HMRC tightening up on Employee Benefit Trusts

[Scoobos]

IMHO don't touch them with a barge pole. Far too dodgy and I agree that its square bang in HMRC's targets - thanks to the Premier League etc.

Use an umbrella as Lisa suggested, if it's your first go - and then form a LTD once you know you have what it takes.

[meanttobeworking]

Also remember that any percentages they claim is a percentage of your ex. VAT invoicing amount. Which means in real terms (i.e. cash in your pocket after invoicing) Ltd works out about the same.

for example (roughly):

Loan Scheme Figures

Invoice amount: £10,000
15% fee/tax/whatever: £1,500

Cash in your pocket: £8,500 (85%)

Ltd Figures

Net invoice amount: £10,000
Total invoice (inc VAT): £12,000
Remainder after VAT repayment: £10,380 (paying VAT at 13.5% for first year on FRS)
Modest expenses: £500 -> to your pocket
Salary: £624 -> to your pocket
Remainder Profit: £9,256
Profit after Corporation Tax: £7,404 -> to your pocket as dividend

Total to your pocket: £8,528 (85%)

Obviously this is just a rough working, and doesn't take into consideration a couple of things (like professional fees for accountants, etc), but for the sake of a few quid, Ltd is my recommendation (and I used to use a loan scheme).

[northernladuk]

I've been talking to a couple of friends and doing a little research and it looks like the HMRC are locking down pretty hard on Employee Benefit Trusts.

I'm starting a new contract on Monday and thinking of going in on a trust, but I'm just a little worried and really dont want to get a huge bill from the tax people one day, or even worse, get all my money locked down.

So now I'm not sure if I should go Trust and hopefully save some money, or just go Umbrella.

Any thoughts?

Maybe instead of talking to friends you could have spent time searching the forum for the raft of very long threads (some stickied) that discuss this in detail, straight from the mouths of people affected by it.

The site search is rubbish and won't let you search for EBT so use the google method. This is explained in the thread below.
http://forums.contractoruk.com/welco...uk-forums.html

[LisaContractorUmbrella]

I've been talking to a couple of friends and doing a little research and it looks like the HMRC are locking down pretty hard on Employee Benefit Trusts.

I'm starting a new contract on Monday and thinking of going in on a trust, but I'm just a little worried and really dont want to get a huge bill from the tax people one day, or even worse, get all my money locked down.

So now I'm not sure if I should go Trust and hopefully save some money, or just go Umbrella.

Any thoughts?

Locking down pretty hard is a bit of an understatement - tax avoidance schemes seem to be HMR&C's top priority at the moment and they are not playing nicely You don't say whether this is your first contract - if so an umbrella company is a good option for the first few months just so you can see whether or not the contractor route is for you; if you have had several contracts and think you are outside IR35 then the Ltd Co route is definite the best financial route for you. If you are inside IR35 then you just need to weigh up the pro's and cons but whatever you decide I would avoid any scheme promising 80-90% take home pay especially if they claim to be HMRC approved.

[malvolio]

I've been talking to a couple of friends and doing a little research and it looks like the HMRC are locking down pretty hard on Employee Benefit Trusts.

I'm starting a new contract on Monday and thinking of going in on a trust, but I'm just a little worried and really dont want to get a huge bill from the tax people one day, or even worse, get all my money locked down.

So now I'm not sure if I should go Trust and hopefully save some money, or just go Umbrella.

Any thoughts?

Take a look around you. There's a thread around here somehwere where people are trying to prevent being forced to pay six figure tax bills. Why not get a Limited Company and be both safe and comparatively well off? You won't actually lose that much when you work it out and at least you know that what you earn is all yours.

[sn0wm0nkey]

I've been talking to a couple of friends and doing a little research and it looks like the HMRC are locking down pretty hard on Employee Benefit Trusts.

I'm starting a new contract on Monday and thinking of going in on a trust, but I'm just a little worried and really dont want to get a huge bill from the tax people one day, or even worse, get all my money locked down.

So now I'm not sure if I should go Trust and hopefully save some money, or just go Umbrella.

Any thoughts?