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Contractors and Directors Tax Saving Solution

Over recent years the Revenue have really cracked down on contractors when it comes to tax payments. Attempts by contractors to avoid hefty tax bills by setting themselves up as a limited company have failed with IR35 provisions. This means that earnings cannot be paid as dividends and must effectively suffer tax at your highest rate along with employees and employers national insurance.

If you are a company director or highly paid employee you will suffer the same fate as contractors above if you are paid via the company payroll. This can mean an effective tax rate as high as 60%

There is an alternative, which avoids the IR35 issue and allows you to retain 80% of everything you earn, legally.

So what is the different way of working?

By becoming an employee of one of the UK’s largest specialist contract companies your commercial services are contracted to your current client or employer. You pay tax on all your UK earnings but your income is structured in a highly tax efficient way.

Those who typically benefit most are existing contractors and also business owners who are running their own company. Benefits include

  • Maximum deduction from earnings of 20% so you keep 80% of what you earn.
  • Your status as an employee of a UK company moves you out of the scope of IR35.
  • No need to form a limited company with associated running costs.
  • No additional costs of insurance, administration etc.

Who does this apply to?

  • You need to currently earn over £70,000 per annum
  • You need to be able to contract to a client company for over 6 months
  • This will work well for business owners currently employed in their own companies
  • It will also work well for professional sub contractors.

Tax savings are one of the main reasons directors and contractors come to Parker Chartered Accountants and Financial Advisors. The contractor route is a favourite solution of ours where a company earns profits in excess of £70,000 per director thus pushing the director into higher rates of tax. It is a low risk highly efficient remuneration solution.

To discuss how Parker Chartered Accountants and Financial Advisors can help cut your tax liabilities call 0121 704 1354.


Parker Chartered Accountants and Financial Advisors is the trading name for Parker Business Development Ltd (Registered No. 4116664), Parker Tax and Trust Ltd (Registered No. 06950353) and Parker Financial Planning LLP (Registered No. OC347027). Parker Financial Planning LLP is authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales – registered office contact details here