Currently a sole trader agent says I need to operate through a umbrella or ltd co.

[LisaContractorUmbrella]

IR35 calc output. 7072 salary. 500 a day 46 weeks a year. all other settings standard.

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Your current net monthly income is £6,496.

If you get caught by IR35, this decreases £1,391 (21%) to £5,104

--

I think Malvolio might have been spot on.

What would the contractor get in an umbrella situation Lisa?

£6496 is almost 92% of £7072.00 and on that salary you are definitely 40% tax payer so think there may be something amiss with the calculation? Either that or I've missed something in your question which is entirely possible

[prozak]

£6496 is almost 92% of £7072.00 and on that salary you are definitely 40% tax payer so think there may be something amiss with the calculation? Either that or I've missed something in your question which is entirely possible

yes. Sorry. 7072 is the annual salary component - no NI.

6496 is take home if you are paying out all the money and taking the top rate tax hit.

[LisaContractorUmbrella]

yes. Sorry. 7072 is the annual salary component - no NI.

6496 is take home if you are paying out all the money and taking the top rate tax hit.

Here you go - from our website calculator:

Monthly Weekly

Income 10,000
Expenses 0.00



Employer's NI 1,130.92
Employee's NI 457.57
Employee Tax 2,861.40
Total All Tax 4,449.89
Fees 85.00
Total Net Income 5,465.11

[TestMangler]

I thought he was talking about Malvolio.
but then he quoted you.

Malvolio loves calling people a permie if they don't know all the tax legislation by heart, backwards, forwards and sideways.

Yes Lisa, sorry. Prozak is correct. I meant to quote Mal, rather than yourself.

Mal regularly tells newbs they should be paying taxes as if IR35 caught if they post questions about how to ask for holidays etc but now claims it's almost impossible to be caught these days

[malvolio]

Yes Lisa, sorry. Prozak is correct. I meant to quote Mal, rather than yourself.

Mal regularly tells newbs they should be paying taxes as if IR35 caught if they post questions about how to ask for holidays etc but now claims it's almost impossible to be caught these days

If you are a tester by trade, I hope you pay better attention to detail than that.

For the record I never suggest anyone should pay under IR35. It is entirely avoidable with just a little effort. What I do say is that if you are whining about short notice periods and late payments or about having to get permission for time off, then you're behaving like a permie, not a contractor.

Equally Tolley's is now over 10,000 pages long. Nobody knows it all. However, it's not unreasonable that a contractor knows the bits that apply to them in their day-to-day work - and there are plenty of examples out there they can use.

[SueEllen]

Thanks for your advice guys.



That's difficult to judge, this contract will only be for 3 months and I don't know how often they will come around.

It sounds like the umbrella route will be easier, but the ltd route my be better in the long run. I also want to create some patents in future and would prefer them in the name of a ltd.

I will speak to an accountant and see what they say.

Unless you work in a field where you specifically have to have freelancer status there is nothing stopping you putting your direct contracts through your limited company. This will limit your personal liability with the client if everything goes wrong.

Just make sure you get your contracts reviewed for stupid clauses that some companies thing they can throw in.

If you use one of the contractor accountants that post on here and as you seem to have the research abilities i.e. you found this website and posted, then you won't have difficulty on the accounting side.

[TestMangler]

If you are a tester by trade, I hope you pay better attention to detail than that.

For the record I never suggest anyone should pay under IR35. It is entirely avoidable with just a little effort. What I do say is that if you are whining about short notice periods and late payments or about having to get permission for time off, then you're behaving like a permie, not a contractor.

Equally Tolley's is now over 10,000 pages long. Nobody knows it all. However, it's not unreasonable that a contractor knows the bits that apply to them in their day-to-day work - and there are plenty of examples out there they can use.

I can't be arsed finding it, but you recently said something along the lines of 'It sounds like you come under IR35, I hope you are paying the relevant taxes' to someone who asked a question. If that's not a suggestion that someone should be paying it, I don't know what is.

Yes, I do pay attention, thats how I know you said it, in among some of your other terrible advice

[malvolio]

I can't be arsed finding it, but you recently said something along the lines of 'It sounds like you come under IR35, I hope you are paying the relevant taxes' to someone who asked a question. If that's not a suggestion that someone should be paying it, I don't know what is.

Yes, I do pay attention, thats how I know you said it, in among some of your other terrible advice

That was to Prozac (I think? CBA t look it up) who was expecting to get paid for doing now work, so blowing the minimum level of MOO for an IR35 defence. I wasn't suggesting he paid the taxes, I was suggesting he needed to get his head around what an IR35 defence was actually all about.


Context is everything. You lose. So sorry.

[TestMangler]

That was to Prozac (I think? CBA t look it up) who was expecting to get paid for doing now work, so blowing the minimum level of MOO for an IR35 defence. I wasn't suggesting he paid the taxes, I was suggesting he needed to get his head around what an IR35 defence was actually all about.


Context is everything. You lose. So sorry.

I lose ?? How do you make that out ? You spout opinions based on what exactly ? You ever watched an HMRC inspector trying to construct an IR35 case ? Any idea how they do it ?

Your minimum level of MOO arguement is bollocks to be honest. I've had money from agencies twice for ******* up contracts and been compensated for not doing any work. One of them actually came up as part of my defence in my IR35 investigation and was used to demonstrate risk. To suggest (as you do regularly) that a real business would 'walk away and move on' is complete tosh. That is not opinion, that is verifiable fact. A 'real business' would weigh up what can be achieved to minimise risk of financial loss and if it proved to be too expensive, then they would drop it. To take an agency to 'Summary Cause' (I don't know what you call that in England, but it's the next step up from small claims), doesn't cost much and, in my experience, an agency, for the sake of a week or a months money, won't defend against it and will roll over if you do it right.

So love, you lose. But don't let it worry you. It can't be a new experience for you

[malvolio]

OK, of course, you've had an investigation and I haven't after 16 years contracting. Which one of us is doing it right?

FWIW I've studied every appealed case since 2003, they all hinge on different factors and different subtleties of interpretation depending on the specific circumstances, mainly since the original law is so foggy. In general there has to be an irreducible minimum of Mutuality present and being paid for no work is part of that. Being paid what is effectively a penalty for a reduced notice period isn't about Mutuality.

And I don't actually care that much anyway, I was only objecting to you misquoting what I said and using it out of context to prove your own point.