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salary/tax question for all consultants please

 
#1 salary/tax question for all consultants please
05/04/2006 04:18

douglas

As someone outside the industry i've heard that the nature of a management consultant's skill is to help improve clients' profits, etc

I presume this involves finding smart ways to pay less tax.

Does this mean that most m.c.'s use the same techniques to cleverly avoid high tax on their own salaries? I hope it does.

I'm thinking of joining the industry but am put off if it means paying half of my potentially lucrative salary to the tax guy.

Any thoughts on how much tax an m.c. pays on a salary of £70k?

cheers all!

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#2 Re: salary/tax question for all consultants please
05/04/2006 08:14

Tony Restell (Top-Consultant.com)

Douglas - the accounting firms have specialist tax consultancy practices that help businesses with tax planning and minimising their tax bills, but this is not mainstream consulting work and is not typical of the type of assignment you'd work on in a business consultancy. You're more likely to be advising a client on the strategic direction of their business, or how to outsource a part of their business functions, or placing a monetary value on a potential acquisition target based on the synergies that exist with the business.

In terms of tax on your own remuneration, a few firms have experimented with clever bonus schemes that help to reduce the %tax bill you as a consultant will face. But by and large you should expect your basic salary to have national insurance and income tax deducted without any fancy footwork - and if you don't pay 40% tax + national insurance on your bonus then you're also one of the lucky few.

If you join a very small firm where you actually become a shareholder then you might receive dividends as well as salary - and these do attract a lower % rate. But I can't imagine this would be your primary reason for joining a very small firm!

Tony

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#3 Re: salary/tax question for all consultants please
05/04/2006 10:30

Fanny Adams

All true.

Another route would be to work direct to contracts rather than to a salaried job.

And before you say it...yes i know you dont get benefits, you dont get as much job security. blah blah blah

But the flip side is you pay half as much tax, you earn more than your rival at EY etc. And you work when you want to.

Just a thought, from the other side of the world

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#4 Re: salary/tax question for all consultants please
05/04/2006 11:17

Question for Fanny

Fanny

I am reconsidering becoming a contractor again after a few years in a permanent role - can you recommend any good agencies that you have discussed roles with?

Thanks for your time.

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#5 Re: salary/tax question for all consultants please
05/04/2006 11:25

Fanny Adams

Honestly, no i cant.

I put CV out there into the mix with as many as i can almost permanantly. Keeping the CV upto date as often as possible.

So most of the calls i get from agency i end up turning down.

Alot of the work i do comes from people in my contacts list now.

Get your CV out permanently would be your best bet i would say. If your any good the calls will keep coming. And you will be in a position to take work when you want it

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#6 Re: salary/tax question for all consultants please
05/04/2006 11:34

[grad] john mcbride

When you do contracting work is it from home or at client site?

Do you not find it a bit lonely workign from home? Also do you get to engage and manage small teams as a contractor or is it fairly encapsulated soliary work?

Thanks.

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#7 Re: salary/tax question for all consultants please
05/04/2006 15:31

Could somebody please answer the Career Change question below? Any advise would be useful

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#8 Re: salary/tax question for all consultants please
05/04/2006 15:54

Fanny Adams

No i work away on client site moonday to friday. Managing teams, working solely with a client, often taking a team directly from the client aswell.

So no not lonely at all...

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#9 Re: salary/tax question for all consultants please
05/04/2006 21:37

ADW

There is consulting work that is exempt taxation. As long as one becomes a direct party to the consulting contract then all earnings are exempt. Join the consulting profession and discover how.

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#10 Re: salary/tax question for all consultants please
06/04/2006 12:39

CAL

Consultancy is about providing expertise, time and resource to management so they get the best return in their business - not just avoiding tax or cutting cost. You'll need to have real understanding of business and probably some specialist knowledge/qualifications. Good graduates can join large consultancies and learn these.

Any employee with a salary of 70k will pay roughly the same tax (personal allowances will change the details) a consultant is no better (or worse) a job than being a senior manager from that point of view.

One tax calculator to give you a rough idea is here: http://www.moneyweb.co.uk/products/tax/income/generalincometaxni.html

More on employee tax and personal allowances here: http://www.direct.gov.uk/MoneyTaxAndBenefits/Taxes/SelfAssessmentYourTaxReturn/fs/en

It isn't what you pay in tax that matters: it is what you are left with. Does that meets your needs and feel an appropriate reward for the effort .... and being a consultant requires effort not just about the time you spend with a client it is the preparation and commitment, travel and networking you need to do to make that assignment a success. High salaried posts either have to generate money, add considerable value or take risks!

If you go self employed you can reduce that tax bill but beware of needing to make arrangements to show you are a real business not a pseudo-employee trying to avoid tax. This is normally OK if you are a real consultant with multiple clients but is harder if you have interim contracts. Take proper advice. The professional contractors group can help (http://www.pcg.org.uk) or a specialist accountant.

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#11 Re: salary/tax question for all consultants please
13/04/2006 22:10

CuddlyBear

Don't worry mate - you are too dumb to become an MC, anyway. Not understanding the difference between personal and corporate tax; not knowing the UK marginal tax rate; having idiotic ideas about your would-be salary - all in one short paragraph!

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#12 Re: salary/tax question for all consultants please
14/04/2006 13:02

douglas

In response to Cuddlybear (cue childish voice)...

I'm amazed by your spectacular failure of comprehension. You are clearly an idiot of the first order. Na na na na na!

You also don't deserve your superiority complex, since you can't count. I actually wrote FIVE paragraphs and not just the one.

And for your information, I happen to be a member of Mensa. From the evidence in your post, I am utterly sure that I can destroy you in any numerical or verbal reasoning task.

To be serious though - if you don't have anything useful to say - please just go and f*** yourself.

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