keep 75% with ltd co, 80% with umbrella?

[Steven@Parasol]

I am staying Ltd, I like to sleep at night but you can see why the Umbrellas / EBT are so popular? (and I can dream of the holidays / ferrari’s!)[/QUOTE]

True umbrella companies are emplyment led solutions not tax led. These schemes etc are not umbrella companies.

Althouigh we do all sometimes get tarred with the same brush!

[DaveB]

But it would not be 485 per month – it would be much more – below are rough figures (don’t worry, I use an accountant so excuse me if below are wrong!)

In
11,550 Monthly Monies

Out
Expenses = 1,200 pm
Salary = 825 pm
TX & NI = 300 pm (estimate!)
Corp Tax = 1,845

Remaining = 7,380

Based on the above, after corporation tax, I would be able to take home the following:

825 salary
1200 expenses
7380 dividends (£5000 of which will be taxed at 20% - so reduces by £1000

Take Home = 6,560

Compared to 9,700 take home via ‘Choice Premier’ with only £350 per month being paid in tax.

I am staying Ltd, I like to sleep at night but you can see why the Umbrellas / EBT are so popular? (and I can dream of the holidays / ferrari’s!)

To compare like with like you need to add your salary and expenses into your take home ( that what the "umbrella" will be doing)

So it's more like 8635.

Plus your Tax and NI are out, should be around 125 all in.
Also you havn't allowed for FRS VAT. Thats worth another 370 a month.

So as a rough estimate your Ltd take home should be around 9180.

Premier claim 9700 with 350 tax to pay

Add the 485 from the original 5% guestimate and it's pretty much there.

On top of that you havn't accounted for pension payments. If your ltd pays them there is no CT to pay on that *and* you reduce your personal tax liabilities thanks to lower divi payments. ( the tax saving is less than the pension payment so your overall divi payment falls).

[LisaContractorUmbrella]

"Premier claim 9700 with 350 tax to pay"

3.6% tax? Presumably on income earned in the UK by a UK tax payer? Seems too good to be true?

[AtW]

Anything which claims 80 to 85% retention will carry more risk. Is it really worth it if you're already achieving 75%?

And, by the way, the 80/85 figure doesn't tell the whole story either. Promoters of these arrangement typically charge 10%.

So HMRC only gets 5-10%. Do you think they'd be happy with that?

I knew you were not stupid.

[DonkeyRhubarb]

I knew you were not stupid.

Perhaps I was 10 years ago though. All I can say is, with ir35, it seemed like a good idea at the time.

ir35 doesn't seem like much of a reason these days for using a scheme.

[SneakySimon]

To compare like with like you need to add your salary and expenses into your take home ( that what the "umbrella" will be doing)

So it's more like 8635.

Plus your Tax and NI are out, should be around 125 all in.
Also you havn't allowed for FRS VAT. Thats worth another 370 a month.

So as a rough estimate your Ltd take home should be around 9180.

Premier claim 9700 with 350 tax to pay

Add the 485 from the original 5% guestimate and it's pretty much there.

On top of that you havn't accounted for pension payments. If your ltd pays them there is no CT to pay on that *and* you reduce your personal tax liabilities thanks to lower divi payments. ( the tax saving is less than the pension payment so your overall divi payment falls).

If I ever complain about paying £126 a month to SJD, remind me of my back of fag packet calculations!

[Waldorf]

But it would not be 485 per month – it would be much more – below are rough figures (don’t worry, I use an accountant so excuse me if below are wrong!)

In
11,550 Monthly Monies

Out
Expenses = 1,200 pm
Salary = 825 pm
TX & NI = 300 pm (estimate!)
Corp Tax = 1,845

Remaining = 7,380

Based on the above, after corporation tax, I would be able to take home the following:

825 salary
1200 expenses
7380 dividends (£5000 of which will be taxed at 20% - so reduces by £1000

Take Home = 6,560

Compared to 9,700 take home via ‘Choice Premier’ with only £350 per month being paid in tax.

I am staying Ltd, I like to sleep at night but you can see why the Umbrellas / EBT are so popular? (and I can dream of the holidays / ferrari’s!)

I think your figures a bit wonky?

I have just been messing about with this calculator - Contractor Accountant specialists UK | Accountancy Service for contractors | Accountancy Services UK | Take Home Pay Calculator UK. you seem to keep more than you think but likewise your figures imply that you will be working 264 days a year, which is probably too high considering 104 weekends and 8 bank holidays.