Contractors Pay Schemes

Evs74

Hi,

I'm about to move into Self Employment and am looking at the best ways to maximise my income. I'll be earning around £200/day.

Looking around there seems to be a lot of "too good to be true" companies that claim you can take home 90% of your gross income, which is more than Umbrella Companies or setting up a Ltd company.

With no prior knowledge of this sort of thing, i'm assuming these schemes are legal but are they a big risk?

Richard

InsideInsurance

Many of the offshore umbrella schemes can sit in the grey area of legalities (several celebs have been in the press recently for similar schemes) and additionally there is a lack of protection if it all goes wrong.

I know two colleagues that uses them. One has been with theirs for donkeys years, gets the monies in fine and no problems. The other one was a newer contractor, got an even higher percentage of their monies but it was totally sporadic/ unpredictable what they'd get and when. It could go 3 weeks with no money and then £400 turns up, another month with no money and £20 turns up, 2 days later £10,000 turns up

Short of going through a umbrella that requires full receipts for everything or operating a Ltd within the rules of IR35 then you are always going to be running a risk. Personally I operate my Ltd much less into the grey and still retain a healthy percentage without the risk of an offshore company running away with my money.

Evs74

@InsideInsurance Thanks for the advice

directdebiter

I would advise to avoid these companies that suggest 90% take home.

Although many are maybe inside the law - it is a risk and with all the discussions on restrospective tax grabs by the chancellor - if the scheme is not covered in the future you may face a very high retrospective tax bill. For peace of mind I would always go Ltd or standard Umbrella.

directdebiter

I would also look at contractoruk.com forum which has lots of discussions on these schemes from self employed contractors. HTH.