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

**cojak** · 4 January 2017, 16:54

Originally posted by tarbera View Post

Say I have a 52 week Contract starting 10th April 2017 with HMRC – I will definitely be IR35 Caught

Daily Rate = £500 – 5 days a week – 9 hour days
No pension Contributions
Vat Registered (standard not Flat rate)
I work away from home and have a London flat that costs £500 per week (have to pay if I am in London or on Holiday or at home)
Other Expenses are £400 a week (Travel + Food etc) – Only pay this out when working (not when on Holiday)
Ignore all other business expenses (accountants, Insurance etc)
Assume already a higher rate taxpayer
Remove VAT if makes calculations simpler as neutral

Question 1

I work 20 days then Invoice for £10K + £2K Vat
Expenses = Flat + other = £3600

What is my net gain for working those 20days (180 hours or work) after expenses and tax

Question 2
I work 10 days (I went off to butlins to ride some donkeys for 10 days) = £5K + £1K Vat
Expenses = Flat + other = £2800

What is my net gain for working those 10days (90 hours of work) after expenses and tax

Thanks in Advance (assume I don’t have an accountant to ask @copyright NLUK)

I don't know how the expenses are going to work, but the tax is to expect 65% of day rate as per umbrellas.

You need to include accountant fees in your expense calculations, but I would consider them the same as umbrella fees (i.e. part of the 45% tax & fees)

Will expenses even be allowed?

**LondonManc** · 4 January 2017, 17:16

Originally posted by tarbera View Post

Say I have a 52 week Contract starting 10th April 2017 with HMRC – I will definitely be IR35 Caught

Daily Rate = £500 – 5 days a week – 9 hour days
No pension Contributions
Vat Registered (standard not Flat rate)
I work away from home and have a London flat that costs £500 per week (have to pay if I am in London or on Holiday or at home)
Other Expenses are £400 a week (Travel + Food etc) – Only pay this out when working (not when on Holiday)
Ignore all other business expenses (accountants, Insurance etc)
Assume already a higher rate taxpayer
Remove VAT if makes calculations simpler as neutral

Question 1

I work 20 days then Invoice for £10K + £2K Vat
Expenses = Flat + other = £3600

What is my net gain for working those 20days (180 hours or work) after expenses and tax

Question 2
I work 10 days (I went off to butlins to ride some donkeys for 10 days) = £5K + £1K Vat
Expenses = Flat + other = £2800

What is my net gain for working those 10days (90 hours of work) after expenses and tax

Thanks in Advance (assume I don’t have an accountant to ask @copyright NLUK)

Where do you get your expenses claim from if you're inside IR35?

As of 6 April 2016, any worker employed through an umbrella company or a limited company director working inside IR35 can no longer claim for travel and subsistence costs such as expenses and incur tax relief on these costs.

**tarbera** · 4 January 2017, 17:33

Originally posted by LondonManc View Post

Where do you get your expenses claim from if you're inside IR35?

As of 6 April 2016, any worker employed through an umbrella company or a limited company director working inside IR35 can no longer claim for travel and subsistence costs such as expenses and incur tax relief on these costs.

Expenses will come out of net pay, hence my question, it is worth working for PS if you have high expenses

**northernladuk** · 4 January 2017, 17:37

Originally posted by tarbera View Post

Expenses will come out of net pay, hence my question, it is worth working for PS if you have high expenses

If you can get in to private sector easily enough and work end to end the answer for me would be fat no with or without the expenses TBH. I can't imagine the rates will stay the same anyway so the model might be a bit too hypothetical and why take any inside IR35 gig if you don't need to?

If it's attractive due to convenience other than money then it doesn't really matter to a certain extent?

I can't help with the actual numbers though sorry.

(assume I don’t have an accountant to ask @copyright NLUK)

**LondonManc** · 4 January 2017, 17:41

Originally posted by tarbera View Post

Expenses will come out of net pay, hence my question, it is worth working for PS if you have high expenses

The lesson is simple, don't rent a flat.

**northernladuk** · 4 January 2017, 17:42

I don't really trust them but bearing in mind it's a straight case of Inside vs Outside could it be worth pumping numbers in to the calculators to get a clue?

That one does say

Travel expenses cover any travel, subsistence and accommodation costs incurred on contract duty, and falling within the HMRC Travel Rules for site-based employees.

But dunno if that takes in to account T&S not being allowed on an Inside IR35 or whatever the situation is so just be wary.

**malvolio** · 4 January 2017, 18:05

Told you...

**eek** · 4 January 2017, 21:34

Originally posted by tarbera View Post

Expenses will come out of net pay, hence my question, it is worth working for PS if you have high expenses

No, as we discussed when you last posted that question in October / November....

In other news new end client had 2 departments ring up looking for support.... - I think the going rate will be 4 times the rate contractors charge.

**SueEllen** · 4 January 2017, 22:53

Originally posted by eek View Post

No, as we discussed when you last posted that question in October / November....

In other news new end client had 2 departments ring up looking for support.... - I think the going rate will be 4 times the rate contractors charge.

Shame it isn't more.

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