Offshore Umbrella Companies
Offshore Umbrella Companies may turn out to be the best option for contractors. It looks like the Government don’t want contractors in Limited Companies. It looks as if they want them in Umbrella Companies. Indeed it looks as if the Government are trying to herd contractors into the onshore PAYE versions. What is the reason for this? The reason is that the Government get 10 grand a year more from contractors in brollies than they do from Limited Company contractors. However, contractors may reject being herded where they don’t want to go.
For this reason the Offshore schemes may benefit. If you watch what the Government and its followers do rather than what they say then you get a large hint. Whilst George Osborne is trying to get contractors into mechanisms that yield more tax for the Government, he and his family have an offshore trust with a pot of £4.5m in it. Cameron’s father Ian amassed his fortune from using offshore schemes. Cameron’s father-in-law Lord Astor also uses offshore schemes as does Lord Ashcroft, the Conservative Party’s biggest donor.
So there’s a pretty strong tip for using offshore umbrella companies. There are those at the bottom who pay PAYE. There are those in the middle who are able to defray some costs and taxes by using Limited Companies. In 1999, prior to IR35, virtually all contractors used this mechanism. At the top there are the Lord Ashcrofts, Ian Camerons, Lord Astors and George Osbornes who are able to get round paying very much tax by using offshore vehicles. So, by herding contractors out of Limited Companies the Government hope to cash in. However, contractors may not agree to be herded into onshore PAYE Umbrella Companies and may take a leaf out of their very own playbook by using offshore companies. After all, what is sauce for the goose is sauce for the gander.
For a selection of good Umbrella Companies check out Which Umbrella Company