Tax Avoidance Through Umbrella Companies

If you happen to be a contractor, agency worker, or work through an umbrella company this may apply to you, so it is best to ensure you understand your pay arrangements to avoid getting an unexpected tax bill.


Some people will bend rules of the tax system to try and pay less than they owe, this unfortunately will also effect if you even if you were unaware, requiring you to pay what is legally due, plus interest with a possible penalty.

Some warnings to look for that that may mean you’re involved in a tax avoidance scheme:

  • The proposed contract payments are needlessly complicated or glossed over

  • You have been told you’ll take more money home after tax but are not given a concrete reason why

  • You are offered cash bonuses when recommending friends

Understanding how you’re being paid is the best way to spot tax avoidance, this applies to anyone in PAYE as well as Self Assessment.

Check payslips and contractual arrangements, this will confirm you are paying the right amount of Income Tax and National Insurance Contributions, but also compare your earnings to the money you receive in your bank account and check if it matches with your payslip. Another thing to be vigilant about is any receivings of untaxed payments like loans or capital advances.


For further information on how to prevent being apart of tax avoidance, please find link attached:


https://www.gov.uk/government/publications/tax-avoidance-facts?&utm_source=campaignpage&utm_medium=refferal&utm_campaign=upstream_

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