% take home pay

[BankingContractor]

As this is my first year of contracting can someone pls tell me how much I expect to take home, as a percentage of gross takings? (outside IR35).

I know it depends on a multitude of factors and the figure will undoubtly vary from individual to individual, but just really want a ball-park % figure as I'm trying to save for a property and trying to estimate when I'll have enough for the one I want?

Thanks

[rootsnall]

Lose a third, keep 2/3rds !

[monkeygeorge]

If you're in IR35 and with an umbrella, about 40% tax.

If you're out of IR35 with a composite about 20%.

If you go limited it depends on many factors but my illustration came to about 30%.

George

[Underscore2]

Keep 80%

if outside IR35.

[rootsnall]

If I understand correctly from previous debates on these matters the composite figure of 80% does not take into account the fact you have to pay higher rate tax on a good chunk of your dividend payments when you do your personal tax return. I think the illustrative figures produced by some composites conveniently ignore this fact. It reckon it works out the same as a Ltd at 65-70% net.

[Underscore2]

No

YOU DO NOT have to pay additonal tax on those dividends. I wish people would stop saying this. If you a Ltd and you pay yourself divs you don;t pay any additonal tax. Same goes for composite - if run correctly.

[rootsnall]

Can you explain how ? I'm not having a go as I'll switch to the 80% if its explained how.

An example with very rough figures is 80K gross, 10K expenses, 10K salary, therefore 60K in divs, you'd have to pay extra tax on 40Kish of divs by my reckoning.

How would a composite or 'properly' setup Ltd organise itself to pay less tax + NI !?

[EqualOpportunities]

An example with very rough figures is 80K gross, 10K expenses, 10K salary, therefore 60K in divs, you'd have to pay extra tax on 40Kish of divs by my reckoning.

Quite right Roots, quite right...

[malvolio]

Underscore, take note...

You do not pay any more tax as long as you stay out of the higher rate band. Divis are tax paid at the basic rate, so go over the threshold and you have to make uo the difference..

Or have I been getting it wrong all these years?

[tim123]

YOU DO NOT have to pay additonal tax on those dividends. I wish people would stop saying this. If you a Ltd and you pay yourself divs you don;t pay any additonal tax. Same goes for composite - if run correctly.

Underscore people keep on saying it because you are wrong.

If you are paid by divis and you ARE a higher rate taxpayer you have extra tax to pay.

How many times do you have to be told this before you will believe it.

tim