OK so I'm trying to clarify my understanding of inside vs ouside contracts in the current market condtions and their relative pros and cons. This would help evaluate 2 comparable opportunities (similar roles , tech, sector) of an inside contract at £550/day vs and outside one at £400. These figures are purely made up - just trying to illustrate that the outside contracts seem to be priced lower due to the expected tax saving.
Inside
+No tax risk
+Brolly is easier to run
-Lots of tax/NI to pay
-little or no expenses
-Rate may or may not include ER NI
Outside
+Less tax/NI via divs
+greater flexibility with what you do with co earnings eg pay contributing spouse, retain earnings and defer (mitigate HR) tax, invest co funds
-tax risk of being found inside (risk and likelihood varies depending on whether exempt through small/offshore feepayer or larger co with SDS that turns out to be wrong.
-extra running costs of ltd eg accountant fees
-extra hassle of running ltd
-extra hassle of verifying outside status intially and ongoing basis and documenting everything
I know there are calculators out there designed to compare rates but most are too simplistic.
However neither account for half of the above financial differences. Indeed these things become very nuanced / convuluted and hard to model.
Have I missed any key points from the above lists?
Interested to know what approach others are taking to evaluate the options. I know from other recent threads that some won't take outside atm as deem it too risky. I suppose part of my question is how much extra retained renumeration % do you need from an outside gig to offset the extra hassles and risks?
Inside
+No tax risk
+Brolly is easier to run
-Lots of tax/NI to pay
-little or no expenses
-Rate may or may not include ER NI
Outside
+Less tax/NI via divs
+greater flexibility with what you do with co earnings eg pay contributing spouse, retain earnings and defer (mitigate HR) tax, invest co funds
-tax risk of being found inside (risk and likelihood varies depending on whether exempt through small/offshore feepayer or larger co with SDS that turns out to be wrong.
-extra running costs of ltd eg accountant fees
-extra hassle of running ltd
-extra hassle of verifying outside status intially and ongoing basis and documenting everything
I know there are calculators out there designed to compare rates but most are too simplistic.
However neither account for half of the above financial differences. Indeed these things become very nuanced / convuluted and hard to model.
Have I missed any key points from the above lists?
Interested to know what approach others are taking to evaluate the options. I know from other recent threads that some won't take outside atm as deem it too risky. I suppose part of my question is how much extra retained renumeration % do you need from an outside gig to offset the extra hassles and risks?
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