New Public Sector Rules – take-home pay Calculation question – One for the accountant

[b r]

The new PS rules pretty much mean either you take a rate 25%-50% higher than before the new rules, or you work local to where you live.

Yep, certainly spending no more on commuting than an employee would who also has to pay it out of net.

[doconline]

Actually..

£10,000 monthly invoice would made up of
Employer NICs : £1130.68
Taxable Income : £8869.32

Of that taxable income, £2754.93 would be Tax, £455.12 would be Employee NICs, leaving £5659.27.

I think you made the mistake of deducting tax and employee NICs from the 10,000 rather than the after employer NICs amount.

Still, with no relief on expenses, the £3600 comes out of the £5660, leaving £2060 at the end of it.

Which doesn't sound worth the hassle of contracting.

The new PS rules pretty much mean either you take a rate 25%-50% higher than before the new rules, or you work local to where you live.

OK, as I said I'm not an accountant and the figures quoted were from the referenced website. There would also be umbrella fees to take into account or other fees if going through your own ltd.

All things considered though, doesn't sound level it's worth the hassle.

[northernladuk]

Actually..

£10,000 monthly invoice would made up of
Employer NICs : £1130.68
Taxable Income : £8869.32

Of that taxable income, £2754.93 would be Tax, £455.12 would be Employee NICs, leaving £5659.27.

I think you made the mistake of deducting tax and employee NICs from the 10,000 rather than the after employer NICs amount.

Still, with no relief on expenses, the £3600 comes out of the £5660, leaving £2060 at the end of it.

Which doesn't sound worth the hassle of contracting.

The new PS rules pretty much mean either you take a rate 25%-50% higher than before the new rules, or you work local to where you live.

That told him! Love these threads where we run the numbers. 99.9% of the time they are wrong and it gets too confusing to be useful

[youngguy]

If you take a look at https://listentotaxman.com/120000? this will give you very rough figures. I have left off VAT for ease of calculation, as with the new flat rate scheme changes, it won't change the figures very much anyway. This is if you bill 20 days per month on average and don't pay into a pension. This does not include any umbrella fees etc and uses figures for 2016/2017.

Answer to Q1 - Not including employer NI (£1300), you are looking at ~£6100 per month. Taking off employer NI £4800 per month.

Using the above figures and changing the amount to £60k (average of 10 days per month for 12 months)

Answer to Q2 - Not including employer NI (£600), you are looking at ~£3500 per month. Taking off employer NI £2900 per month.

These figures are very rough and may differ based on the a mount of tax already paid during the year, but both figures used will put you into the higher tax bracket threshold so will be reasonably accurate.

You need to bill an average ~13 days per month to break even on you expenses alone, before your household bills etc.

You'd need a 50% increase in your rate and bill 20 days per month on average to make £3k per month after tax and expenses.

Hope this helps and IANAA, so treat figures with large pinch of salt

Don't forget the agencies WILL pass the employer ni to the contractor ( argument being the employer of the worker is the ltd/PSC and not the agency)

[cojak]

I was hoping an accountant type would answer my question. As yet no answers here or Ipse

Probably because they don't know either.

[northernladuk]

Probably because they don't know either.

Indeed. Would be a brave accountant to come on here and put their reputations on the line attempting to answer anything around the PS debacle.

[jamesbrown]

Indeed. Would be a brave accountant to come on here and put their reputations on the line attempting to answer anything around the PS debacle.

Case in point: the Apprenticeship Levy will also be deducted by the deemed employer (fee payer) if they meet the requirements (most will), and that is bound to be passed on too.

[eek]

Flat in London, home and family in Glasgow where I travel from each week

Several contractors will do the same thing

Hotel expenses are are lot more than a flat

Are you including or just outright ignoring the 24 month rule....

[fannyadams]

Are you including or just outright ignoring the 24 month rule....

24 month rule irrelevant - T&S expenses aren't allowable inside IR35.

[jamesbrown]

24 month rule irrelevant - T&S expenses aren't allowable inside IR35.

And vice versa, which is eeks point, I assume.