What percentage of your earnings do you clear?

[jamda]

Just coming towards the end of my contract and I was working out, in the last year how much, as a percentage of what I charge the client (less VAT), I take home.

It worked out at 70%.

I just wondered what the range was. There are these high, high risk schemes that promise 85%, but assuming its all above board, I wonder what the average contractor clears (as a percentage of what they charge)

Thought it might be interesting.

[northernladuk]

You are going to get a whole host of answers that are different due to issues such as time spent away from home, mileage to client, different amount of expenses, people with more than one director and so on. You have made no distiction between umbrella or LTD either. Complete apples and pears.

Might be interesting to know but a useful benchmark for your performance it is not.

[jamda]

You are going to get a whole host of answers that are different due to issues such as time spent away from home, mileage to client, different amount of expenses, people with more than one director and so on. You have made no distiction between umbrella or LTD either. Complete apples and pears.

Might be interesting to know but a useful benchmark for your performance it is not.

This was the whole reason for my post, looking across the range of possible set ups, what people are clearing. It was certainly not designed as a benchmark for my performance, and thus I explictly only mention percentages.

What a friendly forum.

[northernladuk]

This was the whole reason for my post, looking across the range of possible set ups, what people are clearing. It was certainly not designed as a benchmark for my performance, and thus I explictly only mention percentages.

What a friendly forum.

That was me being friendly. We get quite of few of these generic questions which do not fulfil the requirement of the poster. Just pointing it out.

[TheFaQQer]

This year, I've had a project working from home, so my expenses have been low (new computer when the old one broke, new scanner, then stationery and postage etc.)

Two years ago, I took home 100% of my income, but since the company billed £0, that's not really that impressive.

I've never bothered to work out the percentage take home, to be honest.

[Sockpuppet]

Just coming towards the end of my contract and I was working out, in the last year how much, as a percentage of what I charge the client (less VAT), I take home.

It worked out at 70%.

I just wondered what the range was. There are these high, high risk schemes that promise 85%, but assuming its all above board, I wonder what the average contractor clears (as a percentage of what they charge)

Thought it might be interesting.

All things being equal a Ltd *should* be the most tax efficient.

[malvolio]

Actually for a LtdCo 70% is about in the right range, which is very roughly 68%-74%. But there are too many variables for any answer to be meaningful.

[Alan @ BroomeAffinity]

Mal's right: 65% to 75% is the norm. Depending upon a few variables - contract rate; shareholding structure; requirement to withdraw funds, etc - 80% can be easily achieved.

[Greg@CapitalCity]

If you are on £500 a day the 'worst' you should ever do is 69% assuming (a) a salary at just below the NIC threshold, and (b) you pay to use the services of a reputable accountant. If you earn less, this 'worst case' figure improves (at £250 a day, this becomes 78%). Ways to improve this are many and varied;
(1) Pay into a pension;
(2) Get your company on the flat rate scheme for VAT;
(3) Claim your business expenses;
(4) Only take out dividends to the higher rate earnings threshold;
(5) Consider using ESC C16 to close down your company when you cease trading;
(6) Consider the slightly higher risk income splitting with your spouse;
(7) Remember to claim for your £150 per head tax free Xmas party; etc etc

[prozak]

Never worked out the actual. But it is around 80%.

But I only take out money up to the higher earnings rate and my wife is a minority shareholder.