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IR35 - been offered a contract inside and not sure how it compares in my situation...

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    IR35 - been offered a contract inside and not sure how it compares in my situation...

    Hey all,

    First post so apologies if this question has been asked time and time again..

    My current situation is that I'm in a contract which expires in September, and I'm engaged as 'outside IR35' - it's with a private sector consultancy.
    My day rate for that engagement is £450.

    I'm likely to be offered an extension, but I've also been offered a contract in the public sector which is deemed as 'inside IR35' and I'm 'taxed at source' - the day rate for that engagement is £550.

    I'm not quite sure how they stack up - I'm used to taking out up to £50,000 in salary and dividends from my limited company each tax year and letting the rest sit there (I dunno what for!) - and I've got a fair bit of cash built up in my business bank account, but for this example if I was taking it all out each year - how does it compare?

    £450 p/day * 230 = £103,500
    £550 p/day * 230 = £126,500

    My expenses are pretty low - I've generally worked mostly at home so I don't take much in T&S expenses.

    I've also got the added fun of paying 9% of any income above approx £19k for my student loan.

    I've got no idea how the two stack up... can anyone help with what my take home per month would be if I was engaged inside IR35 on a public sector contract and also accounting for student loan?

    Thanks...

    #2
    Just use a regular UK income tax calculator for PAYE employees, including the ErNI (because this will be paid from your day-rate too).

    For example:

    UK Salary Tax Calculator 2020 / 2021: Calculate my take home pay

    Since you mention public sector, the public sector off payroll rules apply, so deductions will happen at source (more or less in the same way they will happen in the private sector, post April 2021).

    Comment


      #3
      I still find it a little surprising people are asking this question so soon after to the mess that was (or wasn't) April 2020... Surely every contractor worth his salt should have done their research in to how inside and outside stacks up so they could be prepared for what as about it, but didn't hit? Even if it wasn't relevant for them back then it's still coming again.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by jamesbrown View Post
        Just use a regular UK income tax calculator for PAYE employees, including the ErNI (because this will be paid from your day-rate too).

        For example:

        UK Salary Tax Calculator 2020 / 2021: Calculate my take home pay

        Since you mention public sector, the public sector off payroll rules apply, so deductions will happen at source (more or less in the same way they will happen in the private sector, post April 2021).
        I’ve read elsewhere that the day rate advertised should not include employer NI contributions as these “should not be passed onto the worker”.
        I’d read that the contracting rate has a “client charge rate” applied on top when the client is billed to cover employment costs... is this not necessarily the case?

        Comment


          #5
          Originally posted by northernladuk View Post
          I still find it a little surprising people are asking this question so soon after to the mess that was (or wasn't) April 2020... Surely every contractor worth his salt should have done their research in to how inside and outside stacks up so they could be prepared for what as about it, but didn't hit? Even if it wasn't relevant for them back then it's still coming again.
          Apologies if I’ve disappointed your expectations of me as a contractor but I’m afraid I’m not as clued up as others on this stuff. Hence why I’m humbly asking for assistance - i’d appreciate it if you can try to assist rather than make an entire reply all about how i’m not “worth my salt” as a contractor. That isn’t very helpful.

          Comment


            #6
            mod snip
            Last edited by Contractor UK; 28 December 2020, 17:45.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #7
              IR35 - been offered a contract inside and not sure how it compares in my situation...

              Originally posted by jatt17 View Post
              Apologies if I’ve disappointed your expectations of me as a contractor but I’m afraid I’m not as clued up as others on this stuff. Hence why I’m humbly asking for assistance - i’d appreciate it if you can try to assist rather than make an entire reply all about how i’m not “worth my salt” as a contractor. That isn’t very helpful.
              If you take the extension on inside IR35 basis , HMRC will rub there hands and assume you have ALLWAYS been inside IR35 for same roll (discussed a million times here)

              And go after you for all past years with current client

              Paint that target on your back

              Your will go to top of the zzzzlist

              If you ignore that advice (as you will)

              You will get 52-54% of your gross rate paid into your personal account


              Sent from my iPhone using Contractor UK Forum

              Comment


                #8
                Originally posted by jatt17 View Post
                Hey all,

                First post so apologies if this question has been asked time and time again..

                My current situation is that I'm in a contract which expires in September, and I'm engaged as 'outside IR35' - it's with a private sector consultancy.
                My day rate for that engagement is £450.

                I'm likely to be offered an extension, but I've also been offered a contract in the public sector which is deemed as 'inside IR35' and I'm 'taxed at source' - the day rate for that engagement is £550.

                I'm not quite sure how they stack up - I'm used to taking out up to £50,000 in salary and dividends from my limited company each tax year and letting the rest sit there (I dunno what for!) - and I've got a fair bit of cash built up in my business bank account, but for this example if I was taking it all out each year - how does it compare?

                £450 p/day * 230 = £103,500
                £550 p/day * 230 = £126,500

                My expenses are pretty low - I've generally worked mostly at home so I don't take much in T&S expenses.

                I've also got the added fun of paying 9% of any income above approx £19k for my student loan.

                I've got no idea how the two stack up... can anyone help with what my take home per month would be if I was engaged inside IR35 on a public sector contract and also accounting for student loan?

                Thanks...
                You’re looking at approx £1515 after all taxes a day once you get settled, and the satuatory minimum pension kicks in.


                Sent from my iPhone using Contractor UK Forum
                http://www.cih.org/news-article/disp...housing_market

                Comment


                  #9
                  Originally posted by jatt17 View Post
                  I’ve read elsewhere that the day rate advertised should not include employer NI contributions as these “should not be passed onto the worker”.
                  I’d read that the contracting rate has a “client charge rate” applied on top when the client is billed to cover employment costs... is this not necessarily the case?
                  Well, just make sure you're being quoted the rate you think you're being quoted because those "employment costs" are coming from somewhere.

                  Comment


                    #10
                    Originally posted by jamesbrown View Post
                    Well, just make sure you're being quoted the rate you think you're being quoted because those "employment costs" are coming from somewhere.
                    Yeah - this is probably what I'll probe a bit more come Monday when I'll hopefully have some paperwork, and then I'll be able to make sure that Employers NI isn't being deducted from the day rate that was advertised to me.
                    I'd be very surprised if it is - when the rules are that those costs can't be directly or indirectly passed onto the worker, if a public sector department is in breach of their own governments rules then it's probably scandalous.

                    Comment

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