Rousseau International - any opinions?

[Fred Bloggs]

I keep seeing statements on various parts of the boards saying people are getting 80% or even 82% "legitimately" out of their limited companies. I have searched to see if I can find out how this is being achieved but the only things that come up on the searches are "I am getting 82%" etc.

Is this being achieved by maxing out the low salary / dividend to high rate tax threshold / split income with 50% share holder to maximise the dividends at lower tax rate / drop shed loads into a company pension plan / have fairly high legitimate expenses? It would be great if someone would share how it is being achieved. If it is legitimate then it surely shouldn't be a problem to share?

If this is easily achievable then I would definitely say it isn't worth the risk for the extra 3 - 5% that the schemes offer.

Most of the people that I know are only keeping around 72 - 75% of their ltd co earning which is why I ask.

Thanks

Pastalista

I have posted this elsewhere here. The way to acheive the highest Ltd Co retention is to make extensive use of Ltd Co funded SIPP contributions. However, this is not an approach everybody would like to use. It works for me though as I am approaching 55 and can get chunks of the SIPP money out tax free like I did when I turned 50 before the change in legislation.

[LisaContractorUmbrella]

I have posted this elsewhere here. The way to acheive the highest Ltd Co retention is to make extensive use of Ltd Co funded SIPP contributions. However, this is not an approach everybody would like to use. It works for me though as I am approaching 55 and can get chunks of the SIPP money out tax free like I did when I turned 50 before the change in legislation.

Yep Fred's right - you can pretty much take home 100% of your earnings as long as you don't mind living on minimum wage and chucking the rest into a pension

[Fred Bloggs]

Yep Fred's right - you can pretty much take home 100% of your earnings as long as you don't mind living on minimum wage and chucking the rest into a pension

For the older contractor, perhaps already drawing a pension from a previous employer(s), this is a very realistic option. In fact, under these circumstance the £50k lmit is now a problem where it wasn't when it was £250k per annum.

[ASB]

For the older contractor, perhaps already drawing a pension from a previous employer(s), this is a very realistic option. In fact, under these circumstance the £50k lmit is now a problem where it wasn't when it was £250k per annum.

Yes but the Pension in a number of respects generally only really provided for a tax deferral given the income is taxable on the way out. Of course there are potentially significant savings in some areas if it suits ones circumstance. There is the 25% tax free lump sum also the fact that one may be able to arrange things to remain a basic rate taxpayer when drawing benefits.

As you say not for everyone, my strategy was intended to be divis upto 40% threshold, balance in a sipp. Though that changed somewhat when I went permie.

Of course also depends on IR35 status, if concerned about IR35 then the pension becomes potentially more attractive since it IR35 proofs that income; thus removing the NI hit. In this scenario the overall savings can be very significant.

But, got to watch out for the lifetime limit on fund value though. Gets expensive to breach that (though no more expensive than it would have been paying that as income in the first place).

[Greg@CapitalCity]

Some simple examples

To demonstrate take home pay percentages, here are two simple examples;

(1) Contractor earns £200 a day, works 48 weeks a year, on IT VAT flat rate scheme
Billed to agency: £48,000
Effective turnover due to FRS: £49,536
Take a salary of £7,000
Corporation tax will be £8,507
Net profit (all taken as a dividend) will be £34,029
No personal tax, and take home = (34,029 + 7,000) / 48,000 = 85%. On top there will be business expenses you can claim, and pension contributions you can make if you like - which will only make the % return better.

(2) Contractor earns £500 a day, worked 48 weeks a year, on IT VAT flat rate scheme
Billed to agency: £120,000 + VAT
Effective turnover due to FRS: £123,840
Take a salary of £7,000
Corp tax will be £23,368
Net profit will be 93,472
Take £35,000 of the net profit as a dividend, and best case scenario what is left over gets taxed at 10% through entrepreneurs relief when you eventually close down the business.
So your (deferred) personal tax is (93,472 - 35,000) x 10% = 5,847. Your take home = (7,000 + 93,472 - 5,847) / 120,000 = 79%. On top there will be business expenses you can claim, and pension contributions you can make if you like - which will only make the % return better.

If Contractor 2 put £15,000 a year into a pension their take home goes up to 82%. If you earn a good rate, and put some thought into your profit extraction, you'll still do very well by working through your own company.

[Alan @ BroomeAffinity]

Its not hard to legally retain about 80% of your income even up to £80k per annum IF your circumstances are correct.

EDIT:Never read last page, othersise I wouldn't have made this redundant post.

[Fred Bloggs]

Yes but the Pension in a number of respects generally only really provided for a tax deferral given the income is taxable on the way out. Of course there are potentially significant savings in some areas if it suits ones circumstance. There is the 25% tax free lump sum also the fact that one may be able to arrange things to remain a basic rate taxpayer when drawing benefits.

As you say not for everyone, my strategy was intended to be divis upto 40% threshold, balance in a sipp. Though that changed somewhat when I went permie.

Of course also depends on IR35 status, if concerned about IR35 then the pension becomes potentially more attractive since it IR35 proofs that income; thus removing the NI hit. In this scenario the overall savings can be very significant.

But, got to watch out for the lifetime limit on fund value though. Gets expensive to breach that (though no more expensive than it would have been paying that as income in the first place).

Agreed, current fund values are about £450k (combination of a deferred final salary pension and a SIPP) won't lose sight of the cap.

[Ebbers]

Rousseau International

Hi, I know these posts have been going for some time, but is the general opinion that the LLP Self-Employed option that Rousseau International offer is illegal?

I have been approached by them recently and what they offer is very tempting.....not just the returns, but less paperwork etc...

............how risky is it to go down this route?

Cheers

[kernow69]

3 years??? I've been doing this a while and I'm damn sure they haven't been around 3 years!

I'd been with them for 3 years, nothing better is out there... I used to run my LTD, the mess with the accountant, the paper work, the insurances, the whole headache for what?
now, I do NOTHING, just work, send them my timesheet, get my money, no liabilities, audits from HMRC, nothing, nothing to worry. its all legal etc...
I dont have to close my LTD, I just dont use it.. but so far.. works wonders, and I had referred 4 of my friends they had signed up and I got £500 for each of them , every year,.. tax free!! pocket money...
the solution they offer is used by tons of companies in the UK, doing business inland or abroad.. and they are others out there offering similar solutions.. so this is no brainer.. but if you don't understand, just ask to be explain.. instead of reading for old fashionists...
if you work for your money.. then GET YOUR MONEY!!!..
good luck!!

[cojak]

yeah get yourself a good umbrella company, that can give not more than 63% of your returns,, go ahead work for then so they can make money USING YOU....

Since you've ignored the other Ltd option posts and that you didn't appear before they noticed our existence, I take it that you work for RI then ragazzo?