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Reply to: Consulting Overseas Limited
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Previously on "Consulting Overseas Limited"
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Guest repliedBut the topic is about whether anyone has experience of working through Consulting Overseas Ltd. Has anyone?
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Guest repliedFrom a logical point of view I would not include all expenses as part of my net income. The only net income that I am interested in is the money from contracting that I can use personally. Arguably some expenses can partially contribute to profit but items such as accountancy fees, accommodation costs and travel tickets are spent money and cannot be included as net income.
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Guest repliedI'm the 100k example there. I'm not going to grumble as long as I get over 70%. Compared to the umbrella camp where i was getting about 55%!
Just to put my mind at rest you dont actually have to physically only pay yourself the minimum wage do you? Thats just what you guys put through the books.....?
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Guest repliedThey are fairly rough calculations for the purposes of illustration. The expenses could of course be left out - I left them in as the calculators that these types of scheme use all leave them in.
As to the salary - you can get away with £4500 a year if you want - we recommend the salary to at least match the National Minimum Wage though, just in case.
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Guest repliedSimon
You have counted both the salary and expenses as net income. This may well be fair enough with such a low salary where presumably no tax or NI is payable but the expenses surely need to be added to the tax , thereby reducing the net return to 66% and 73% respectively.
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Guest repliedsalary of £4500
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Guest repliedSure - I took a baseline of £100k a year.
Allow say £5k for expenses and a salary of £4500, giving a profit of £90,500, on which Corporation Tax is payable of £90,500 x 19% = £17195
If you distribute all of the remaining funds as dividends you would get £73305. Of this around £27000 falls into the basic rate tax band, so no further tax to pay, then there would be an additional 25% to pay on the remainder £73305 - £27000 = £46305 x 25% = £11576
So, from your original £100,000 you end up paying about £28771, leaving you with £71229, hence the 70% I mentioned.
If you were earning say £50,000 pa the figures look even better:
£50,000, less £5000 expenses and £4500 salary = £40,500. Corporation tax would be £40,500 x 19%(ish!) = £7695
Balance as dividends gives £27000 at basic rate and £13500 in the higher rate, so £13500 x 25% = £3375.
Total tax payable on the £50k is then £11070, giving a net of around 78%.
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Guest repliedSimon - I'm with you guys and I'm hoping to get nearer the 80% mark. Can I ask you to put some more detail behind the 70% mentioned.
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Guest repliedIf you mitigate against high rate tax, pay a national minimum wage and draw limited expenses a net return of just over 80% of your gross contracting return is achievable from a limited company/accountancy arrangement that sits outside IR35.
This figure obviously depends on your personal circumstances but I have managed to achieve it so it isn't difficult.
We worked these figures out when comparing the usual services with offshore arrangements. Surprisingly the traditional accountancy/Ltd route can be as remunerative as most anything else available and without any associated risk or contentiousness.
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Guest repliedA return of 70% is about what you would get with your own Limited Company.
Also, on their web site is says I think that they have acted for over 3000 contractors, yet their accounts filed at Companies House for March 03 show a balance sheet value of a little over £8000, and no cash at bank.
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Guest started a topic Consulting Overseas LimitedConsulting Overseas Limited
Has anyone heard or used these guys? I have just been to see them and they sound very good, especially their Actinium product.
You end up working for them and they pay you in salary and dividend format, with the retention rate over 70%.
Sounds very tempting.Tags: None
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