Rule of thumb uplift from outside IR35 to inside IR35 day rate?

[Untouchable1]

I’m trying to get a sense of the typical uplift needed when moving from an outside IR35 contract to an inside IR35 one.

For example, if someone’s day rate is £1,200 outside IR35, what would be the rough equivalent inside IR35 to achieve a similar take-home pay?

Is there a general rule of thumb (e.g. +30%, +40%, etc.) that people use when negotiating?

[WTFH]

There is no rule of thumb on it, because it is all dependent on how your finances are currently structured.
Outside IR35:
Are you running a Ltd?
How many shareholders/"employees" does the company have?
How much do you take out as salary, how much a dividends, how much goes to pension, how much do you claim on expenses?
Do you put company money into other ventures?
Do you use any other methods of reducing personal/corporation tax?
How many billable days do you actually do per year?

Inside IR35 (after umbrella fees): Here's your pay, how much do you want to put in a pension? The rest goes into your personal bank account after tax.

Some on here will tell you exact figures, based on their imagination. Some will argue that any figure that is not significantly larger than the other is incorrect (without justifying or evidencing it)
There are websites (e.g. https://www.contractorcalculator.co....alculator.aspx ) than can give you approximate calculations of Outside v Inside V Perm, they tend to be basic in assumptions and will base calculations on their only being one employee in the Ltd.

Oh, and congratulations - this time last year you were basing your figures on £500 a day, well done for the increase to £1200.

[northernladuk]

I’m trying to get a sense of the typical uplift needed when moving from an outside IR35 contract to an inside IR35 one.

For example, if someone’s day rate is £1,200 outside IR35, what would be the rough equivalent inside IR35 to achieve a similar take-home pay?

Is there a general rule of thumb (e.g. +30%, +40%, etc.) that people use when negotiating?

Not for me because every gig has a rate and I have to weigh up multiple factors as to whether I would take it or not. I know roughly how low I will go but that's about it. There was no real point comparing. Also to compare them you'd have to have a decision to make and I think with so many inside gigs it's rare to be able to have that inside/outside decision. I also can't remember the last gig I could negotiate. Managed to squeeze the odd tenner out the agent but ever gig I can ever remember was a set rate card.

What makes it even harder is the size of the rate you've quoted. If it was around the 400-450 mark then it's been discussed you'd need around 600 to have the same'ish standard of living. The higher the rate the more different that figure will be and it's very complicated to do a like for like.

There was a discussion somewhere about going outside to inside was around a 35% difference income but again that was comparing something like a £450 a day rate and was quite awhile ago. There are no calcs to back that up as no one could come up with anything that was remotely useable.

Not a clue for the rate you've quoted. Way out of my league.

[malvolio]

You will have to take a different line. You know what you take home now. Assume an inside gig will cost about 50% between stated day rate and take home. You then ask for a day rate to meet that.

Snag is, at your level you aren't comparing apples with apples, and they already know what they are going to pay you.

So negotiation options are fairly limited...

[avonleigh]

There are too many factors involved to have an exact answer. But I tend to aim for 25-30% extra for an inside gig.

[ladymuck]

£1,200 day rate, assuming 220 billing days a year, would put you very firmly in the very top tier tax bracket on an inside IR35 role so the treatment of that compared to putting it through a LtdCo would be completely different.

[SussexSeagull]

At that rate it is less of a concern, but expenses come into play as well as they have to come out of your salary/wages. If it is 100% WFH then not really a factor but if you need to stay away during the week it very much is.

[fatJock]

I use 25% uplift when inside and offer a reduced outside rate - engagers choice.

[rocktronAMP]

Why don't you enter the details of the Inside IR35 contract rate into Lucy's calculator?

For example £500 per day Inside IR35 for 20 working days in the month will generate gros £10,000
https://clarityumbrella.co.uk/contra...ay-calculator/

The breakdown follows:

Monthly Income	£10,000.00
Employer National Insurance	£1,231.94
Apprenticeship Levy	£43.15
Employee National Insurance	£340.10
Employee Tax	£2,404.43
Total All Tax	£4,019.62
Margin	£95.00
Total Net Income	£5,885.38

Not sure what your contract length is? But say it is 6 months then 120 working days. £35,312.28 net
If you are extremely fortunately 12 months is 220 workings £70,624.56 net

Can you and your family live with that? Yes or no answer.