How Much Money Will I Keep
Contractors want to know “How much money will I keep by using offshore umbrella companies?”
Is it worthwhile operating through Offshore Umbrella Companies? How much money will you save a year by operating this way?
Say you are a contractor who is earning just over £400 a day – which is around £100,000 a year.
If you operated PAYE you would probably keep about £64,000 of that.
Offshore Umbrella Companies Viable Alternative to PAYE Umbrella Companies and Limited Companies
If you operated through a Limited Company you might keep around £75,000 of that.
If you operated through one of the offshore umbrella companies you would keep something between £85,000 and £90,000 of that depending on how much you earn and your circumstances.
Operating Through Limited Company
So, if you were PAYE you would contribute about £36,000 a year towards the Treasury.
Therefore, if you operated through a Limited Company this loss would be around £25,000 a year.
However, going through one of the offshore umbrella companies you would give up between £10,000 and £15,000 a year. Most freelancers would be towards the lower side at 85% but if they got a really good contract rate they could probably negotiate up towards the higher mark.
It’s probably worthwhile getting a quote from 3 or 4 companies to see what is the best offer. You’ve worked hard enough for it and you might as well keep as much as you can of it.
Government Complaints
The Government complain about it but have no real will to stop it. As the top dog in Google asked, why are they complaining when it is they who created the rules that allowed tax avoidance in the first place?
Legal Tax Avoidance schemes used by UK contractors
It was the Thatcher Government who changed the rules to allow money to go offshore untaxed which gave rise to this tax avoidance in the first place. If they were to abolish it now it would hit many of the Conservative Party donors.
As one of top dogs at HMRC said recently many of these schemes are completely legal. If the Government want to make them illegal they have to change the laws. Until then, offshore Umbrella Companies are legitimate ways for contractors in the UK to avoid tax quite legally.
To see details of these offshore umbrella companies and how much money you would keep see Offshore Umbrella Companies Directory