Comparing inside/outside rates?

[eek]

I think that's because we are probably all tired of bouncing this one around and never getting an answer so just don't bother

On that point I was thinking more about agencies / accountancy firms then posters here.

I only did the above because it was more interesting than the task I need to do.

[edison]

so someone was asking a question to me and I don't have time to fully answer it but I do have 1 additional fact

For every penny above £50,270 to £100,000

Outside IR35

£1 in profit results in £0.735 after Corporation tax (at the 26.5% band)
£1 paid as a dividend will give you £0.6625 (after dividend tax of 33.75%)
So £1 in profit gives you a dividend of 1*0.735*0.6625= 48.7p

Reversing that £1 take home pay will require the company to make £2.05 in profit

Inside IR35

£1 in pay results in £0.58 after tax (40%) and additional employee NI (2%)
£1 agency fee results in a £0.875 of pay (after employer NI and apprenticeship levy deductions of 14.3%.
So £1 agency fee results in take home pay of £0.5075

Reversing that £1 take home pay requires an agency fee of £1.97

So once we get above £50,000a year unless you have expenses or wish to keep money for a future day being inside is a better deal...


Got to say I'm really surprised no-one has actually noticed / mentioned this outright...

I thought the corporation tax rate is on a sliding scale between £50k and £250k? I used an online calculator (might have been on the .GOV site) which suggested my true CT rate would be around 23.5%.

[BlueSharp]

I thought the corporation tax rate is on a sliding scale between £50k and £250k? I used an online calculator (might have been on the .GOV site) which suggested my true CT rate would be around 23.5%.

I don't understand the 26.5% band either when the max rate is 25%, and that's before the marginal rate is deducted. Playing around with the calculator my effective corp tax rate will be 22%. But I had not realised how close the tax burden was on in comparison between the two.

[eek]

I thought the corporation tax rate is on a sliding scale between £50k and £250k? I used an online calculator (might have been on the .GOV site) which suggested my true CT rate would be around 23.5%.

While HMRC talks about tapering the tapering is actual the consequence of everything from £50,001 to £250,000 being taxed at 26.5% to provide that tapering.

So 22% = £50,000 at 19% + £y,000 at 26.5%

And I link to someone who you may trust more than me given that tax is how they make their money

https://www.whitefieldtax.co.uk/help...n-tax-changes/

[ladymuck]

The effective rate is 26.5%, it's even on the HMRC website as that.