inside vs outside ir35 rates when spose not working + paying yourselves pension

[leo123]

How much will £600 daily outside ir35 (when your spose does not work and you both are 50/50 shareholders of your limited company, so you each pay minimal salary + dividends) will match the inside daily rate?

Online calculator (contractorcalculator.co.uk) shows the matching outside rate £725.

But I cannot believe that. I don't think it includes correct limited company management (when you are outside).

Also when inside I used to pay myself and my wife pensions (which goes before the tax).

Any ideas what will be the outside match in my case?

Many thanks!

[northernladuk]

We don't know. This has been asked a thousand times. The calculators are very generic and tend to give different answers even with the same inputs so can't be taken as anything but a finger in the wind. They certainly aren't set up for complex arrangements or associated benefits either. They don't take in to account previous earnings that year, benefits like director phone, expenses loop holes and a load of stuff which affects the in your pocket value which is important so are a sledgehammer guesstimation and best.

You'll get a very approximate number and then beyond that you will have to look at other aspects of each role you are comparing for non tangible benefits. Role choice is not always about the money.

When all this hit someone came up with a very rough 35% uplift is required comparing an outside vs inside but again, makes no consideration for LTD setup etc.

My question is why are you trying to compare? Have you got two roles or are you just wondering so you are ready to make a decision if a certain role appears? As I say, a flat like for like isn't the only thing you need to consider when taking a gig.

I'm half tempted to ask how you paid your wifes pension from an inside gig.

[leo123]

You are right.
I worked many years outside before Covid, then I worked perm.
Now I matched my perm salary + bonus etc. to the inside ir35.
However contract is more risky.
Do you know if umbrella companies pay pension? (When outside ir35 I used to pay by myself).
Also in perm if you are redundant you are paid at least your notice period...
The plus of contracts is you don't have the bloody annual and mid-year reviews of your performance...

[leo123]

I'm half tempted to ask how you paid your wifes pension from an inside gig.

I was outside. Just paid from my limited company account to her pension, which is tax efficient.

[WTFH]

The plus of contracts is you don't have the bloody annual and mid-year reviews...

If you're a good contractor you have a review every time a new contract is discussed, whether that is an extension or a completely new one.

[WTFH]

And back to NLUK's question: What rate have you been offered inside?
You say you've got an offer on the table of £600 outside, but how much is the inside gig offering you?

[northernladuk]

I was outside. Just paid from my limited company account to her pension, which is tax efficient.

You said

Also when inside I used to pay myself and my wife pensions (which goes before the tax).

Also, paying her pension may be efficient but it can be risky. If you are paying her low wages any amount that is excessive of her income is going to be a risk and easily deemed as a tax fudge and not linked to the work she did for the company.. which will be none.
If you are paying her like 8k then anything over say 3.5k a year is going to be highly questionable..

And up to a point you might has well pay yourself the full amount as it comes of CT anyway, no point splitting it unless you are maxing your 40k a year.

I'm guessing you paid her much more than 3.5k and are getting some highly dubious advice.. but I could be wrong.

[northernladuk]

Now I matched my perm salary + bonus etc. to the inside ir35.
However contract is more risky.

It is so sounds like you got unlucky with the inside gig. Many of them will match a good salary but there are plenty out there that have an uplift to make it more worthwhile.

Do you know if umbrella companies pay pension? (When outside ir35 I used to pay by myself).

Yes they do. They have different schemes. Some will pay in to your provider, others you have a choice and I'd imagine there are a few that only have one option but yes they pay in to pensions.

Also in perm if you are redundant you are paid at least your notice period...

That's an absolute pittance unless you've been there many years so not really a benefit.

The plus of contracts is you don't have the bloody annual and mid-year reviews of your performance...

You get paid for doing them so it's a slight pain in the bum at worst. If you are trying to break in to a new skill etc it's an opportunity to push your management for more training or career change so can work out as part of your master plan to get more skills as well. There are many things in contracting I'd consider a bigger pain in the bum than supplier reviews as perm. But still small potatoes in the greater scheme. Just play the game and get on. If you make yourself hate it you are bound to make yourself miserable.

[malvolio]

Incidentally - have you read this?