As a professional contractor, you will now be aware of the implications resulting from the Inland Revenues application of IR35, what it entails, and what the effect of IR35 has on you.
If you continue to use your Intermediary Services Company as the vehicle through which you offer your services to clients, then the IR35 legislation will significantly reduce your net income, as all payments for work undertaken will be considered as received in consideration for employment.
You may be liable to the top rate of income tax plus employees NICs on all such payments (from April 2003 there is no upper limit on the amount of NIC payable), it will also impose on the company employing you (ie your personal service company) the burden of paying employer's NICs (12.8% in 2004/05 with no upper limit).
For many contractors who do not change the way in which they operate, IR35 will cause their overall tax burden to increase to over 50%.
At Berater Limited, we recognize that the independent contractor needs to adjust and make additions to their working arrangements.
Berater Limited has therefore developed a tax efficient scheme to minimize the tax burden on the contractor and reduce the legal requirements currently imposed on the service company. This service has been developed to help contractors manage their finances in a highly tax efficient way now that the IR35 rules have come into force, which could produce a return of up to 80%.
The Scheme is based upon :
· Berater Limited acting in much the same way as your Personal Services Company;
· Berater Limited employing you as a Consultant;
· Berater Limited entering into contracts with your Agency;
· Berater Limited undertaking all invoicing and payroll procedures;
· Receiving one third of your gross contract income as a salary;
· Approximately 80% of the remainder of your gross contract income being made available to you in line with current legislation (details available when requesting additional information).