Potential new Inside IR35 role

[Big Dawg]

I been speaking to an agency about new role. This will be inside IR35. This is my first inside IR35 so a bit confused with a few things.

I asked them to calculate my take home.

They say said £650/day gives a daily take home of £338.54 / Weekly £1,692.71 / Monthly £7334.73.

On they calculation they have provided for me it shows the gross pay as £568.00.

I am quite confused about this. I have emailed agency to clarify but hoping in the meantime anything could explain.

Thanks

[northernladuk]

Who's paying you? Is the agency doing PAYE or are you having to go through an Umbrella. If it is umbrella I'd be asking them for a summary. Have you tried a couple of Umbrella calulators? Seems about the same on the few I tried but will depend on what tax you've already paid. The calculator should give you a breakdown of whats going on.

What bit confuses you though?

[hobnob]

The gross pay looks about right:

£650 x 5 = £3250 (i.e. this is what the umbrella company will receive)
£568 x 5 = £2840 (i.e. this is your gross salary as an employee)

Company deductions:
£28.03 for umbrella margin
£14.20 for apprenticeship levy (0.5% of £2840)
£367.77 for employer's NI (13.8% of £2840 - £175, i.e. the portion of your salary above the Secondary Threshold)
Total = £410

£3250 - £410 = £2840, so those figures add up.

NB The apprenticeship levy and employer's NI are fixed. I've calculated the umbrella margin to match the figures you provided. That seems like a weird figure, and you might want to confirm that with the umbrella company. (This doesn't include pension contributions, which will come later unless you opt out.)

As for your net salary, you should be paying £124.46 in employee's NI. PAYE is a bit more complicated, because it depends how much you earn over the year as a whole, but if they charge you the wrong amount then you can correct it in your SATR.

Edit: I've assumed that there's an umbrella company involved, but NLUK is correct that there might not be. However, the employer deductions will be the same either way.

[Big Dawg]

Who's paying you? Is the agency doing PAYE or are you having to go through an Umbrella. If it is umbrella I'd be asking them for a summary. Have you tried a couple of Umbrella calulators? Seems about the same on the few I tried but will depend on what tax you've already paid. The calculator should give you a breakdown of whats going on.

What bit confuses you though?

I believe this is with the agency doing the PAYE. The part that confused me was the gross pay, but hobnob has kindly gone to length and explained.

The gross pay looks about right:

£650 x 5 = £3250 (i.e. this is what the umbrella company will receive)
£568 x 5 = £2840 (i.e. this is your gross salary as an employee)

Company deductions:
£28.03 for umbrella margin
£14.20 for apprenticeship levy (0.5% of £2840)
£367.77 for employer's NI (13.8% of £2840 - £175, i.e. the portion of your salary above the Secondary Threshold)
Total = £410

£3250 - £410 = £2840, so those figures add up.

NB The apprenticeship levy and employer's NI are fixed. I've calculated the umbrella margin to match the figures you provided. That seems like a weird figure, and you might want to confirm that with the umbrella company. (This doesn't include pension contributions, which will come later unless you opt out.)

As for your net salary, you should be paying £124.46 in employee's NI. PAYE is a bit more complicated, because it depends how much you earn over the year as a whole, but if they charge you the wrong amount then you can correct it in your SATR.

Edit: I've assumed that there's an umbrella company involved, but NLUK is correct that there might not be. However, the employer deductions will be the same either way.

Thanks this totally makes sense now. Thanks for the level of detail. This is really helpful. The breakdown they showed me had the agency parent group name on the calculation so I am assuming they will do the payroll. But will get more details on that tomorrow.

Have a good evening to both of you.

[PerfectStorm]

One bit these calculations often miss - how much money you've taken in the financial year already as it will mean you are that much further through the tax bands before you start. Not always an issue in May, but it could be.

[cojak]

I don’t know if this is any good but you could have a look at this payslip checker https://forums.contractoruk.com/umbr...p-checker.html