Better off beight caught by IR35?

[downsouth]

According to the calculator at I'd take home £7,009 per month inside IR35 but £6,646 outside IR35.

well taking home £7009 per month will very quickly get you into the Higher Tax bracket, and the implications of this tax wise, plenty of ways to minimise your tax exposure too

suprised no-one else has mentioned this but speak to an accountant

[xoggoth]

I don't know but just an aside on pensions. I found corporate pensions are incredibly bound up by regulations and very difficult to transfer to another provider if you want to. Do a bit of research before putting a lot of dosh into one.

[Olly]

Holly molly, £600 a day and not researched the basics.....why will nobody pay diligent little ole me that much....oh wait they did...but not any more...sniff sniff

[BolshieBastard]

First contract at £600 per day! What am I doing wrong?

I'm not envious, I'm not envious, I'm not envious .... no doesn't work.

Let me guess the keywords .... London, finance, high volume, low latency ....

Good luck lass.

He's a troll.

[OrangeHopper]

He's a troll.

What me? I might look like one and have nothing sensible to contribute but I'm not smart enough to be a troll.

[CauliCheese]

Thank you for the many replies - much appreciated.

Re additional expenses, I will read more on that to get a better understanding. I appreciate that these both increase my costs (bad) but are not taxed (pension - good). MPWannaDecentIncome - Thanks for the link to the 5% allowable expenses - very clear and useful.

Re pension contributions vs ISA etc, probably a separate topic but this isn't me putting all my eggs in one basket. I also have non-pension long term investments so am spreading risk around. xoggoth - thanks for comment re transferability of corporate pensions - would do more homework before starting anything.

I do understand that outside IR35 I would pay myself minimal salary (tax free allowance) and the rest in dividends. Perhaps I should ditch the calculator and try to do the sums myself and see where I come unstuck. I have only known for a week that this contract was definite so I'm at early homework stages, hence the rudimentary questions at this stage.

First contract at £600 per day isn't as good as it sounds :-) I've been in investment banking for 15 years and am switching from perm to contract not wholly out of choice (best offer around and want to leave current role).

I definitely will be speaking to an accountant, but it's a bit like seeing an IFA - I want to know what I think first, and understand as much as possible before I get their advice.

Have good week-ends,
Regards,
CauliCheese

[jetrimby]

Please get careful advice as, on that money, the cost of getting it wrong are going to be large.
In simple terms IF you are able to get out of IR35 by way on contract/conditions and actual behavour etc then you WILL be better off than not. You can still use a pension (and a company can (and in your case should) contribute to a personal scheme whether SIPP or standard) so there should be no problem contolling this money to some extend (dont forget you will not see it till 55 though!)
Re expenses as non IR35 you can claim as much as you spend on the business (subject to normal tax rules) FOr IR35 there are still the same restrictions on what is allowable BUT also can't exceed 5% of turnover. (Pension is not part of this)
It does sound however that you might well fall into the IR35 rules (day rate/year contract and I suspect with the monies involved substitution is not going to be allowed!) IF so there are another couple of options out there to try and keep the tax bills down. There are several systems out there using foreign based EBTs (Employee benefit trusts) and offshore companies employing the likes of yourself in quantity to get round various IR35 issues and taxes. As a city background is likely to something you know or a work collegue is aware of (most big city bonuses don't contribute that much to the tax man, as they like to claim!) They are mentioned on other treads in more detail here. Not liked by many on here and not sure I would use them for the long term but as a one year contract could be a very good way of earning a bit more than you expected. Get good advice from an accountant and know what you are getting into (rewards AND risks) but I would at least look into it.

[Hex]

Try using the calculators here: www.ir35calc.co.uk

If you're still getting more takehome for being inside IR35 vs being outside IR35 then you're not using the calculators properly.

[MPwannadecentincome]

Try using the calculators here: www.ir35calc.co.uk

If you're still getting more takehome for being inside IR35 vs being outside IR35 then you're not using the calculators properly.

The calculator seems a bit simplistic, it does not account for expenses?

[malvolio]

The calculator seems a bit simplistic, it does not account for expenses?

AAAARRRRGGGHHHH!!!!!

FFS when will people get it into their thick heads that expenses are not income. If you make money on them by understating your tax position, you're doing it wrong and potentially commiting evasion.

Also, if you buy something for £10 and expense it, all you're doing is getting back the tax on the original £10 you used to pay for it.