Our friends over at Shout99 have posted a story from specialist accounts Danbro who says that new legislation has highlighted the potential risks, which could include massive back tax bills, for contractors using offshore umbrella companies.

It goes on to say that offshore umbrellas based overseas – including the Isle of Man – have offered contractors up to 85 per cent of their income by operating from locations outside the UK tax system. However, the Finance Act 2008 introduced measures to prevent tax avoidance through misuse of double taxation treaties for income arising on or after 12 March 2008.

However, this article actually contains a significant discrepancy and that is that Danbro mention that offshore umbrella companies are offering individuals 85% of their income. By definition an umbrella company would always pay employees under full UK PAYE and NI deductions. It would therefore be impossible to pay anyone 85% of their income whether the umbrella company is in the UK or offshore. What Danbro are mentioning here is most definitely not an umbrella company!

FPS Umbrella in conjunction with Busy Bees, had launched the childcare vouchers for contractors. This is a more flexible way to meet the costs of childcare, under which part of the parents wages or salary can be given up or “sacrificed” in exchange for childcare vouchers.

Childcare Vouchers are simple to set up and use. Here is a list of some of the benefits:

• They are exempt from tax and National Insurance contributions – a hugely important tax concession for working parents.
• Savings can be made by both parents.
• Working parents can each save up to £1196 per year via reduced tax and NI.
• The vouchers are HMRC and government approved.
• Can be used to pay for all approved or registered childcare for children ages 0-16 years old, from nursery fees for the little ones to activity holidays for the teenagers.
• Tax free benefit voucher value £55 per week/£243 a month
• Busy Bees vouchers provide discounts on Busybees nursery places.
• Since the vouchers were launched a number of FPS Members have signed up for this and seen the benefits immediately.