Offshore Umbrella Companies returns for UK Contractors

Posted on May 3, 2016 by admin

Offshore Umbrella Companies Returns

Offshore Umbrella Companies returns are the best returns a contractor can get. Those using them are able to keep the most of the money they earn of all contractors.

The returns can be as high as 90% depending on income.

It’s usually reckoned that a contractor using an onshore umbrella company will pay around ten grand a year tax more than one using a limited company.

However, offshore returns dwarf even that of limited companies. Indeed, it could make another ten grand’s difference again to the UK Contractor.

Difference in Take Home Pay

So, the difference between the annual take home pay between a contractor in an offshore company and one in an onshore one can be as much as £20,000 a year.

That’s a difference, over 15 years or so, of around £300,000. Once you’ve added in the extra earning potential of having that extra money to invest, it could be quite a substantial sum we are talking about.

On the Stock Market you are able to get an average return of around 12% a year, including dividends.

Extra Money Calculation

If you calculate how much your extra 20 grand a year would come to over 15 years at 12% interest a year, your money would be worth an extra £835,000 over that 15 years.

Of course, if you are better than the average Stock Market punter you could make even more.

So, it is clear that Offshore returns are much higher than for those using onshore companies. Using them would make contractors a million quid richer in 16 and one-third years, I calculate. That’s not to be sniffed at.

If you are going to be a successful and rich contractor you should maximise your returns from your earnings.

Apply for Offshore Umbrella Companies

So, to find out more, or to apply for one, click on Offshore Umbrella Companies List to get the best offshore umbrella companies returns and offers.

Offshore Umbrella Company Returns

Posted on March 22, 2016 by admin

Offshore Umbrella Company Returns

So, what are the offshore umbrella company returns on your hard-earned cash compared to other options?

First of all, what are the other options?

Firstly, you can just pay up on your IR35 tax. Secondly you can operate through a Limited Company (or Personal Service Company). Thirdly you can operate through a PAYE Umbrella Company. Finally, you can operate through an offshore umbrella company.

Offshore Umbrella Company

Offshore Umbrella Company Returns can vary anywhere between 85% and 90%, depending on your income. Using offshore umbrella companies are by far the best method of keeping most of your money.

So, if you earned £100,000 you would expect to keep £85,000 to £90,000 of the money you earn.

Limited Company (Personal Service Company)

This is the next best option. However, you would still be £10,000 to £15,000 down than the offshore umbrella company returns. You would expect to keep around 75% of your money. So, you would keep around £75,000 if you earned £100,000.

Onshore Umbrella Company

Using a normal onshore umbrella company would let you keep around 60% of the money you earn. This means you would keep around £60,000 of the £100,000 you earned.

PAYE Operator

If you pay the IR35 tax or use normal PAYE, you would get back around £55,000 of £100,000 that you earned.

There are many reasons for using one or the other. However, if it is a bean count, and you are just going for the most lucrative option then the offshore umbrella company returns of up to £90,000 makes it a no-brainer for contractors.

You could be keeping up to £30,000 a year more by using an offshore umbrella company rather than using a normal onshore umbrella company. That mounts up over time. That money escapes you.

To find out more about offshore umbrella company returns you should click on Offshore Umbrella Company Directory

Offshore Umbrella Company List

Expenses Umbrella Company Contractors Don’t Claim

Posted on December 21, 2015 by admin

Expenses Umbella Company Contractors Don't Claim

Expenses Umbrella Company Contractors Should Claim

There are quite a few expenses umbrella company contractors should claim but don’t.

Chancellor Osborne stated in his Autumn Statement 2015 that he was going to take away the right of umbrella company contractors to claim travel and subsistence expenses against tax if they were under the supervision, direction and control of their clients.

It was immediately thought that this could be a complete game changer for umbrella companies and their owners. It was thought that it could be an existential threat to them.

After all, if contractors will pay a monthly fee greater than what they are able to get back in tax deductions then surely there was no point in them staying in the umbrella company.

Working through Umbrella Companies for maximum returns

Umbrella Company Contractors Don’t Claim Expenses

However, figures from giant group showed that 60% of the contractors in their umbrella company don’t bother claiming any expenses at all.

So the Chancellor shutting down the travel and subsistence expenses wouldn’t affect them at all.

Many of them probably don’t even know that it has happened. When April comes they will probably be oblivious to it.

So, for what could they have been claiming?

Allowable Umbrella Company Expense Claims

For a start, everyone travels to work so they could have been getting 45p a mile deductible for the first 10,000 miles and 25p thereafter.

If you are giving someone from an umbrella company a lift to work you can claim another 5p a mile for them.

Your parking fees are claimable as are any toll charges.

If you take the train or bus to work (or even aeroplane), you can claim the full cost back in tax.

Umbrella Company Expenses explained

No Travel and Subsistence After April

This is going to go in April for those who are supervised, directed and controlled. However, why do so many current umbrella company contractors not claim for any of this?

Surely, they don’t all live in walking distance of work.

Then there are subsistence expenses.

If you are working away from home you can claim the cost of hotels and meals.

You can also claim for rented accommodation although not for food. They reckon that you would probably eat anyway.

If you do any extra work and have to eat then you can claim it too.

Expenses Deducted from Wages Before Tax

All expenses are deducted from your ‘wages’ before tax is calculated.

However, 60% of giant’s contractors don’t.

giant are not unusual other umbrella companies tell me that more than half their contractors don’t claim any expenses.

All of the above are about to go in April for those who are supervised, directed and controlled at their client’s site.

However, it is strange that so few umbrella company contractors claimed them in the first place.

Maybe they couldn’t claim subsistence as they were not working away from home. However, everybody has to travel into work.

As the umbrella company deducts your tax and NI contributions from your salary before it ia calculated, it could be money saved at the higher rate of tax.

Umbrella Company Costs for UK contractors

Other Expenses Claimable by Umbrella Companies

So, what else can they claim.

They can claim for postage, stationery and phone calls related to their work

Also, they can claim for equipment like PCs and printers etc. that they use on their assignment

They can claim for fees paid as membership of trade bodies like contractors group IPSE

Again, they can claim for training costs and even the cost of eye tests and glasses.

A significant saving is tax-deductible for a pension scheme. Do they not claim for that?

Maybe the umbrella company has a pension scheme and claims for them but I don’t know.

Even the umbrella company’s fees are tax-deductible.

Maybe the umbrella company claims that for them automatically – but maybe they don’t. I don’t know.

Put in Umbrella Companies by Agencies

It just seems very strange that so many contractors could cut their tax bill but don’t.

Perhaps they just don’t know any better.

Maybe when they came into contracting they were edged towards an umbrella company by an agency who get bungs from umbrella companies for sending contractors to them.

Perhaps they have just remained in those umbrella companies ever since.

Contractor Tax Advice on umbrella company alternatives

Umbrella Company Contractors Outside IR35

It could even be that they are outside IR35 and able to use a personal service company but don’t know it.

The difference in tax paid by an IT Contractor earning £425 a day, or £100,000 a year is currently around £10,000 a year.

When the ability to claim for travel and subsistence expenses goes in April 2016 that could rise to £15,000 a year.

With the gap rising umbrella company contractors who do claim travel and subsistence expenses against tax may look at alternatives to umbrella companies.

Umbrella Company Alternatives for Contractors

They could sue a plain old personal service company which could save them £15,000 a year in tax and NI contributions.

Also, they could use a tax efficient Limited Company Solution which would save them £25,000, or more, a year.

They could also use an Offshore Umbrella Company which would save them £25,000 to £30,000 a year.

Tax Efficient Limited Partnerships for UK contractors

Umbrella Company Contractors Who Don’t Claim Expenses

However, as regards the 60% of umbrella company contractors who don’t even bother to claim expenses, one presumes that they will carry on regardless, oblivious to it all.

There are many expenses that umbrella company contractors could claim but don’t.

Over a period of ten years they may pay a quarter of a million more in tax than they need to.

Invested properly over a ten-year period that could easily be turned into half a million.

Perhaps a new term could be coined for those contractors, who, after all, are permanent employees of their umbrella companies for tax purposes.

Maybe they could be called semi-perms.

Umbrella Companies Contractors Alternatives After April

Posted on November 17, 2015 by admin

Umbrella Companies Contractors Alternatives

Are you looking for umbrella companies contractors alternatives?

Umbrella Companies in the UK are under a severe threat that would be a severe blow to the solar plexus. It would leave 200,000 umbrella companies wondering whether it would be worthwhile staying in an umbrella company or looking for another solution.

The Chancellor has already told us that he is going to abolish the ability of umbrella company contractors to offset travel and subsistence expenses against tax.

Umbrella Company Recommendations for UK Contractors

It is mainly contractors who fear that they are inside IR35 who join umbrella companies.

Disguised Contractors in Umbrella Companies

The umbrella companies disguise these contractors as employees of the umbrella company and they deduct PAYE from the contractors’ income.

In all other ways the contractor behaves like a contractor.

The umbrella company performs no other function other than to disguise contractors as employees for tax purposes and pay them accordingly.

They allow for tax deductions like travel and subsistence, pay the contractor and send the PAYE to the taxman.

If contractors were to just pay the IR35 tax they would not be able to claim much in the way of tax deductions.

Tax Deductible Travel and Subsistence Expenses

However, using the ruse, or device, of the umbrella company, they are able to claim certain things against tax.

These include travel and subsistence, equipment costs (e.g. their PC), pension contributions and membership fees of trade organisations.

However, the most important of these is the travel and subsistence that they can claim as deductible.

Conservatives Bashing Contractors Again

However, the Conservative Government, in the guise of Chancellor George Osborne, intends taking it away from them.

To be fair, they are also going to take it away from personal service company contractors too.

They couldn’t be fairer than that, could they?

Umbrella Company Contractors Monthly Fee

Umbrella Company contractors pay a fee of normally over £100 a month for their umbrella company, basically, to pay them.

They must be the only ‘permanent employees’ who their company charge just to pay their salaries.

It was worthwhile, previously, for contractors to pay that fee because they would get more back in tax-deductible allowances than their month fee.

Doing a financial bean count they still came out on top.

However, a financial bean count, after this, may well show that the money they are paying their umbrella company to pay them, and do their admin, is more than they are able to claim back in tax-deductible expenses.

They may as well just pay the full IR35 tax. It might be cheaper for them to do so.

Contractors Staying with Umbrella Companies

Some contractors will stay with the umbrella companies. They will be those who are happy to pay the umbrella company to do their admin for them even though they lose out financially.

There will also be those contractors shoved unceremoniously by their unscrupulous agencies into umbrella companies, against their interests, so that the agencies can continue to get ‘bungs’ from the umbrella companies for doing so.

Inducing contractors to join an umbrella company is illegal under the 2010 Bribery Act – but we know it happens.

However, many contractors will be looking for alternatives to umbrella companies.

Here are some umbrella companies contractors alternatives worth looking at.

Personal Service Companies (Limited Companies)

Although the Conservatives intend to take the travel and subsistence allowance from personal service companies too, there are still lots of other tax-deductible expenses that a limited company contractor can claim.

Indeed, it is reckoned that limited company contractors pay an average of £10,000 a year less in tax and NI contributions than an umbrella company contractor.

So, umbrella company contractors may seek to change their contracts, and working practices, to take themselves outside of IR35.

Many of those contractors using umbrella companies were those who weren’t sure if they were inside IR35 or outside IR35.

They didn’t want to take the chance of an IR35 investigation which may take years and cost them tens of thousands of pounds of back tax and fines if they lost.

However, with these changes to allowances that they can claim they may well be more willing to take a little bit more risk for more rewards.

Tax Efficient Limited Companies

These are similar structures to the common or garden limited companies.

However, they manage contractors income in the most tax-efficient way to give them returns of 85% or more.

Limited company contractors can continue to use their existing limited companies going this route.

An example of one of those, and how they do it, is here – Tax-Efficient Limited Companies.

Offshore Umbrella Companies

Multi-national companies and high net worth individuals, as well s hedge funds, have long used offshore companies to save on tax.

Now contractors are taking advantage of UK tax laws to do so too.

They can get keep 85% or more of their income using these.

For more information see Offshore Umbrella Companies List for UK Contractors.

The contracting world is now very different to the one that we are used to.

Those that plan in advance will be those who will not miss out.

To be forewarned is to be forearmed.

Rise in Use of Offshore Umbrella Companies

Posted on June 7, 2013 by admin

Rise in Usage of Offshore Umbrella Companies

Rise in Offshore Umbrella Companies

Offshore Umbrella Companies appear to be on the rise. One of the top dogs at HMRC recently said that many offshore schemes were completely legal.

Top people in the Conservative Party have been using these schemes for a long, long time. Indeed David Cameron’s inheritance came to a great extent from the money his father Ian made from setting up offshore schemes for himself and for others.

His father-in-law Lord Astor has many offshore schemes. Indeed the house in Scotland that David Cameron and his wife visit every year is registered in the Bahamas.

The top Tory party donor Lord Ashcroft is another one who operates offshore tax avoidance schemes. He is also the Tory party’s top fundraiser.

Tory Party Leaders

The top dogs in the Tory party have been doing this for years. They are getting on their high horses about multi-national companies joining them in doing this now. They didn’t create these rule for them (nor for comedians like Jimmy Carr) but for the ‘good old boy’ network.

As the head of Google said, it wasn’t Google that created the rules. It was, previous, mainly Conservative governments who created them. Making money moved offshore untaxable was one of the first things the Conservative government brought in when they won the 1979 election.

Now, contractors and freelancers are doing the same and setting up offshore umbrella companies. Of course the Government don’t like it but if they changed the rules it would affect many of their own supporters and donors. They liked it best when it was only the ‘good old boys’ that were able to take advantage of it.

Margaret Hodge Avoiding Tax

Even Labour MP, Margaret Hodge, who has been bashing multi-national companies as immoral for avoiding tax, turned out to be a shareholder in an offshore company that pays less than 2% tax. Her share is worth millions and she got a dividend of £50,000 last year. Everyone is at it now, it seems, except the PAYE workers who now pay most of the tax.

Contractors and freelancers can now get 85% or more of their money returned to them through using offshore umbrella companies. It is very difficult for the Conservatives to change the rules so that contractors and multi-national companies are hit and Tory party donors and members aren’t hit. They don’t want to share this goldmine but they don’t want to lose it either.

This is why more and more contractors are operating through these offshore umbrella companies. Their usage is on the rise. To see a list of these companies click on Offshore Umbrella Company Directory

Margaret Hodge an Offshore Tax Avoider too

Posted on May 23, 2013 by admin

Margaret Hodge

It turns out that Labour MP, Margaret Hodge, is a tax avoider too.

You couldn’t make it up. The newspapers revealed, not long ago, that two senior managers at HMRC were putting their salaries through Limited Companies to save tax. This was whilst they were hunting down genuine contractors who were doing so.

They have now revealed that the Hammer of Google, Facebook, Starbucks etc., Labour MP Margaret Hodge, has a share in an offshore fund as well and is an offshore tax avoider.

The newspapers revealed that Chancellor Osborne is an offshore tax avoider and has an offshore family trust worth £4.5m. They also revealed that David Cameron’s father Ian was an offshore tax avoider He made most of his money (and David Cameron’s inheritance) from offshore funds.

The new revelation is that the Chairperson of the Committee which looks into tax affairs and tax avoidance has a share in an offshore fund. Margaret Hodge is an offshore tax avoider too.

Stemcor Offshore Company

She has a shareholding in Stemcor – which paid just 0.01% tax last year. Google and Amazon would be proud of that. Hodge claimed in a grilling, by Michael Crick, that she just had a small shareholding in the company run by her brother who is an offshore tax avoider.

However it turns out that her shareholding is 1.26% of the company. That would mean that she would have been paid out £56,939 in dividends last year. Her shareholding is now worth £1.8m. That’s hardly a tiny, tiny amount as she claimed.

Stemcor have confirmed that it doesn’t even include shareholdings in her children’s names. It turns out that she owns several million pounds worth of shares when you include her children’s shareholdings. They will now pay no inheritance tax on it.

She was asked to explain what other purpose that there could be other than avoiding tax for her share in the trust? She hadn’t replied so far.

It’s always been the case that those in the know have been using these tax avoidance schemes. It’s to save paying their full whack of taxes.

The top Tories have been offshore tax avoiders for a long time. Now it looks like Labour MPs are at it too. They are using them while bashing multinational companies and genuine contractors who now use offshore umbrella companies.

To see some examples of offshore umbrella companies for contractors see Offshore Umbrella Companies