Butler and nanny tax dodge closed
Nannies and butlers face action to stop them using the same tax avoidance measures that IT consultants will have with the introduction of IR35.
Link: Budget 2003
The move, which will stop domestic staff using intermediary companies to avoid national insurance and tax liabilities, is bound to hit the wealthy and upper classes who hire household help.
A statement included in Gordon Brown’s Budget measures on Wednesday said: ‘The measure closes an avoidance device whereby domestic workers, who would otherwise be directly employed by the person to whom they provide the service, operate instead through an intermediary, such as a company.’
However, the move immediately prompted puzzlement among tax experts who estimate that the tax revenue to be saved by taking these precautions could only be insignificant.
‘The cost of running and operating a company to avoid taxes in this way far outweigh the possible benefits,’ said Alastair Kendrick, a tax director at Ernst & Young.