Insider ir35 - is uk a tax hell now?

[Fraidycat]

The OP is on around £75k a year tax paid, hardly penury.

You could say the same thing if he earnt 750K and took home 75K. Hardly penury.

Or even 7.5Million and take home pay of 75K. Hardly penury.

"The highest rate of income tax peaked in the Second World War at 99.25%. It was then slightly reduced and was around 90% through the 1950s and 60s.
In 1971 the top rate of income tax on earned income was cut to 75%. In 1974 the cut was partly reversed and the top rate on earned income was raised to 83%.
In the first budget after her [Margaret Thatcher,] election victory in 1979, the top rate was reduced from 83% to 60% and the basic rate from 33% to 30%. The basic rate was also cut for three successive budgets – to 29% in the 1986 budget, 27% in 1987 and to 25% in 1988.The top rate of income tax was cut to 40% in the 1988 budget. Under the government of John Major the basic rate was reduced in stages to 23% by 1997"

[newmove]

To add as it's worth settling this once and for all

£154,000 in assignment fees over the year (220 days at £700 a day) with an umbrella fee of £95 a month and a typical 1257L tax code, NI code A so under 66 years old..

£81,865.82 in pocket without any pension contribution (53.16%) = 46.84% lost in tax and umbrella costs.

or
£66,596.50 (43.24%) in pocket with £40,000 (25.97%) paid into your pension = 30.79% lost in tax and umbrella costs.

Calculator - my company's own as used to validate a whole set of other PAYE providers so I know it's right.

You lose the 1257L tax code if your taxable income is over 100k.

[Bodger]

I can give you some real numbers as I have worked on a similar rate recently:

Key Facts:

Claiming child benefit for 2 x children, and earning over 100k so tax free wiped out.
No pension contributions
Tax Code: K461 (Minus 4621 tax free amount)

Weekly Figures:

Umbrella Income £3254
Umbrella Margin: £20
Employer NI: £384
PAYE: £1033
NI: £132
Final Received: £1686

Thats a total figure of 51.80% of total income received after tax.

For yearly figures, multiply that by about 46 weeks, gives an umbrella income of £149,684 vs a post tax income of £77,556

It's not as bad the original poster mentioned, but it is pretty hefty. You'd lose about 40k per year vs a ltd company splitting tax burden with spouse, with modest expenses for acountant / insurances etc.

[_V_]

Wow, how the mindset of contractors has changed. Be grateful for £75K salary (btw that's the salary of my 24 year old stepson working in IT permie).

No wonder the IT contracting community is dead.

[Bodger]

Wow, how the mindset of contractors has changed. Be grateful for £75K salary (btw that's the salary of my 24 year old stepson working in IT permie).

No wonder the IT contracting community is dead.

I mean, in fairness, thats a 75k post tax income. So more like 120k before tax on a normal PAYE salary.

[eek]

You lose the 1257L tax code if your taxable income is over 100k.

True but that doesn't change the figures

[Fraidycat]

Thats a total figure of 51.80% of total income received after tax.

Yeah, factor in lost child benefit it will be that.

It gets even worse for overtime pay.

After Employers NI some one on £700 a day will be on around 150K a year.

This means they will be at or very near the 45% income tax threshold.

So any over time pay will be taxed 45% income tax, 2% Employee NI, and 13% NI Employer.

That sounds like Tax hell to me.

But it would have been even more hellish under labour, Corybn wanted the 45% tax band to start at 80K and a new 50% tax band to start at 125K. My guess he would have jacked up employee and employer NI for high earners as well.

[malvolio]

You could say the same thing if he earnt 750K and took home 75K. Hardly penury.

Or even 7.5Million and take home pay of 75K. Hardly penury.

"The highest rate of income tax peaked in the Second World War at 99.25%. It was then slightly reduced and was around 90% through the 1950s and 60s.
In 1971 the top rate of income tax on earned income was cut to 75%. In 1974 the cut was partly reversed and the top rate on earned income was raised to 83%.
In the first budget after her [Margaret Thatcher,] election victory in 1979, the top rate was reduced from 83% to 60% and the basic rate from 33% to 30%. The basic rate was also cut for three successive budgets – to 29% in the 1986 budget, 27% in 1987 and to 25% in 1988.The top rate of income tax was cut to 40% in the 1988 budget. Under the government of John Major the basic rate was reduced in stages to 23% by 1997"

And your point is...?

[Fraidycat]

And your point is...?

Thats the kind of thinking that ends up with 90 to 99% tax bands. That we have had in the past. And some people would like to see again.

[malvolio]

Thats the kind of thinking that ends up with 90 to 99% tax bands. That we have had in the past. And some people would like to see again.

Which is not what I was saying. I was not saying we should disregard the taxation landscape and any potential future depredations HMG may come up with. We have someone complaining about the return on their income - which is still substantial by any normal measure - when the remedy lies in their own hands. Moaning about the legal deductions is pointless.