Offshore Umbrella COmpany
Should Freelancers, who don’t want to go the Limited Company route go for the onshore Umbrella Company Route or the offshore route? The onshore route is best for:-
- those who are either caught by IR35 or
- those who don’t want the hassle of doing all their own admin and just want to concentrate on what they do i.e. IT Contracting.
An alternative to the safe PAYE onshore brolly would be the Offshore one. There are a variety of Offshore schemes. They are run typically offshore in places like the Isle of Man. Instead of getting paid by the Offshore scheme, the contractor would receive money in terms of a loan from the Trust. The contractor would be able to keep typically 85% of his or her money. It could be as high as 91%.
They used to be considered a bit racy and maybe a bit dodgy too. However, David Cameron confirmed recently that although they were ‘morally wrong’ they were legal. Indeed both his stockbroker father and his father-in-law Lord Astor, use offshore schemes to shelter money from tax. So does the Conservative Party’s leading donor Lord Ashcroft. He has donated £10m to the Conservative Party. Chancellor Osborne has an offshore trust worth £4.5m.
So, it is extremely unlikely that the Conservatives will be party poopers and abolish all of theses schemes. They may get rid of some of them. They are going to make Employee Benefit Trusts (EBTs) illegal. However, most of the Offshore Umbrella Companies have abandoned those long ago and set up other models which are completely legal. I don’t think that contractors should lose too much sleep over the chances of Prime Minister, David Cameron, or Chancellor Osborne abolishing them any time soon.
For a selection of good Umbrella Companies check out Which Umbrella Company