Should I be paid by an umbrella loan scheme?

spence

I have been offered to sign up to an umbrella loan firm to reduce my tax bill.

I earn approx. £45K.

The firm is Darwin, I work in the construction industry.

The deal is to get paid £12K a year salary and get paid the remaining amount as a commercial loan( with a 4% bonus each year to pay off the interest).

My questions are:-

1. Is this legal, will it remain legal?

2. Should I do it?

Thanks in advance.

CKhalvashi

spence wrote: »

I have been offered to sign up to an umbrella loan firm to reduce my tax bill.

I earn approx. £45K.

The firm is Darwin, I work in the construction industry.

The deal is to get paid £12K a year salary and get paid the remaining amount as a commercial loan( with a 4% bonus each year to pay off the interest).

My questions are:-

1. Is this legal, will it remain legal?

2. Should I do it?

Thanks in advance.

It seems like a Jimmy Carr moment.

I owe our holdings company a large amount on a directors loan, but it certainly isn't a tax efficient way of doing it, as you're stomaching Corp Tax for min. 6 years before the debt gets written off, always leaving you 6 years down with the tax man.

Retirement would also be a problem, as you'll have to pay it back into the company when it liquidates.

CK

spence

I don't think I would have to pay corp tax as I would be employed by Darwin and pay the £12K as P.A.Y.E. I would not be self employed or a company director.

Does this information change anything?

CKhalvashi

spence wrote: »

I don't think I would have to pay corp tax as I would be employed by Darwin and pay the £12K as P.A.Y.E. I would not be self employed or a company director.

Does this information change anything?

It makes it seem even more dodgy than it does now.

The reason I've done mine the way I've done it, is because the company will need the finds in the future. My tax affairs, however, are complicated; I'm a director on 6 companies, paid part through PAYE as employed and am also part self-employed, usually with capital gains at the end of the year, as where yours at the moment probably aren't anywhere near as complicated.

Why overcomplicate life over a few hundred pounds a month extra? I can't comment on the scheme itself, but I'd hate to think what would happen if HMRC came calling, as this seems to be an area of choice at the moment. There could be £1000s to pay in one go if they do.

CK