Category Archives: Offshore Umbrella Companies for Contractors

Offshore Umbrella Companies for Contractors
Offshore Umbrella Companies for contractors can give 85% to 90% returns to contractors and are legal. They are tax avoidance rather than tax evasion and so are legal. Many UK contractors are now using them.

They were previously used by the wealthy and major international companies to cut their tax bills.

It all stems from the fact that Mrs Thatcher made it one of her first bills when she came to power. She made it so that money sent offshore was no longer taxable.

That opened the floodgates.
Tory Grandees
Many of the Tory Grandees started up schemes so that their clients would pay a lot less tax. They aslo used them themselves.

It is only in recent years that UK contractors have managed to be able to tap into this.

Now they can pay a lot less tax as well.

[caption id="attachment_745" align="alignright" width="300"] Offshore Umbrella Companies for Contractors in the UK[/caption]

Offshore Umbrella Companies Viable Alternative to Limited Companies

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Offshore Umbrella Companies Viable Alternative

Viable Alternative

HMRC and Chancellor Osborne have taken away travel and subsistence expenses, as a taxable deduction, from PAYE umbrella company contractors. So, are offshore umbrella companies a viable alternative?

There are over 200,000 umbrella company contractors in the UK.

They pay a monthly fee of over £100 to PAYE umbrella companies, basically just to pay them.

Caught by IR35 Tax

Those contractors in umbrella companies were normally those who:-

  1. IR35 caught,
  2. IR35 Maybe caught them and they didn’t want to take a chance or
  3. they just wanted their admin done and get paid without any hassle.

There are others, still, who unscrupulous recruitment agencies shoehorned into joining umbrella companies. They  just wanted the bung they would get for sending contractors their way by the umbrella companies.

Under the 2010 Bribery Act this is illegal. However, it is well know that this happens.

Umbrella Company Contractors

Umbrella Company Contractors alternatives

Personal Service Company Contractors

Those contractors who operate through personal service companies pay around £10,000 a year less in tax and NI contributions than PAYE umbrella company contractors on average.

This could rise to up to £15,000 now that umbrella company contractors will no longer be able to offset travel and subsistence expenses against tax, from April 2016.

Many contractors will just stay with their umbrella companies as that is all they know. Many of them were not even claiming expenses against tax anyway.

Others will stay because they reckon they IR35 catches them and have no alternative anyway.

Best Umbrella Company Alternatives

Others, who agencies shoehorned into them, or who do claim travel and subsistence expenses against tax in umbrella companies, will have a look around to see if there are any alternatives.

They may make another assessment to see if IR35 really catches them.

Even if IR35 does catch them,, they may seek advice as to how to take themselves out of it by changing their contracts and working practices.

After all, they could be up to £15,000 a year richer if they were not operating through an umbrella company but using a limited company.

Offshore Umbrella Companies as an Alternative

Some may go further and look at using offshore umbrella companies as an alternative.

They could save even more money as those offshore umbrella companies can let UK contractors keep perhaps from 85% to 90% of the money that they earn.

They could keep £25,000 to £30,000 a year more than they could keep by operating through an onshore umbrella company.

offshore umbrella company list

Offshore Umbrella Company List

This will tempt many contractors. After all this adds up over a number of years.

It can make offshore umbrella companies a viable alternative.

For a list of offshore umbrella companies click on Offshore Umbrella Companies for Contractors.