Soooo Confused

[FoxyMinx]

Hi guys and girls.

Just about to start contracting and have been looking at all the IR35 stuff and I'm soooo confused.

After lots of reading up I know I fail IR35, so I will have to go the PAYE route and not dividend route.

However what I'm not clear on, is even if I use one of the umbrella PAYE schemes such as SJDAccountants or Parasol am I doing it all above board and 'risk' free and how the revenue want me to ?

I should hope it the right way as looking at the net calculators on these sites I'm only taking home 58.7% of my gross as I fail IR35, as a permy I'm taking 70% . I don't want to incur more costs and have to set up my own company and go PAYE.

[malvolio]

Errm

You probably haven't read it very well, then...

If you're inside IR35 you will pay the same tax and NICS as a permie, less a little for running the company. It can't be significantly different (given the same gross income) - otherwise what would be the point of IR35 which after all is said and done attempts to ensure all workers pay tax at the same rate?

Umbrellas are entirely legal, although there is some suspicion that Hector will be looking closely at people claiming to be outside IR35 while using an umbrella.

Basically, if you're convinced your inside and are a newcomer, get a decent umbrella (don't ask me for advice on "good", though people seem to like Parasol and SJD are not dummies) and use that as a safe way to learn how the freelance busines works. Yo may then find you can get your next contract out of IR35 and you will have some time to learn how it all works properly. It's actually better to have your own company, in or out of IR35, in my view, but an umbrella will get you running.

BTW, welcome to the madhouse!

[FoxyMinx]

Re: Errm

Hi thanks for the info.

Looking at the calculator on the Parasol site, its shows me paying both 'employee' and 'employer' NI, so thats why I would only net 58.7% compared to 70% if I was permy, when you employer pays it there NI bit. So really IR35 means I pay more than a permy, doesn't seem to be fair, considering I have to pay for my own insurances and stuff. For the purposes of the Inland Rev I'm an employee for the purpose of the client I'm not an employee. The other two parties benefit and I get stuffed, does that sum IR35 up ?

[Martin Underwood]

That old chestnut

"So really IR35 means I pay more than a permy, doesn't seem to be fair, considering .... " (cont. p94)

Oh for heaven's sake!

No, you're not paying more than when you were a permie. You are BEING PAID MORE as a contractor! part of that premium is because the EMPLOYER IS PAYING LESS by not paying the employer's NI directly!

Whether you are a permie or a contractor it does not matter... the employer's NI still gets paid. It's just that as a contractor, the employer pays you the amount he's saved, and you hand it to the govt.

"The other two parties benefit and I get stuffed, does that sum IR35 up ?"
THEN STAY A PERMIE THEN!

[FoxyMinx]

Re: That old chestnut

Love u to Martin, not been getting any ?

[Mordac]

Foxy,

Firstly, how can you be so sure you fail IR35, if you haven't started contracting yet? IR35 applies to an individual contract, not to a "type of contractor".
You can get contracts worded so as to mitigate IR35, as long as they reflect the true nature of the work.
What type of work are you hoping to be doing?
Secondly, I have used Parasol and they are pretty good. You won't be able to claim for any of the dodgy "expenses" which some brollies let you claim, so you need not fear a visit from Hector.
Ultimately, you need to speak to an accountant. (Cue spam from Fiddle, Darren & Simon )
There's some good info on IR35 here: www.lawspeed.com/freelancers/ir35.aspx

[Darren at 1st Accountancy Serv Ltd]

Spam

Mordac....spam, don't know what you mean!

[Mordac]

Re: Spam

Just making sure you're still awake Darren.
I see you had another miserable weekend, although at least you didn't have quite so far to go and the barcodes didn't cave in quite so easily. Needless to say I was supporting you (from the comfort of my local) on both occasions.

[Darren at 1st Accountancy Serv Ltd]

ManYoo

Cheers Mordac, very disappointing...just be glad when this seasons over. Good luck for tonight!

[FoxyMinx]

Re: ManYoo

SJD accountancy said it failed IR35, asked agency to make changes but it was a no go, did kick and screen but no luck.

Oh well I understand now, will just have to let Gordy have his wicked way with me :lol