Why you should consider using an employee benefit trust
- Author Eddie Bent
- Published March 27, 2010
- Word count 402
What is it?
If you’re a contractor or temporary worker, an employee benefit trust can save you money. By using such a scheme, you can retain far more of your earnings than you would normally expect.
How you can gain
You can receive up to 25% more of your consultancy earnings. The average retention can be up to 85%.
Furthermore, if you sign up with a company that uses the trusts, you don’t have to do any of the administration that goes with these schemes. You simply keep more of the money that you make.
The process
Sign up with a specialist company that uses an employee benefit trust, and you become an employee. The company handles all your current and future contractual arrangements, including invoicing and collection.
You have all the advantages of being a contractor and none of the time-consuming problems of managing your own limited company.
Other advantages
Once you sign up with an appropriate company, there should be no charges when you don’t work. You should have full employee status in the UK and abroad. And you should receive professional indemnity cover.
Legality
Because an employee benefit trust sounds so good, it’s understandable to ask whether it’s legal or not.
The answer is yes, it’s legal. But you do need to sign up with the right company. Some companies may work offshore and cloak their proceedings in secrecy. You may then find that HMRC will go to you direct and ask for tax. The purpose of the trust then falls apart.
You need a company that’s a registered employer, pays its taxes, gives full disclosure and meets all necessary legal conditions.
Retention of earnings
The figure quoted above of 85% for retention of earnings is an average. Sometimes the return is lower. This may happen if you submit a high number of invoices at once. But over a three to six month period, an earnings retention figure of 85% is normal.
Signing with a company
Be wary of signing up with a company that expects you to stay with them and therefore charges joining and leaving fees. You should opt for a company that gives you complete flexibility.
Summary
This article is just a summary of the employee benefit trust process. For further details, speak to a company that uses the trusts. You won’t be wasting your time: you can make significant tax savings.
Find out more about an employee benefit at Bedouin Group visit http://bedouingroup.com
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