I am currently contracting via an umbrella.. I have come across a few folks who are actually using a solution which has something to do with a trust in IoM. The details read something like ... This results in well a very large tax saving solution.
Under the solution, you supply your services to us as a self-employed consultant, and we re-sell your services through a company in the UK to your agency. We pay you for the work you do. The amount is agreed at the point you sign up and the amount will usually be a third of the price the client or recruiter will pay for your services.
As a self-employed consultant you are liable to pay income tax and NI contributions on the payment we make to you for your services.
The remainder of the contract value is the profits we make as a partnership. As a partner in the business, the Trust takes the majority of the profits. This profit is earned in the Isle of Man and is subject to Isle of Man taxation. The current applicable rate is 0%.
The Trust views each self-employed consultant as an integral and important part of its success. As an SEC the work you conduct will result in significant profits being paid into the Trust. The Trustees have a legal obligation to ensure it is administered successfully, the profits you help generate are an important part of this success and as such it is in the best interests of the Trust to ensure these continue to contribute towards it. In addition, the Trustee’s themselves are entitled to a 2% management fee. Both of these points mean that it is in the best interests of the Trust to maintain a good relationship with each of the SEC’s they are engaged with.
The Trust’s fund is potentially available for any purpose. Typically consultants ask for loans from the trust. The trustees meet monthly and decide whether the trust should lend money to those requesting it. Any loans are made on a commercial lending basis and are subject to terms and conditions. The Trust have provided and easy to use online portal for making any requests of them.
It is important to remember that these are loans and not income derived from any work you have carried out and been paid for in the UK and therefore not subject to current taxation and NI requirements.
This sounds dodgy to me. I am no expert in taxation , but this sounds too good to be true.
A straight forward pitfall i see is:
1) The trust could straight away reject the appeal and you will not get paid.
2) This changes my market value down to a third of what I am actually earning; being on a tier 1 visa which requires renewal , i am not too sure if I can show my gross income as the amount i am actually making.
My questions being :
1) Is this legit. Has anyone been shafted over this ?
2) Can you show your earning power as the loans you get + the salary you have sold your services for?
I am trying to look up threads on the suggested agency, but no luck. If there is already a discussion on the above , please point me in the direction.
Cheers!
Under the solution, you supply your services to us as a self-employed consultant, and we re-sell your services through a company in the UK to your agency. We pay you for the work you do. The amount is agreed at the point you sign up and the amount will usually be a third of the price the client or recruiter will pay for your services.
As a self-employed consultant you are liable to pay income tax and NI contributions on the payment we make to you for your services.
The remainder of the contract value is the profits we make as a partnership. As a partner in the business, the Trust takes the majority of the profits. This profit is earned in the Isle of Man and is subject to Isle of Man taxation. The current applicable rate is 0%.
The Trust views each self-employed consultant as an integral and important part of its success. As an SEC the work you conduct will result in significant profits being paid into the Trust. The Trustees have a legal obligation to ensure it is administered successfully, the profits you help generate are an important part of this success and as such it is in the best interests of the Trust to ensure these continue to contribute towards it. In addition, the Trustee’s themselves are entitled to a 2% management fee. Both of these points mean that it is in the best interests of the Trust to maintain a good relationship with each of the SEC’s they are engaged with.
The Trust’s fund is potentially available for any purpose. Typically consultants ask for loans from the trust. The trustees meet monthly and decide whether the trust should lend money to those requesting it. Any loans are made on a commercial lending basis and are subject to terms and conditions. The Trust have provided and easy to use online portal for making any requests of them.
It is important to remember that these are loans and not income derived from any work you have carried out and been paid for in the UK and therefore not subject to current taxation and NI requirements.
This sounds dodgy to me. I am no expert in taxation , but this sounds too good to be true.
A straight forward pitfall i see is:
1) The trust could straight away reject the appeal and you will not get paid.
2) This changes my market value down to a third of what I am actually earning; being on a tier 1 visa which requires renewal , i am not too sure if I can show my gross income as the amount i am actually making.
My questions being :
1) Is this legit. Has anyone been shafted over this ?
2) Can you show your earning power as the loans you get + the salary you have sold your services for?
I am trying to look up threads on the suggested agency, but no luck. If there is already a discussion on the above , please point me in the direction.
Cheers!
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