Take home calculator explained

[gabox01]

Hey,

I don't really understand this calculator:

Contractor Calculator - Take Home Pay - Limited Company Calculators - Business Calculators

Let's say you enter 400 to the daily rate, can somebody tell me how the 75.41% is calculated?
Is VAT involved here?

[Pondlife]

Hey,

I don't really understand this calculator:

Contractor Calculator - Take Home Pay - Limited Company Calculators - Business Calculators

Let's say you enter 400 to the daily rate, can somebody tell me how the 75.41% is calculated?
Is VAT involved here?

£400 per day x 260 working days = £104K
260 working days / 12 months = 21.66 working days/month
£104K / 12 months = £8666.67/month

Nowt to do with VAT. 75.41% will be based on certain assumptions around salary (and therefore employ(er+ee) national insurance, income tax, possible expenses, pension contributions etc.

Edit: The only VAT bit might be that they make an assumption around your FRVS % and subsequent savings

[gabox01]

£400 per day x 260 working days = £104K
260 working days / 12 months = 21.66 working days/month
£104K / 12 months = £8666.67/month

Nowt to do with VAT. 75.41% will be based on certain assumptions around salary (and therefore employ(er+ee) national insurance, income tax, possible expenses, pension contributions etc.

Edit: The only VAT bit might be that they make an assumption around your FRVS % and subsequent savings

Are there any calculator which is more detailed?

[Martin at NixonWilliams]

Hey,

I don't really understand this calculator:

Contractor Calculator - Take Home Pay - Limited Company Calculators - Business Calculators

Let's say you enter 400 to the daily rate, can somebody tell me how the 75.41% is calculated?
Is VAT involved here?

From what I can tell, it looks as though there are some assumptions made in terms of expenses to arrive at that take home percentage based on turnover of £104,000. If you contact SJD I'm sure they can give you the details.

As a guide, the tax paid is likely to be a combination of corporation tax and income tax on dividends declared in excess of the higher rate threshold (£41,865 for 2014/15). The calculation would be something like:

Turnover (including flat rate scheme benefit)
- Expenses (including salary)
= Profit before tax
- Corporation tax (20%)
= Profit after tax

The profit after tax is then taken as dividends which are tax free whilst your total income is below £41,865, the remainder are then taxed at an effective rate of 25%.

Note that if you have a spouse with whom you can split the shares and therefore make use of their allowances, the take home pay percentage could be much higher than 75%.

I hope this helps.

Martin

[Pondlife]

Ermmmm

Calculators

maybe

[northernladuk]

Are there any calculator which is more detailed?

To be more detailed you will need to input a much more detail list of requirements such as expenses, pensions, travelling etc as every case is different.

The accountant you should be speaking to will provide something. SJD do a spreadsheet you could try filling in with your numbers but unless you know the project numbers it won't be that accurate.

[Martin at NixonWilliams]

Are there any calculator which is more detailed?

We have a more detailed version here - https://www.nixonwilliams.com/net_pay_calculator.asp

[northernladuk]

Note that if you have a spouse with whom you can split the shares and therefore make use of their allowances, the take home pay percentage could be much higher than 75%.

That's advice? Really?

[Martin at NixonWilliams]

That's advice? Really?

What is the problem?

[Jessica@WhiteFieldTax]

Just a note on calculators - its obvious, but bears repeating, there are many variables:

~ accuracy of calculator
~ complexity of calculator
~ assumptions
~ data in

The one thing thats not variable, is tax law. IE for a given set of parameters, all other things being equal, the answers will be the same. We sometimes see people "calculator shopping" ("I've spoken to XXX and they say my take home is AAA, whereas YYY says its BBB, can you improve that?")

HTH