Employee Benefit Trust

Is An Employee Benefit Trust Right For You?

Whilst there is great freedom to be had in being your own boss and working as an independent contractor there is also the reality that you are losing a lot of the benefits associated with employment. Of course to counter the loss of paid holidays, paid bank holidays, employer pension contributions a UK independent contractor can expect to receive a better rate of pay than their full time employee equivalent. The thing about increased gross pay is that tax is paid as a percentage and this seriously eats into any advantage the contractor may have. It is for this reason that Employee Benefit Trusts have become so popular.

The Advantages Of An EBT

• You will retain more of your contract
• You will be able to claim the statutory benefits of employment
• A very simple way of running your "self employed" payroll
• A large number of companies to choose from so competitive rates
• Did we mention that you get to keep much more of YOUR salary?

The Disadvantages Of An EBT

I'm sure you weren't expecting this bit? What the EBT scheme companies can neglect to tell you.

• There is a risk (however small) that the loan will be called in - an EBT is so tax efficient because of the loan nature of payments
• HMRC really don't like them, there is risk involved!

Of course it has been noted that EBT's in particular were named in the April 2010 budget as being something that will be cracked down on, any contractor entering into an EBT arrangement does so at entirely their own risk.

A Better Contractor Payroll Solution?

Wouldn't it be great if there was a payroll solution for UK contractors that had the benefits of an EBT but without being an Employee Benefit Trust? A solution does exist, fill in the form on the left hand side to find out more!