Reply to: Ltd vs Umbrella

[Ardesco]

I am an accontant !!! ive not started contracting jst yet i was only considering the different possibilities for when i eventally start... i thought the whole irredeemable debt sounded dodgy, glad to hear it is illegal.

if anyone needs help on ir35 try this link

http://www.helpaccountants.co.uk/rec...tions_page.htm

If you are an accountant why on earth are you not running your own LTD?

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[malvolio]

I wasnt sure if it was legal... im guessing not now!! thats the calculations they sent me. I think because they pay you in irredeemable debt its not taxable so the 10k plus the approx 4k (tax and ni on the nominal salary). Hence 14k is all you pay and youy see the rest.

I have an Australian collegue at work who uses their services but im guessing seeing as he's only here for a few months he can get away with it?

I suggest you read the Red Book that backs up the last budget very carefully indeed. Look for the thing about misuse of mutual taxation treaties. Then go check your savings, because you may be needing them.

Also, of course, have you been told that "irredeemable" loans have this interesting treatment in UK taxation law such that when you stop the daisy chain you will be liable for the accrued tax on the notional income you have been receiving?

Then again I'm not an accountant. I suggest you talk to a good one, quickly.

[Alan @ BroomeAffinity]

MSCs are no more as far as a newbie is concerned, although rumour has it there are still some unenlightened souls providing that service.

I've got contractors coming over almost daily from an accountants in Middlesbrough who would appear to be operating a (thinly) disguised MSC which would appear to be run - or at least owned - by an employment business. The "accountants" had control of the bank account and paid the VAT and tax etc. At least, that's how it would appear. We haven't had a response from them yet despite asking for about a month.

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[BrilloPad]

Feel free. It's illegal, but what the hell, it's you who'll go to court. Anyway, 1635+6120+2312=£10,067 in fees before you earn anything - you are pulling our leg, aren't you. now go away and try again

I think only the 1635 is upfront? The others are related to amount you charge.

Though 1635 seems alot for insurance.

[malvolio]

here are the calculations from DMS for a contract worth 72k:

Employer Insurances £1,635 £0
Management fees 8.5% £6,120
Trustee fees, 5% of loan £2,312
EBT Distribution (before P11D tax) £43,933
Plld loan tax, 22% of 6.25% of loan £604

they pay you a salary of 18k which is liable to both tax and NI and the charge fees for the remainder which is basically paid to you as irredeemable loan............ is it worth doing? i could end up seeing an 80% but is it worth the risk?

Feel free. It's illegal, but what the hell, it's you who'll go to court. Anyway, 1635+6120+2312=£10,067 in fees before you earn anything - you are pulling our leg, aren't you. now go away and try again

[BrilloPad]

here are the calculations from DMS for a contract worth 72k:

Employer Insurances £1,635 £0
Management fees 8.5% £6,120
Trustee fees, 5% of loan £2,312
EBT Distribution (before P11D tax) £43,933
Plld loan tax, 22% of 6.25% of loan £604

they pay you a salary of 18k which is liable to both tax and NI and the charge fees for the remainder which is basically paid to you as irredeemable loan............ is it worth doing? i could end up seeing an 80% but is it worth the risk?

with montpelier you could make 83%.

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[Alan @ BroomeAffinity]

... would it be risky to use an 'umbrella structure' but is basically a disguised MSC such as DMS?

http://www.dms-london.co.uk/contractor_solutions.asp

Yip.

Had a look at the contractor calculator and the best option (so by that I take it the DMS option) is "Salary Packaging" - doesn't tell you what it is though.

I'd go with a more transparent solution. If you can tell its a diguised MSC, then d'you reckon its beyond the tax man's abilities?

MSCs are no more as far as a newbie is concerned, although rumour has it there are still some unenlightened souls providing that service.

Agree YourCo is the only sensible answer though!

... would it be risky to use an 'umbrella structure' but is basically a disguised MSC such as DMS?

http://www.dms-london.co.uk/contractor_solutions.asp

[malvolio]

The thread is wee bit out of date, though. Worth bearing in mind.

Go Ltd, though. That's always the advice.

Not as far as the financials between Umbrella and Limited it isn't, at least not to the extent someone who doesn't already understand the thing would notice. MSCs are no more as far as a newbie is concerned, although rumour has it there are still some unenlightened souls providing that service.

Agree YourCo is the only sensible answer though!

[Alan @ BroomeAffinity]

Oh look what I found on this forum:

http://forums.contractoruk.com/accou...composite.html

The thread is wee bit out of date, though. Worth bearing in mind.

Go Ltd, though. That's always the advice.

[SueEllen]

Oh look what I found on this forum:

http://forums.contractoruk.com/accou...composite.html

[LisaContractorUmbrella]

You take home will also depend on whether or not you will be inside or outside of IR35 which will make a big difference