Understanding contractor pay

[escapeUK]

Sorry, but this is a harsh welcome to contracting. The street isn't paved in gold.

Not via umbrella paying two lots of NI anyway.

Via ltd company with no NI at all and being paid to collect VAT is a different story!

[centurian]

Via ltd company with no NI at all and being paid to collect VAT is a different story!

At least until the Tories get in and "simplify and clarify" it

Then we'll be begging for the Labour uncertain nature of it, which at least we have come to understand how to navigate.

[VectraMan]

Imagine you work in London and the client decides they want you to go to (say) Geneva tonight, say over and be onsite at 8am tomorrow. Fights and hotel at such short notice would easily eat up your daily fee. There is no way a business is going to swallow that.

In my experience (and I assume this is the norm), clients will pay you for expenses such as that example, but the day to day getting to their office is your problem.

I think we're a little unfair on the umbrellas. I did my first 4 months with an umbrella, and I have to admit to finding the expenses and NI very confusing. But I was never mislead; it was my fault for not understanding it properly.

[malvolio]

Mal - he's going through a brolly. IR35 game over.

Picky picky...

[cojak]

Still not convinced jumping in and telling all new posters to read stickies and not bother us is a good idea.

If other posters wish to offer advice then good stuff, but do we have to jump on every new poster and not make them feel welcome?

Hopefully the new site's FAQ section will resolve this.

[ASB]

Speculative example.

Income £1,000; "own" expenses £200, Brolly Fee £25;

The ER's NI is 12.8% on everything above the primary threshold (110 pw). The total of these combined is 775 (i.e. what's left after exs and fee).

(wages - 110) * .128 [er's ni] + wages = 775

Er's NI = 75.46 wages = 699.54. (i.e. Total 775.00)

Gross wages 699.54

Tax free 124.52 (6475 pa)
Taxable 575.02

Tax (20%) = 115

Ni free = 110
Ni able = 589.54

NI (11%) = 64.85

Net wage = 699.54 - 115.00 - 64.85 = 519.69

Of course you can't add the 200 quid back in because you've already spent that on the expenses. But at least you get the benefit of the 200 before suffering deductions on it.

[Edit, I've done those weekly, to show the principle. Of course, some of the expenses may potentially be chargeable to the client - dependant upon the contract]

[LisaContractorUmbrella]

Not via umbrella paying two lots of NI anyway.

Via ltd company with no NI at all and being paid to collect VAT is a different story!

But only if you are outside IR35 remember

[escapeUK]

But only if you are outside IR35 remember

We are all outside Lisa, if we want to be (and refuse to work for anyone who trys to put us inside it)