Results of the Umbrella survey

[Bluebird]

c) Split Ltd ownership with low/nil earning partner and dividend allocation to both share owners?


Or otherwise please divulge and allow us to make use of the system too!

c)

+ Expenses [with reciepts]
+ VAT FRS

[ChimpMaster]

neither.

c) Split Ltd ownership with low/nil earning partner and dividend allocation to both share owners?


Or otherwise please divulge and allow us to make use of the system too!

[Bluebird]

I guess you achieve that by using either:-

a) A Ltd employing taper relief over more than 2 years.
b) An "umbrella" which (legally) uses exotic methods of payment and tax avoidance.


Unfortunately both are a dying breed and HMRC seem to be intent on reducing contractor post-tax earnings any way they can...

Still, I think 67% is about right.

neither.

[tim123]

Err, no, it's not right.

You cannot be fined for tax avoidance (yet!)

But you can be fined for being negligent in preparing your tax returns, which is what is happening here.

So the answer to the original question is:
Yes, you can be fined (it's called a tax penalty)
No, it won't be for Tax avoidance.

HTH

tim

[ChimpMaster]

the example is "worst case"

i myself can take about 83%

I guess you achieve that by using either:-

a) A Ltd employing taper relief over more than 2 years.
b) An "umbrella" which (legally) uses exotic methods of payment and tax avoidance.


Unfortunately both are a dying breed and HMRC seem to be intent on reducing contractor post-tax earnings any way they can...

Still, I think 67% is about right.

[Bluebird]

I realise I'll be earning more. I know it depends how you pay yourself - It's just that I was expecting to see a higher percentage of gross earnings. Not a drop of 10%.

the example is "worst case"

i myself can take about 83%

[Bluebird]

Err, no, it's not right.

You cannot be fined for tax avoidance (yet!)
You could be fined for fraud I guess.
RS

They just fine you for not having or failing to keep records.

It doesn't have a name like "avoidance" or "fraud" - unless you are really stupid in which case they take you to court for fraud and then you'd be happy with just a fine

[Ian]

I realise I'll be earning more. I know it depends how you pay yourself - It's just that I was expecting to see a higher percentage of gross earnings. Not a drop of 10%.

[Gonzo]

"A contractor earning £1000 per week with no expenses will take home about £624.00"

Does this sound about right? I've only just started contracting so the money side hasn't settled down yet. But as a permie I was taking home about 70% of my untaxed salary. According to this, it will only now be just over 60%

It sounds like as a permie you were in the lower rate tax band - less than £39000ish a year, so 22% tax and 11% NI (NI could be lower if you were contracted out of SSP).

You should earn significantly more than that as a contractor - while there is plenty of work around, when there is no work around you will earn significantly less.

[Ian]

"A contractor earning £1000 per week with no expenses will take home about £624.00"

Does this sound about right? I've only just started contracting so the money side hasn't settled down yet. But as a permie I was taking home about 70% of my untaxed salary. According to this, it will only now be just over 60%

[RSoles]

Err, no, it's not right.

You cannot be fined for tax avoidance (yet!)
You could be fined for fraud I guess.
RS

[miffy]

Is this right?

Yes.

Unless you can support your claims for your out of pocket expenditure, it's fraud.

[NotAllThere]

If you could then not produce receipts to support your expense claims you would have to repay any tax relief you had received and could also be fined for tax avoidance.

Is this right?

[DaveB]

Are out now

Can we get a sticky of the body of the article in here?