Originally posted by coolhandluke
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Can you afford to go perm or inside IR35?
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merely at clientco for the entertainment -
As others have mentioned it sounds like you're suffering from lifestyle inflation.
There are a lot of adjustments contractors can make before having to decide if food or heating is today's priority. As I rarely take more than 76k out of the company each year I'm confident I could find something perm paying around that and pay the extra tax, 10k drop per anum? If you go perm what are your plans for the war chest? I will probably stick mine in my pension or look for investment property.Make Mercia Great Again!Comment
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Effective tax rate between 100K and 120K is 60% (and 14% Employers NI if inside IR35)
Tax rate above 150K is 45% (and 14% Employers NI if inside IR35)
These threshold levels are probably not going to change much over the next 10 or 20 years.
While inflation will mean more and more Permies and Inside IR35 contractors end up paying these tax rates.
In fact these tax rates might even rise, both the 45% rate and the 14% NI rate eg 45%->50% and 14%->20%Last edited by Fraidycat; 26 December 2020, 08:38.Comment
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You shouldn't be paying the employers NI from your day rate on an inside gig. Unless, of course, you're using an umbrella.
Haven't looked too closely for a while but I would expect illustrations for inside gigs to make it very clear what deductions the client / agency will be taking from your rate (isn't it going to be a legal requirement?).Comment
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Originally posted by ladymuck View PostYou shouldn't be paying the employers NI from your day rate on an inside gig. Unless, of course, you're using an umbrella.
Haven't looked too closely for a while but I would expect illustrations for inside gigs to make it very clear what deductions the client / agency will be taking from your rate (isn't it going to be a legal requirement?).Comment
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Originally posted by ladymuck View PostYou shouldn't be paying the employers NI from your day rate on an inside gig. Unless, of course, you're using an umbrella.
Haven't looked too closely for a while but I would expect illustrations for inside gigs to make it very clear what deductions the client / agency will be taking from your rate (isn't it going to be a legal requirement?).
It's why I'm very keen on ensuring agencies are very clear in what they are offering and why one of the things I'm working on is to get agencies to use "Agency Umbrella Rates" so that it is clear what the agency is paying the umbrella and that the sum paid isn't the employees and is before all the deductions that need to be made (employers NI, holiday pay....).
And you can see why it's so important when both of the posts above (when both you and JamesBrown both of whom are a lot better informed than the average contractor) are getting fundamental items wrong...
However it's essential that we ensure agencies do offer these types of rates as salary sacrifice into pensions is essential going forward as it's one of the few benefits we will have remaining.Last edited by eek; 26 December 2020, 11:47.merely at clientco for the entertainmentComment
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Originally posted by eek View PostIt's not - Key Information documents exist so that the amount paid will be clear but they are only required when the contract is being offered.
It's why I'm very keen on ensuring agencies are very clear in what they are offering and why one of the things I'm working on is to get agencies to use "Agency Umbrella Rates" so that it is clear what the agency is paying the umbrella and that the sum paid isn't the employees and is before all the deductions that need to be made (employers NI, holiday pay....).
And you can see why it's so important when both of the posts above (when both you and JamesBrown both of whom are a lot better informed than the average contractor) are getting fundamental items wrong...
However it's essential that we ensure agencies do offer these types of rates as salary sacrifice into pensions is essential going forward as it's one of the few benefits we will have remaining.Comment
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Originally posted by eek View PostAnd you can see why it's so important when both of the posts above (when both you and JamesBrown both of whom are a lot better informed than the average contractor) are getting fundamental items wrong...Comment
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It is unlawful for an employer to deduct employment costs, such as ErNI, from pay owing to an employee. Of course, it is perfectly legal to offer pay in line with the overall costs of employment. That’s why absolute clarity on the pay owing to the employee is important.Comment
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Originally posted by ladymuck View PostI am not surprised I'm getting bits wrong. I've read the legislation and the guides that are intended to help one make sense of them and there's still stuff that I get stuck on. I know i was bordering on "I don't like it so it must be illegal" as I believe an inside contract shouldn't be fundamentally any different to an employment or FT contract in that the contractor should be told a rate (be it hourly, daily, annual etc) and be able to easily determine from that what their take home pay should be. They shouldn't be left wondering if they're going to suffer erNI or AL because of some quirk in the way the client / agency want the payments processed.
So one area I'm focussed on (and the IPO isn't helping here) is allowing agencies to do what they want but in a way that will make it clearer - hence "Agency Umbrella Rate" so it's clear what the rate is and a means of generating Key Information Documents so they don't need to ask multiple umbrellas to do it.merely at clientco for the entertainmentComment
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