Ir35 calculator to know when its not worth it to work

[cwah]

Weird. You earn £50 more an hour of which you get £25 in your sweaty little hands. But apparently that makes you £25 worse off, rather than £25 better off. I pity those CEOs on £500K.

Why do you compare against CEO wage at £500k? Of course if I earn such amount I wouldn't mind paying 50-60% tax rate.


Would you work at 45% tax rate if you were on £200/day? You would end up with half of it. That's what you'd get working for deliveroo or any low pay job actually.

Time is money. As simple as that. There is a point where it's not worth it unless the wage is very high.

And yes of course I wouldn't mind paying 50-60% tax if I could charge £1k/day. But that's not what this is about here

[hugebrain]

Weird. You earn £50 more an hour of which you get £25 in your sweaty little hands. But apparently that makes you £25 worse off, rather than £25 better off. I pity those CEOs on £500K.

If maths isn’t your strong point, imagine there are just two people, you and Bob and one bottle of wine. You earn £100 and Bob gets £100. The wine costs £100 a bottle. Everything is equal.

Now you decide to work harder. So you get an extra £100 wages, of which £60 goes to Bob, you get to keep £40. The price of wine goes up to £150 a bottle.

You think you are better off because you now earn £140, but in fact you are worse off. You can no longer afford the wine, but Bob can.

[NotAllThere]

Weird. You earn £50 more an hour of which you get £25 in your sweaty little hands. But apparently that makes you £25 worse off, rather than £25 better off. I pity those CEOs on £500K.

[hugebrain]

If you want to pay less tax, the easiest way is to have a lower income. If you want to have more take home, just earn more.

No man is an island. That works for an individual, but not for society as a whole.

Consider that relative wealth is more important than actual wealth (both emotionally and practically when competing for scarce resources).

There are two parts of society: decent, hard-working people (like contractors) and worthless scroungers (state school teachers, doctors, diversity coordinators etc.).

Now, once they earn more than £12, 571, the decent people (as a whole) are making themselves worse off. This is because after taxes (add petrol tax, booze tax, VAT, stamp duty etc.) and government borrowing, the scroungers are getting more of the decent people’s wages than they get themselves. The harder the decent people (as a whole) work, the richer the scroungers get.

That’s why the scroungers set up the system this way. The > 50% tax rate is not set based on some need for necessary government services. It is set that way so that relative poverty is inescapable. No matter how hard you work, you cannot possibly escape the faster-growing wealth of the scrounging class.

[cwah]

when paying your share to society as a whole makes working unacceptable then we (society) have a problem.

I'm not against paying taxes. It's just not worth it at some stage. The few examples above illustrate it properly.

Not all contractors are having huge day rate to compensate. Would a £200/day inside IR35 worth it if you also get taxed half of it on top of not having any security? I'd say no.

[NotAllThere]

I don’t want to troll but speaking to as someone who had just under 60 k of personal rental income he turned down a perm job of 135k and accepts he cannot ever work in the Uk again as a perm.

FTFY. But it was twaddle when you first posted it, and it's twaddle now. You might as well say that as someone who has £135 perm job, I sold my property portfolio as it's just not worth having. Or someone who has a £135K job not accepting a £195K job.

If you want to pay less tax, the easiest way is to have a lower income. If you want to have more take home, just earn more.

[cwah]

There are so many reasons why it's good to know how much is the total tax is. On the top of my mind:
- Plan for holidays. Instead of being taxed at 50% (or more), why not only work in between 2 fiscal years? So a £100k total income can be divided into 2 years at £50k if working through the right period.
- Being able to compare contract inside IR35 Vs Outside IR35 Vs Perm Vs Abroad. And switch to the most advantageous one.

[hobnob]

I won’t go into the numbers because I have not looked at them carefully but the OP makes a valid point that at some point working is no longer beneficial if more than half goes to the tax man

I don't think the percentage is that important. The question is, how much money would you get from that extra work, and is that worth the effort?

For instance, I could get a second job at evenings/weekends doing pizza deliveries, which would probably be roughly minimum wage. I'd get the majority of that money, i.e. tax would be less than half, but it's not worth it for me; I'd rather have that time off.

At the other extreme, suppose that someone offered me a contract at 1 million pounds a week, but I knew that 70% would go in tax, NI, etc. So, I'd "only" get £300,000 per week as take home pay. I'd jump at the chance, i.e. that would definitely be worth it for me, even though the tax man got more than half. (The same would be true if I was paying 90% tax on that income.)

Most people will be somewhere in the middle. So, it's worth doing calculations to figure out how much money you'll actually get from a particular role, but ultimately it will depend on your personal circumstances, e.g. if you're saving up to buy a new house.

[Lance]

I won’t go into the numbers because I have not looked at them carefully but the OP makes a valid point that at some point working is no longer beneficial if more than half goes to the tax man

I don’t want to troll but speaking to someone who had just under 60 k of personal rental income he turned down a perm job of 135k and accepts he cannot ever work in the Uk again as a perm.

when ir35 was not strict and dividends less taxed then it was a different story

when paying your share to society as a whole makes working unacceptable then we (society) have a problem.

[NowPermOutsideUK]

I won’t go into the numbers because I have not looked at them carefully but the OP makes a valid point that at some point working is no longer beneficial if more than half goes to the tax man

I don’t want to troll but speaking to someone who had just under 60 k of personal rental income he turned down a perm job of 135k and accepts he cannot ever work in the Uk again as a perm.

when ir35 was not strict and dividends less taxed then it was a different story