Contracting, Who Would You Like To Win The Next General Election?
The results in the recent local elections won’t come as much as a surprise to most people. Labour seem determined to self destruct, punishing the poor and those who take the risk of running a small business in equal measure with economic policy that does little to inspire confidence in the bunch of morons currently running the country. Only those who are truly arrogant and blinkered could be surprised by what happened. They appear to have lost touch with such a great percentage of the population, reinforced by Gordon Brown’s appearance on the BBC on Sunday to let us all know that it is us who have the problem by not “understanding” what a great financial genius he is. Yes Gordon, of course you are right and everybody else is wrong. You’ve spent money based on a falsely inflated property market and low interest rates that have allowed huge amounts of people to borrow way more than they could afford. You encouraged this, now things have turned, the cycle is rotating. Instead of dragging more money from the private sector to fund ridiculous public sector spending what would really help us all out at the moment would be a reduction in the duty on fuel. This would lower the cost of living straight away across the board. The trouble is that without that revenue those that are elected wouldn’t be able to give themselves such big pay rises so for now they’ll keep with the “doing it for the planet” bandwagon.
So the question is what’s the alternative? In my own opinion Labour seems dead set against contractors and the contracting industry as a whole. On the other hand I think it’s a fair bet to say that the Lib Dems may be even worse on those that work hard to earn hard. The Conservatives seem notable by their silence. So as a contractor who would you like to see win the next General Election in the UK?
Loading …No More Offshore Partnerships, It’s Now EBT All The Way
Starting from today thousands of contractors currently paid through offshore partnership schemes will now need to find another solution. HMRC have specifically targeted the reciprocal tax agreements that allowed many of these schemes to work leaving contractors looking for another solution. Whilst the common misconception is that only handfuls of contractors are paid this way in reality many thousands have taken advantage of the various double taxation agreements offered by the UK Government in recent years. HMRC in removing that option are going to affect the earning potential of thousands of high net worth individuals.
UK Contractors looking to make the most from their contract should now maybe be looking towards EBT (Employee Benefit Trusts) as a viable option. An EBT is a legitimate way of rewarding high worth key members of staff. Several offshore companies are offering EBT schemes to
In the past the EBT route has offered less of a return than an offshore partnership but with the options now being limited more and more contractors will be seeing EBT as a viable payment solution.
The Hypocracy Of Government
Don’t even try to claim expenses that you’re not 100% sure about, put more money away for your pensions, don’t even think about using Offshores! All messages preached by a
Isle of Man Taxation
The Isle of Man indirect tax system closely follows that of the UK, levying VAT and customs and excise duties at the same rates and on the same goods and services as the UK.
A Customs and Excise Agreement exists between the UK and the Isle of Man creating a common customs and fiscal area. Under the Agreement the Island has access to the European Single Market.
A resident person, whether an individual or company, is liable to income tax on world-wide income. Persons who are not resident are liable only on Manx source income. There are no capital, inheritance or withholding taxes. The top rate of income tax in the Isle of Man is currently 18%. The Island has no international tax treaties other than the one entered into with the UK.
Tax Free Companies
A non-resident person can acquire or establish an Isle of Man company and subject to meeting certain requirements ensure that the company is free from tax in the Isle of Man.
Tax Free Trusts
A non-resident person can also settle funds on an Isle of Man trust, which, as long as no Manx residents can benefit, will not be subject to tax in the Isle of Man.
IR35 - UK Contractors
The IR35 issue has become a big deal for UK based contractors, before deciding to contract you should make yourself aware of the implications IR35 can have on not only your income but also your employment.
What is IR35 and how does it affect UK Contractors?
“IR35” is a piece of tax legislation announced in 1999, which took effect from April 2000. The legislation means that the Revenue office can tax some UK contractors as though they are employees of their clients and not as self employed. Any UK Contractors caught by the IR35 legislation pay significantly more tax reducing their take home pay.
Why did the UK government introduce the IR35 legislation?
HMRC’s intention was to tackle tax and National Insurance (NIC) avoidance schemes through the use of intermediaries, such as Partnerships or Personal Services Companies (PSC).
HMRC’s view was that a large number of IT Consultants, Engineers, non-executive directors and “one man band companies” were often treated as self-employed when in fact they should have been treated as employees of the client. This was based on the terms and conditions that the contractors worked under, essentially your contract with the client dictates whether or no not you fall inside or outside of IR35.
Does the IR35 legislation affect all UK contractors?
Yes, in the sense that all contractors need to consider IR35 and take action to protect themselves from it. As mentioned above having a contract that falls within IR35 can seriously impact on your earnings as a contractor. Being inside or outside IR35 is not a black and white issue.
How can contractors determine if they are inside IR35 and not really self-employed?
The law for tax and social security legislation does not define ‘employment’ and ’self-employment’. Over the years Courts have considered the issue and their guidance on this issue is known as IR35 case law. Most contractor payroll service companies will be able to provide an assessment of your current contract as to whether or not you are inside or outside of the IR35 legislation. Many offshore payroll solutions for contractors provide their own new contracts that if acceptable ensure you fall outside of IR35.
Contract Length Does Not Imply You’re Inside IR35
It seems that the length of your contract does no longer imply whether or not you fall inside or outside of the IR35 legislation.
Not an Employee
In a recent judgement released by the Court of Appeal, is has been decided that the agency worker (James) was not an employee of the end client (Greenwich Council).
This case involved a Ms Merana James, who claimed unfair dismissal because her agency sent another temp worker to Greenwich Council when she took time off from the work.
Upon her return after a month’s absence Ms James found another temporary worker supplied by her agency carrying out the role. It was then that she claimed that she had worked for 3 years with the client and that she was an “implied employee” and entitled to the entitlements of a permanent worker.
Your Employment Status Doesn’t Change Because Of A Length of Time
The courts found that the length of time she had worked for the client had not provided her with employment status, she was not deemed an employee of the client. They stated the governing contract she had was a temporary agency workers agreement with the agency which had not been supplanted with an implied contract of employment between her and the end client.
Many UK contractors and their clients fear that after a year or more work for a single client an employment relationship can automatically exist between the two and IR35 becomes applicable. This does not appear to be the case.