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  1. #1

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    Default Lost at sea...Inside IR35.what % should I expect to take home?

    Hi,

    I'm a relatively young IT Analyst who to date has always being employed in a permanent role, however I am currently in the negotiation phase of a contract role with a day rate of around 300, which falls inside IR35. Having no previous experience of operating within a Ltd company, I'm....lost at sea.

    The reason for this is due to the umbrella companies and comparison companies I have been in contact with. I've been told there is 2 options, a standard umbrella where net pay is around 62% of my daily rate, which makes me question if taking on a contract role inside IR35 is worth while? or "enhanced tax efficient" umbrella where they promise 86% take home which is fully HMRC compliant. I've been around long enough to know that if something sounds too good to be true then it probably is, however I don't understand how they could legally sell and advertise this method as legal and compliant... if it wasn't?

    Any help is appreciated, and I would also like to know what % other contractors take home as net pay.

    Thanks

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    You could try a calculator like the one linked below.

    Umbrella Company PAYE Calculator | Contractor Umbrella

    I thought this figure would change when you hit the thresholds but I'm not completely sure to be honest.

    Note there is a warning against the 85% crooks at the bottom of this page but I re-iterate... RUN A MILE. You are correct to question how they do it legally and the HMRC Scheme Enquiries fora is worth a read if you still haven't gotten the message.

    Your two options should be PAYE from agency or umbrella but you don't mention the agency option. Are they not offering this?

    It's all pretty complex to I'd suggest you give Contractor Umbrella a ring and get them to talk you through it. They are very well versed in this whole carry on.
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    On a side note. 300 a day is pretty low and then putting it inside is even worse. If you are still young is it not worth staying put for a while or going for another permanent role and become a more senior / experienced BA that can not only command a better rate but also make sure you can get end to end gigs.

    Your first gig tends to be the easiest to get as you aren't always under the same time pressures you will be trying to get your second with zero income coming in. Scrabbling about contracting without enough experience on 300 quid a day gigs doesn't sound very viable to me.
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    Quote Originally Posted by northernladuk View Post
    On a side note. 300 a day is pretty low and then putting it inside is even worse. If you are still young is it not worth staying put for a while or going for another permanent role and become a more senior / experienced BA that can not only command a better rate but also make sure you can get end to end gigs.

    Your first gig tends to be the easiest to get as you aren't always under the same time pressures you will be trying to get your second with zero income coming in. Scrabbling about contracting without enough experience on 300 quid a day gigs doesn't sound very viable to me.
    Hey,

    Thanks for your reply, I'll be sure to have a look at the threads and company mentioned above. It's actually a TA role and not a BA, so 300 is about the going rate in Scotland, however inside IR35 looks like it could be a bugger, if the 62/64% net is to be believed.

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    Quote Originally Posted by kysto View Post
    Hey,

    Thanks for your reply, I'll be sure to have a look at the threads and company mentioned above. It's actually a TA role and not a BA, so 300 is about the going rate in Scotland, however inside IR35 looks like it could be a bugger, if the 62/64% net is to be believed.
    It is. Anyone promising much more than that, or covering expenses, is either telling lies or lining you up for a very large future tax bill.

    Dunno what you permie rate was, but as a sanity check you're looking at the equivalent of about 35k salary
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    Don't forget there are no expenses allowed either if you are planning on long commutes or stop overs.
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    There is no such thing as an "enhanced Tax efficient umbrella" what there is are normal umbrellas and smooth talking scam artists who will take 10-15% of your money and leave you with a blooming large tax bill 1-5 years away and a long term black mark in your records within HMRC...

    300 a day for an inside IR35 contract is as others have said not much money. You can't claim expenses and you won't get holiday pay. I wouldn't be rushing to take it....
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    I reckon rule of thumb 60% Brolly, 75% max Ltd but only if u leave most of it ltd Money in the pot

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    Quote Originally Posted by stek View Post
    I reckon rule of thumb 60% Brolly, 75% max Ltd but only if u leave most of it ltd Money in the pot
    It also depends on whether you class a pension contribution as take home or not - if you do then it could be higher; if you don't then your take home could be a lot, lot lower (possibly even as low as NMW)
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