legitimately and without fear of investigation for EBT related "crimes".

Please - for the greater good of the community - share.

Thanks

Pastalista

It would also be nice if they defined "a few".

The best I have managed is between 72% and 75% running as a bog standard Ltd. I really can't see how to get better than that without resorting to inflated and or dodgy expenses.

Then again, I don't worry everytime I get a letter from HMRC and my financial future isn't in the hands of the courts atm.

[LisaContractorUmbrella]

There it is again. Another poster stating that they get "a few percentage points below the 85%" without having to worry about being in an EBT.

I have pleaded before and am doing so again; share. If you are able to achieve this legally then it would be incredibly helpful (and would presumably put the poster at no risk) if you shared, in detail how this is achieved.

I assume that most contractors would be very willing to be limited if they felt that they could achieve these kind of returns legitimately and without fear of investigation for EBT related "crimes".

Please - for the greater good of the community - share.

Thanks

Pastalista

Well said Pastalista WPS x 2

[Fred Bloggs]

Fred,
Presumably you are referring to the marginal rate of tax on your Company's turnover, and not counting the personal income tax on the dividends you're taking?

I keep my income below the 40% rate so I pay no income tax on the dividends. I'm comparing what ends up in my pocket (and in my SIPP) versus my Ltd Co turnover.

[Fred Bloggs]

There it is again. Another poster stating that they get "a few percentage points below the 85%" without having to worry about being in an EBT.

I have pleaded before and am doing so again; share. If you are able to achieve this legally then it would be incredibly helpful (and would presumably put the poster at no risk) if you shared, in detail how this is achieved.

I assume that most contractors would be very willing to be limited if they felt that they could achieve these kind of returns legitimately and without fear of investigation for EBT related "crimes".

Please - for the greater good of the community - share.

Thanks

Pastalista

I already have in other similar threads. I make substantial use of my SIPP and my wife is a 50% shareholder. It isn't rocket science and there's nothing secret. I do not make any dodgy expense claims.

[DonkeyRhubarb]

Including pension contributions can be misleading

It is worth noting that someone earning £100,000 in a bog standard umbrella company can achieve around 77%...

...by paying the maximum £50,000 each year into a pension.

This is despite having to pay 13% employers nic, and assuming no expenses.

Approx Calculation

Gross £100,000
Pension £50,000
Employers NIC £11,500
Employees NIC £5,150
Tax (all at basic rate) £6,200

Retained = (100,000-11,500-5,150-6,200)*100/100,000 = 77%

[DaveB]

I already have in other similar threads. I make substantial use of my SIPP and my wife is a 50% shareholder. It isn't rocket science and there's nothing secret. I do not make any dodgy expense claims.

Even with a SIPP I can't see how it makes that much difference.

For example, based on a contract I had a couple of years back paying £350 day.

On an average month I bill for 20 days + VAT at 17.5%.

Invoice Total                     £ 8225.00
VAT (14% FR)                      £-1151.50
Salary                            £- 600.00
Expenses                          £-1092.00

Profit                            £ 5381.50
Corporation Tax                   £-1076.30

Available Dividend                £ 4305.20

Monthly take home                 £ 5997.20
(Salary + Expenses + Dividend)

Take home as % of turnover = 73%.

Divi split between myself and MrsB on a two thirds / One third split with no further tax payable.

[xchaotic]

Even with a SIPP I can't see how it makes that much difference.

For example, based on a contract I had a couple of years back paying £350 day.

On an average month I bill for 20 days + VAT at 17.5%.

Invoice Total                     £ 8225.00
VAT (14% FR)                      £-1151.50
Salary                            £- 600.00
Expenses                          £-1092.00

Profit                            £ 5381.50
Corporation Tax                   £-1076.30

Available Dividend                £ 4305.20

Monthly take home                 £ 5997.20
(Salary + Expenses + Dividend)

Take home as % of turnover = 73%.

Divi split between myself and MrsB on a two thirds / One third split with no further tax payable.

How come Expenses is money you take home? Are all you expenses falsified and you spend no money whatsoever? In my view, the thing you buy for business are a must have and you you're not getting you money back from them (travel, dodgy hotels, business cards)

[DaveB]

How come Expenses is money you take home? Are all you expenses falsified and you spend no money whatsoever? In my view, the thing you buy for business are a must have and you you're not getting you money back from them (travel, dodgy hotels, business cards)

No, they are expenses I paid out of my own pocket and claimed back from the Co. Also covers things like reimbursement of travel costs at 40p per mile (HMRC standard rate). In that example that makes up the bulk. I was doing 110 mile round trip each day.

[Fred Bloggs]

Even with a SIPP I can't see how it makes that much difference.

For example, based on a contract I had a couple of years back paying £350 day.

On an average month I bill for 20 days + VAT at 17.5%.

Invoice Total                     £ 8225.00
VAT (14% FR)                      £-1151.50
Salary                            £- 600.00
Expenses                          £-1092.00

Profit                            £ 5381.50
Corporation Tax                   £-1076.30

Available Dividend                £ 4305.20

Monthly take home                 £ 5997.20
(Salary + Expenses + Dividend)

Take home as % of turnover = 73%.

Divi split between myself and MrsB on a two thirds / One third split with no further tax payable.

Do the sums again, putting a third to half the turnover in a SIPP. From this year the SIPP contribution is limited to £50k though. I can't say this way of working is for everyone, but it suits me.