During the pre-budget statement delivered yesterday (6th Dec), in the House of Commons, it was made clear that the Chancellor of the Exchequer was looking to clamp down on all managed service companies that offer composite schemes. Whilst this is good news for Tarpon and its employees, managed service companies that operate composite schemes were at the brunt of the Chancellor''s attack.
In laymen terms this is where managed service companies pay a small basic salary and all other monies in a dividend payment which will incur far less tax and national Insurance. Hence, a higher net take home.
In a lot of instances paying yourself yearly dividends based on company profits isn’t a problem under the correct circumstances. But, many managed service companies will pay contractors and freelancers in frequent dividends for its tax advantages.
Anyone that has been working through a composite company, receiving dividend payments purely for tax advantages, could face back tax payments for up to seven years.
As Tarpon has and always will operate a compliant PAYE structure and doesn’t offer any divided payments, all contractors and freelancers can sleep easy knowing they are working in a safe and secure way.