Offshore Umbrella Company Benefits
Benefits – so what are the offshore umbrella company benefits?
The main benefits are all connected to the money. This is the best way for contractors to keep most of their money. They can keep anywhere between 84% and 90% of their hard-earned money.
The exact amount depends on how much they are earning.
Mrs Thatcher Changed the Loan laws
Offshore Umbrella Companies started up when Mrs Thatcher changed the laws so that money sent offshore was no longer taxable. It was one of the first laws she brought in when she became Prime Minister in 1979. The Tory party grandees were among the first to get the benefits.
One of the earliest to benefit was David Cameron’s father Ian. He quickly saw the benefits and set up lots of offshore schemes. Indeed he made his money that way. That’s where David Cameron’s inheritance came from.
Many of the Tory grandees saw the benefits and operate schemes like these including Lord Astor, David Cameron’s father-in-law and Lord Ashcroft, the Tory party’s main donor.
How Loans Works
So, the money that is sent offshore stays offshore. The Offshore umbrella company loans the contractor money in lieu of that loan. The loan is never paid back. The contractor defaults on that. The Offshore Umbrella Company takes the money in lieu of that.
Money is not taxed until it comes back onshore. The money never does. It is different money. Loans aren’t taxable. This is how it all works. It’s how the contractor benefits.
It is tax avoidance, of course. However, it is legal and it is not tax evasion which is illegal.
The Government complain about it. However, it is they who make the rules. It is they who can change them. Contractors and others are only taking advantage of the rules as they are. They take the benefits from the Governments own laws.
Indeed it is the legal duty of the directors of a company to maximise the returns for shareholders.
Of course, the Government don’t want to change the rules as it benefits many of their party sponsors. Indeed George Osborne has a Â£4.5m family offshore trust. He sees the benefits of it.
Benefits Not Intended
It’s annoying for the Government when newspapers reveal that comedians and rock stars are reaping these offshore umbrella company benefits.
The benefits weren’t intended for the likes of them and contractors. The Government had to react. However, they don’t change the law.
For some examples of these companies see Offshore Umbrella Company List