Comparing inside/outside rates?

**hobnob** · 11 April 2023, 23:44

This question has come up a lot, but there's no direct comparison. It depends on various factors, e.g. what expenses you have, how you split your income between salary and dividends, whether you make pension contributions, and whether you want to take all the money right away or leave some of it in the company.

If you know those answers, you should be able to predict your own income for a given contract (inside or outside) based on X days per year, but there isn't a "one size fits all" calculator that will work for everyone.

**northernladuk** · 12 April 2023, 13:38

Originally posted by password View Post

Is there a general multiple/divisor I can use to convert a day rate to/from IR35 for equal pay?

No there isn't. We've been through this endlessly and there is no accurate answer. You'll have to find numbers that are close'ish and then look at other factors between the two gigs that might help decide what to go with.

You can try a google search to look at all the threads where this comes up (and there is a lot of them) but none of them will answer your question.

We will probably get the usual troll popping up stating he wants the answer as well but as usual he won't add anything useful either.

**Lance** · 12 April 2023, 14:29

as far as the client is concerned there's no difference.

Ignoring agency margins as they muddy the water.
£500 a day is the client cost inside or outside.

£500 a day outside will pay you more net money than the same rate inside (just because of apprentice levy before other benefits are considered)

So why is this even a question? If all else is equal, Outside > Inside.

**eek** · 12 April 2023, 15:01

Originally posted by Lance View Post

as far as the client is concerned there's no difference.

Ignoring agency margins as they muddy the water.
£500 a day is the client cost inside or outside.

£500 a day outside will pay you more net money than the same rate inside (just because of apprentice levy before other benefits are considered)

So why is this even a question? If all else is equal, Outside > Inside.

- but that only goes so far - I wouldn't want an Outside determination with a claw back clause in the contract.

**ladymuck** · 12 April 2023, 16:40

It's a shame mods can't merge threads as this really ought to be added to the multitude of threads on the topic.

**password** · 12 April 2023, 23:26

Hi Guys,

I'm sorry if I have started another "one of these" threads..

Firstly, I am using the "inside IR35" umbrella calculator from Paystream, which shows the exact amount I get in my pay cheque.. all the other same calculators give a lot lower figure.. which is throwing me a bit.

I understand the issues with comparing rates from inside/outside. I understand that when inside in your own Ltd Co, you can expense a lot more stuff and generally pay less tax.

My current inside/umbrella rate is 750 and my last outside/ltd co rate was 600 (12 months ago) .. so I am trying to figure what a realistic inside/ltd co day rate would be going forward so I don't end up out of pocket too much ..

I'm inclined to add 10% making it £660 which might seam reasonable.. (it's the same client, i'm returning too, actually.. so they know what they paid me last time). Maybe I say 15% and possibly settle at 10% if they want to negotiate?

Please don't attack me on this -- pricing is one of the hardest things to get right in business..

**malvolio** · 13 April 2023, 08:20

Originally posted by password View Post

Hi Guys,

I'm sorry if I have started another "one of these" threads..

Firstly, I am using the "inside IR35" umbrella calculator from Paystream, which shows the exact amount I get in my pay cheque.. all the other same calculators give a lot lower figure.. which is throwing me a bit.

I understand the issues with comparing rates from inside/outside. I understand that when inside in your own Ltd Co, you can expense a lot more stuff and generally pay less tax.

My current inside/umbrella rate is 750 and my last outside/ltd co rate was 600 (12 months ago) .. so I am trying to figure what a realistic inside/ltd co day rate would be going forward so I don't end up out of pocket too much ..

I'm inclined to add 10% making it £660 which might seam reasonable.. (it's the same client, i'm returning too, actually.. so they know what they paid me last time). Maybe I say 15% and possibly settle at 10% if they want to negotiate?

Please don't attack me on this -- pricing is one of the hardest things to get right in business..

I said a long time ago in a defunct blog that this is the only business model where your price to the customer is a total unknown and largely out of your control....

Generally the uplift for an inside IR35 role to get the same rough net in your own account is around 30%; you have to account for aero expenses (meaning all your costs come out of taxed income) plus ErNICs, Al, Agency margin and umbrella fee on top of your own taxes.

In your position I would ask for 30% and see how it goes - if you are moving from outside to inside with the same client. That might even prompt them to think about is the job really inside in the first place; if it really is an inflationary rise will be justified.

I suspect the Paystream calculator is the more realistic. Look a little deeper at most of the others and they are often assuming paid expenses (yeah, right...) and working every day of the year, plus they have no knowledge of your personal tax position. In other words, don't try and quantify the rate, aim to get the most you can in line with the market for your skillset.

Outside IR35, you're in business and your sole purpose is to maximise the return for your shareholders. Inside you are a wage slave, so aim for the top of the pay scale.

**pr1** · 13 April 2023, 09:47

Originally posted by malvolio View Post

I said a long time ago in a defunct blog that this is the only business model where your price to the customer is a total unknown and largely out of your control....

Generally the uplift for an inside IR35 role to get the same rough net in your own account is around 30%; you have to account for aero expenses (meaning all your costs come out of taxed income) plus ErNICs, Al, Agency margin and umbrella fee on top of your own taxes.

In your position I would ask for 30% and see how it goes - if you are moving from outside to inside with the same client. That might even prompt them to think about is the job really inside in the first place; if it really is an inflationary rise will be justified.

I suspect the Paystream calculator is the more realistic. Look a little deeper at most of the others and they are often assuming paid expenses (yeah, right...) and working every day of the year, plus they have no knowledge of your personal tax position. In other words, don't try and quantify the rate, aim to get the most you can in line with the market for your skillset.

Outside IR35, you're in business and your sole purpose is to maximise the return for your shareholders. Inside you are a wage slave, so aim for the top of the pay scale.

Have you read the thread?

OP is currently inside on £750/day
OP has an offer for outside with a previous (different) client whom previously paid them £600/day outside 12 months ago
OP is trying to consider what to charge

**b0redom** · 13 April 2023, 09:56

This is too hard to answer without more information - are you income shifting with your spouse? What are your expenses (if any). Do you still have your Ltd and associated accountancy fees or is this a new setup? How long is the contract length etc.

Wild stab in the dark suggests that ~ £600 outside is ~ £750 outside.

Comparing inside/outside rates?