How a Contractor Calculator helps the Highest earning UK IT contractors to pay 20% less tax than you do.
The Contractor Calculator is used by UK contractors to reduce tax.
UK contractors often feel that they are unfairly targeted for repressive levels of tax, so they end up using an online contractor calculator.
Here's the thing, using a contractor calculator helps you to reduce your costs by paying less tax, which means you earn more take home profit.
What a Contractor Calculator is:
Top contractors will use contractors calculators all the time to discover the potential tax savings on a particular contractor tax solution, these calculators are found online and served by tax avoidance systems that are based in the Isle of Man
The information you can get from a Contractor Calculator:
The Contractor Calculator will provide info such as an illustration based upon the contractors daily pay rate in most cases a contractor who uses the calculator has to enter their email address and then click on a authorization link to be able to get a customized report of the projected savings, as well as an overview of how the relevant tax solution works
Usually a contractor calculator will give you a minimum of this basic information:
A personalised illustration or report on just how much a contractor can save on their contractor tax solution.
an overview of the tax solution including frequently asked question and just how the system works.
These tax avoidance systems are legal in the sense that although the HMRC prefers you didn't pay less tax, they cannot do much about it as these tax solutions are often carefully designed to make the most of maximum tax leveraging provided through trusts along with other mechanisms.
Where do contractors find Contractors Calculators?
contractors usually find these contractor calculators by doing a search online, in google, there are also a few on facebook or even a iphone app that I managed to come across.
The one that I use and recommend would be the contractor calculator online contractor tax solutions.
contractor calculators are generally a simple email form, in order for a contractor to discover just how much tax they could save they have to put in their name, a valid email address and also their daily level of salary... in this example you also get a box where you can ask any questions you have, which will be answered through the staff who work out your personal report(one would hope)
Why Do Contractors Make use of a Contractor Calculator?
Contractors will use a contract calculator for any variety of reasons, to the best of my knowledge this is probably because they can make massive savings on the tax bill, for example a contractor can come home with 87% of his contract value by utilizing some of these contractor tax reducing services - so it would be mostly a purely logical profit motive.
Secondly lots of United kingdom IT contractors feel (possibly justified) that they are penalised for being high earners, as with the UK they are subject to some of the worst/highest taxes in the world- these are individuals who have spend a massive amount of money and time to master their field of expertise and earn well - only to have a huge amount of this swallowed by what they feel is unfair tax levels that penalise high earners. The HMRC has recently in the last few years even introduced ever new measures to try force contractors to pay for more tax - eg: the IR35 law which most contractors feel is really unfair. In this situation contractors get treated and forced to pay taxes like a normal employee. with no benefit of permanent employment.. quite simply they are contractors, contracts end at a moment, and they have NO employment - this is why contractors get paid more, along comes the HMRC plus they legislate a law forcing contractors operating limited companies and working for 1 client - to now pay PAYE levels of taxes.(This is financial suicide for most contractors)
Using the systems provided by the operators of the contractor calculator, contractors can often avoid IR35 entirely particularly if the operators are using a Self-employed model and a trust, as IR35 applied simply to limited companies.
Most operators of a contractor calculator also do tax returns for contractors removing a substantial administrative burden from the contractors life.
Who does a contractor calculator benefit most:
Who is it for?
not risk averse
earning about 250 per day minimum (average contractor is all about 400 sterling a day)
Mostly the calculator will only benefit contractors who're not totally risk averse, because there is always a chance the HMRC could make a new law (and has in the past made laws and then gone after 'back taxes owed in arrears' in a sense saying 'hey you were on this tax avoidance system, now you owe us for that 5 years you were on it chum' - and they have taken several contractors to court just like this, - however they have been losing many of these cases.)
a contractor calculator benefits both contractors who choose to use the operators service and of course the operators, who often charge fees varying between 9 -15% of the gross billing of the end client.