Ir35 calculator to know when its not worth it to work

[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!

How do you get to 25%?

[cwah]

Really? You don't need anything to decide to do that.

Employer NI alone is worth more than 10% and that's before you factor in expenses.

The difficult decision is when the difference in rates isn't 10% but when inside IR35 pays 25% (or more) extra.

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!

[northernladuk]

Again wrong - but I won't point out where because it's utterly worthless.

All these threads where a contractor tries and explains the entire tax world in a single table always are. Post numbers, a bit of back and forth, thread descends in to chaos and we've left with a pile of rubbish to confuse whatever poor sod stumbles upon it later.

[eek]

I don't see what's wrong calculating that. I used these number to decide to quit my current contract inside IR35 to get into one outside IR35 at a 10% lower rate after 1 month in based on that. Feels like a great decision!

Really? You don't need anything to decide to do that.

Employer NI alone is worth more than 10% and that's before you factor in expenses.

The difficult decision is when the difference in rates isn't 10% but when inside IR35 pays 25% (or more) extra.

[cwah]

I don't see what's wrong calculating that. I used these number to decide to quit my current contract inside IR35 to get into one outside IR35 at a 10% lower rate after 1 month in based on that. Feels like a great decision!

[eek]

Here's a table showing a tax rate calculated, if that's what you are looking for:

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

I've included the impact on the total tax rate by removing the personal allowance of £12,571. Is it what you are looking for? It does not make the previous table incorrect though

Again wrong - but I won't point out where because it's utterly worthless.

[cwah]

Here's a table showing a tax rate calculated, if that's what you are looking for:

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

I've included the impact on the total tax rate by removing the personal allowance of £12,571. Is it what you are looking for? It does not make the previous table incorrect though

[eek]

Yeah I didn't add it but the 50% tax rate above this amount (£100k) is still correct. It's just it's removing the allowance benefit that is also taxed at 50%

So basically you haven't got a clue what you are talking about and you are trying to justify a table that I have shown to be completely wrong without even looking at it in details.

Now I could correct it but - nope - it just isn't worth the hassle as both the idea and the implementation are wrong.

[cwah]

You are also missing the taper at £100,000 where your tax allowance disappears

Yeah I didn't add it but the 50% tax rate above this amount (£100k) is still correct. It's just it's removing the allowance benefit that is also taxed at 50%

[lecyclist]

I empathise with the sentiment of cwah's thread. Don't stop now

In the real world, many people are working barely to scrape by. As contractors we have the privilege of being able to "buy back" our own time (by choosing not to work).