HMRC are actively chasing contractors for tax on untaxed income. Some umbrella companies are offering nurses umbrella company loan schemes to increase take home pay.
Some umbrella companies are paying contractors the minimum in salary and taxing this income as normal. However after the minimum payment is made to the contractor the umbrella company then is offering an interest free loan to the contractor to make up the rest of their salary.
An example: A contractor earns £ 1000 per week.
£200 is paid as normal and taxed as normal.
However the balance of £800 is then given to the contractor as an interest free loan, with no loan repayment contract or interest charged.
As a result the contractor is receiving £ 800 tax free. The umbrella company is charging a hefty fee for the arrangement.
HMRC have said on numerous occasions that these schemes don’t work and are clearly tax avoidance. Now HMRC are chasing contractors for the outstanding tax that was not paid on the disguised loan payments as they are deeming these payments as taxable. The latest spotlight statement issued by HMRC is available by clicking here
Thousands of contractors across the UK including doctors and nurses are receiving letters from the taxman with demand notices for thousands of pounds in unpaid tax. This has also been highlighted in the national press.
Any contractors that have been paid by umbrella company loan schemes are being advised to contact HMRC and notify them of the details. HMRC have stated that the tax on such schemes must be repaid by the 05th of April 2019.
Nursing Personnel would advise any nurse NOT to engage in umbrella company loan schemes and if you’re are concerned about any of the above please contact us or contact your professional adviser.
With NHS price caps and the new IR35 rules nurses and healthcare workers are looking at all options to increase their take home pay. However HMRC have stated that untaxed loan schemes ( umbrella company loan schemes ) and off shore tax structures used to avoid tax will be chased by HMRC. This has been reported in the Daily Mail (click) here and The Telegraph(click) news papers and some workers are facing bankruptcy and this is now affecting their mental health. This is not deterring HMRC from aggressively chasing unpaid tax and NI. Loan schemes have also been highlighted on the BBC and Money box. To hear and see the report how HMRC are chasing tax on loans click here. Nursing Personnel would advise nurses and healthcare workers to avoid these schemes at all cost as this will end up costing workers a lot of hardship and pain once HMRC catch up with you. Oddly HMRC seem to be chasing the workers rather than the sellers and promoters of these schemes.
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Should any nurse require more information on any of the above please feel free to contact us or visit our web site by clicking here