Ir35 calculator to know when its not worth it to work

[eek]

That's why I put 2 table.

This one is for the total tax rate:

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

It reflect the tax you pay at the exact amount indicate. Which is what you tried to gave me as example.


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 there

Except it's wrong for reasons I've already posted.

[cwah]

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.

That's why I put 2 table.

This one is for the total tax rate:

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

It reflect the tax you pay at the exact amount indicate. Which is what you tried to gave me as example.


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 there

[Lance]

- 42% is the basic tax rate, so the tax you pay when you earn between £12,571 and £50,270

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.

[cwah]

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.

It just needs a little bit of intelligence. Both figures correct, and there isn't anything contradicting each other:
- 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 £50,270

[eek]

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!

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.

[cwah]

19%+7.5%=25% Really? - thanks for confirming exactly how bad your maths is.

100% gross income * 81% corporation tax * 92.5% dividend = 74.925% retained.

I grossed to 25% but I could have said 25.075% tax rate if I wanted to be pedantic..

[eek]

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.

19%+7.5%=25% Really? - thanks for confirming exactly how bad your maths is.

[cwah]

How do you get to 25%?

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.

[eek]

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.

Not 100% true - you would be mad to take an inside IR35 contract that would require a lot of travel or overnight stays.

But if everything else is equal - think of the pension contributions.

[Lance]

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!

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.