Originally posted by cwah
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Ir35 calculator to know when its not worth it to work
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Originally posted by Lance View Post
that cannot be true for every amount between those figures. NICs start at a lower number than IT therefore the amount of tax paid will be different at every point.
Ignoring the apprenticeship levy and employer NICs.......
Earn £20,000 in 2021/2022 and you'll take home £17,264. That's 14% tax.
Earn £50,000 in 2021/2022 and you'll take home £37,664. That's 25% tax.
This is why a simple table cannot work.
This one is for the total tax rate:It reflect the tax you pay at the exact amount indicate. Which is what you tried to gave me as example.Total gross income Tax band Tax amount Total tax rate Comment £9,564 £9,564 £48 0.50% Apprenticeship levy £12,571 £3,007 £739 6.26% National insurance + Apprenticeship levy £50,270 £37,699 £15,730 32.86% Basic rate income tax + national insurance + apprenticeship levy £100,000 £49,730 £25,011 41.53% Higher rate income tax + national insurance + apprenticeship levy £125,140 £37,711 £18,179 47.71% Higher rate income tax + national insurance + apprenticeship levy + removal of personal allowance £149,999 £24,859 £12,503 48.14% Additional rate income tax + national insurance + apprenticeship levy £200,000 £50,001 £27,290 49.75% Additional rate income tax + national insurance + apprenticeship levy
And this one is the amount of tax you pay within the respective tax band:Total income Tax rate Note £9,564 0.50% Apprenticeship levy £9,564 to £12,571 25% National insurance + apprenticeship levy £12,571 to £50,270 42% Basic rate income tax + national insurance + apprenticeship levy £50,271 to £150,000 50% Higher rate income tax + national insurance + apprenticeship levy At £150,000 55% Additional rate income tax + national insurance + apprenticeship levy
So, taking your example, if you want to know your total tax rate, you look at the first table, and know that your £20k will be between 6.26% to 32.86%.
And if you want to know how much tax you pay on different earning bracket, you use the 2nd table. So you know from £12,571 any additional money earned is taxed at 42%.
But yeah, the total tax is only accurate if you earn exactly the amount within the bracket, but I think it's enough to get an estimate of tax paid and make decision from thereLeave a comment:
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Originally posted by cwah View Post
- 42% is the basic tax rate, so the tax you pay when you earn between £12,571 and £50,270
Ignoring the apprenticeship levy and employer NICs.......
Earn £20,000 in 2021/2022 and you'll take home £17,264. That's 14% tax.
Earn £50,000 in 2021/2022 and you'll take home £37,664. That's 25% tax.
This is why a simple table cannot work.
Leave a comment:
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Originally posted by eek View Post
Yet if I go back to your table the inside IR35 tax rate is listed by you not at 42% but at 32.86%....
We can go round for days here making you look like an idiot - it really isn't difficult.
- 32.86% would be the total tax rate if you were to earn £50,270
- 42% is the basic tax rate, so the tax you pay when you earn between £12,571 and £50,270Leave a comment:
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Originally posted by cwah View Post
I do because I'm comparing against the net earning from an outside IR35 contract. As outside I have a 25% tax rate, and inside about 42%. So I need a 30% raise to compensate, not 10% as told earlier by the recruitment agency. Help making the right decision!
We can go round for days here making you look like an idiot - it really isn't difficult.Leave a comment:
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Originally posted by eek View Post
19%+7.5%=25% Really? - thanks for confirming exactly how bad your maths is.
I grossed to 25% but I could have said 25.075% tax rate if I wanted to be pedantic..Leave a comment:
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Originally posted by cwah View Post
19% corporation tax + 7.5% dividend tax. I know there are other variable like expenses (eg. income is an expense) but it's a good ballpark.
Leave a comment:
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Originally posted by eek View Post
How do you get to 25%?Leave a comment:
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Originally posted by Lance View Post
negotiating based on your personal tax position isn't going to change anything.
Nobody cares... It's all about how much you want, and how much they are willing to pay. The rest is just noise and the agent will see it for what it is.
But if everything else is equal - think of the pension contributions.Leave a comment:
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Originally posted by cwah View Post
I do because I'm comparing against the net earning from an outside IR35 contract. As outside I have a 25% tax rate, and inside about 42%. So I need a 30% raise to compensate, not 10% as told earlier by the recruitment agency. Help making the right decision!
Nobody cares... It's all about how much you want, and how much they are willing to pay. The rest is just noise and the agent will see it for what it is.Leave a comment:
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