Should I trade as a Limited Company, umbrella or composite

[delsvan]

No, that is per month. I am not paid much yet...

[Cowboy Bob]

No, that is per month. I am not paid much yet...

Even so, I find it hard to believe that you can legitimately spend 50% of your gross on expenses. Still if you have the receipts I guess you're safe...

[brobi]

Calculation Result
Income before Tax £2100
Expenses £1000
Tax £252
Income after Tax £1848

Ok but your actual expenses might be train fares, petrol, IT equipment etc. So for the most part your expenses is money you spent for a service. But with mine I pay tax on 20,000 a year with no claim on the petrol (130 per month 12x130=1,560.

Calculation Result (monthly)
Income Before Tax - 5,000
Expenses (not claimed) - 160
Tax (9% account management charge) - 730
Income After - 4,110

So in summary no recipts to keep, no accounts to manage (self employed), no accountancy fees, no IR35 and overall no hassels as this firm deals with the agency directly.

[brobi]

Its also one of those lovely offshore tax schemes!

I have only one comment to make ????

Call it what you will but if it saves me money and I can shout about it. Besides you gotta be in it to win it

[malvolio]

Ok but your actual expenses might be train fares, petrol, IT equipment etc. So for the most part your expenses is money you spent for a service. But with mine I pay tax on 20,000 a year with no claim on the petrol (130 per month 12x130=1,560.

Calculation Result (monthly)
Income Before Tax - 5,000
Expenses (not claimed) - 160
Tax (9% account management charge) - 730
Income After - 4,110

So in summary no recipts to keep, no accounts to manage (self employed), no accountancy fees, no IR35 and overall no hassels as this firm deals with the agency directly.

I think you need to talk to an accountant. If you're netting £48k it's quite likely you should be paying higher rate...

But then again, if we didn't have people boasting about their abilities to fiddle the system- or even just ignoring it completely - we wouldn't have had S134c and IR35 in the first place.

[brobi]

Why waste money on an accountant? Financial Advisors are cheaper!

I think you need to talk to an accountant. If you're netting £48k it's quite likely you should be paying higher rate...

No need as a friend of mine and financial advisor is a qualified tax lawyer in the UK. So I think if it was illegal he would know. Also it is safe to say that the Inland Revenue monitor this scheme very closely.

[malvolio]

No need as a friend of mine and financial advisor is a qualified tax lawyer in the UK. So I think if it was illegal he would know. Also it is safe to say that the Inland Revenue monitor this scheme very closely.

Then perhaps you and your friend should read the news a bit more carefully. It may stop being legal in the not too distant future. But hey, what do I know...

[brobi]

Then perhaps you and your friend should read the news a bit more carefully. It may stop being legal in the not too distant future. But hey, what do I know...

Show me the way! I am always up for some re-education.

[Cowboy Bob]

Show me the way! I am always up for some re-education.

Bear in mind that if your scheme is deemed illegal that any outstanding tax will be backdateable to December 2004.

http://www.contractoruk.com/news/002585.html

Anne Redston, of the Chartered Institute of Taxation, draws attention to the Budget small print which announces a consultation on the tax and NICs position of managed service companies.

“This is the first sign that the government is considering the tax policy issues raised by composites/umbrella companies/managed service companies separately from those of limited companies set up for one worker, or a small number of connected individuals.

“These companies are widely used to supply individual contractors to big companies in the UK. HM Revenue & Customs is concerned that these companies are avoiding - or evading - income tax and NICs, and has announced that it is consulting on new rules to prevent this,” Ms Redston said.

[brobi]

“Potentially under challenge are composite companies, umbrella companies, payment split via salary and dividend and payment split via partner dividend, as in the case of Arctic Systems,” explained Roger Sinclair, legal consultant at Egos Ltd."

"However, buried in the Budget’s finer print, the government says any review will accompany new powers to tackle those who hide employment income by drawing dividends, in order to take advantage of the 19 per cent small business tax.

“Since the Pre-Budget Report, further evidence has emerged that employment income is being disguised as dividends in order to take advantage of the small companies’ tax rate, often encouraged by promoters of mass-marketed managed service company schemes.


All of the above is taken from the same document you posted and this scheme is none of these. Also it's not controlled by the UK government but more on the double taxation treaty. In fact the IR uses a similar scheme themselves so it APPEARS for the moment, they wouldn't close this.

Bring back the tories!!!