Nett pay

[Doddy]

I'm im my first contract, and I've followed the discussion about Ltd Vs Umbrella with interest, because I want to - obviously - maximise my income. I draw an average of 64% from my brolly, but what is YOUR average that you draw fom your own Ltd co? This would need to take into account any include any additional tax due personally at the end of the FY. My accountant, who runs my brolly scheme, leads to believe that there wouldn't be much difference between the two.

Thanks

[ratewhore]

Ah you see...

...it's not about the %age you take out of the company (at least not to me). A clever contractor will pay himself a nice enough whack to live a relatively humble existence but also leave enough in the company to pay the same salary when times are hard..!

So I take about 40% out per year but I guess you could argue the overall tax burden is lower.

Does this help? Probably not.

[BlasterBates]

That's good advice, especially if you're a new contractor, you should aim to pay yourself on the low rate of tax, and then when you're out of job the rest of the dosh gets paid out at 20%.

If you're out for 6 months or a year (probably will happen at some point) that's a lot of dough.

[Doddy]

Good points - I bank what I don't need, so that I can fall back on it when required , so I suppose when you operate as a Ltd, you don't take out more than you need at that time, and then continue to pay yourself a salary when there is no income.
What I am trying to work out is, what is the real percentage advantage in operating as Ltd v paid by brolly, and does this advantage only remain when you pay yourself a McDonald's-type salary, with the rest in divis?

[ratewhore]

You're forgetting about non-income items such as expenses. For example, when I was with a brolly I couldn't expense a course I was in the middle of. When I formed a Ltd I chicked it all through there with no issues at all.