Contractors Articles

It's week 1 and some of the baby faced Umbrella bros are finding hair growth more challenging than others! The bros 'salute their most folically challenged friend Dan'.

"A 3 week head start and a touch of my Mum's mascara have got me in line with everyone else" Dan Bird. We've given him a helping hand in this week's photo.

If you are a contractor or freelancer working in the UK you may have been pitched the tax benefits of paying yourself through an Employee Benefit Trust (EBT).

With an EBT contractors receive just a basic wage equivalent to the Statutory National Minimum Wage. The remainder of their gross earnings go into an EBT, usually offshore. The company making the payment also claims Corporation Tax relief on these payments. The trust then “loans” back the money to the contractor and this loan is not therefore taxable. The loan is never repaid. In effect you receive your wages tax free.

EBT’s have been used from such professions as IT Contractors to Premier League Footballers.

The UK has long been different in some respects. Take property, for example. While swathes of continental Europeans and indeed Americans have for decades happily rented their properties, our homes very much remain our castles. It’s a similar story when it comes to cars, with over a quarter of motorists in the States leasing their vehicles.

“The UK is now fast cottoning on to why car leasing is often the financially savvy option, though”, comments Lee Wolstenholme, Director of Manchester-based Vehicle Consulting, a broker with over 12 years’ experience. “Cars depreciate the minute they are driven off forecourts, so taking out a traditional loan to buy a new vehicle typically leaves motorists with a car or van that has lost value considerably after a few years. Leasing, on the other hand, means you can simply hand the keys back at the end of the contract and the vehicle’s value isn’t yours to worry about”, Lee goes on to explain.

Most UK businesses plan to take on more contractors and freelancers in the next three months, new data suggests. The latest JobsOutlook survey by the Recruitment and Employment Confederation (REC) reveals that 98% of companies intend to maintain or increase the size of their non-permanent workforce during the next quarter.