Ministers examining whether loophole should be closed that allows estimated 100000 people to reduce tax to about 20% by offsetting expensesAn additional £400m could be raised in tax under a diagram by ministers to crack down on a loophole exploited by as many as 100000 people. Ministers are understood to be examining whether to severely tighten the rules of personal service companies before George Osborne’s autumn statement on 25 November.
The special companies are often used to avoid income tax and employee national insurance contributions,costing the exchequer about £400m in lost revenues. Professionals in the media, IT and nursing set up a company to cut their tax to about 20% by offsetting a series of expenses against their earnings.
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Source: theguardian.com