Simple maths problem: Take home pay

[Major Major]

I think I'm missing something.

Day rate is 495/day.

Therefore, including VAT, on a 47 week year, I'm invoicing £130k in theory.

My simple spreadsheet says VAT is £20k/yr worst case.

Expenses amount to £20k.

So corporation tax works out conveniently about £20k.

So I'm only taking home £130k-£20k-£20k-£20k, i.e, about half my invoiced value?

I'm SURE this is all wrong and I should sack my accountant.

[LisaContractorUmbrella]

Hi MajorMajor

Your income is actually about £116k - the VAT element belongs to HMR&C and therefore you shouldn't be including it in calculations to work out your 'take home'

HTH

[Major Major]

Yep, I'll buy that and had kind of thought it.

Even so, it's not particularly efficient; 66% of day rate. So I must be missing something.

(And before someone suggests it, one of those off shore EBT things ain't my bag)

[malvolio]

Yep, I'll buy that and had kind of thought it.

Even so, it's not particularly efficient; 66% of day rate. So I must be missing something.

(And before someone suggests it, one of those off shore EBT things ain't my bag)

Nope, 65% to 70% is pretty much it, mostly depending on operating expenses and exacly how you do the salary/divi split. Permies on HRT manage no more than 60% and unlike you they don't pay Employer's NICs, so you're still ahead.

[stingman123]

Not sure if my way is the best but under my own Ltd Co, I take a 50:50 split.

I find that that usually covers expenses, VAT, NIC, PAYE etc and usually have a little divi at the end!

Which is nice

[Alan @ BroomeAffinity]

You've got higher rate tax to factor in as well. But you also need to add flat rate VAT savings.

70% - 75% is fairly typical at £130k per annum.

[Alan @ BroomeAffinity]

Not sure if my way is the best but under my own Ltd Co, I take a 50:50 split.

I find that that usually covers expenses, VAT, NIC, PAYE etc and usually have a little divi at the end!

Which is nice

What do you mean by 50/50 split?

[mailric]

i try to live off an annual salary of average day rate * £1,000.

Then at year end, anything left over goes into the pot for the shareholders party

[scooterscot]

I think I'm missing something.

Day rate is 495/day.

Therefore, including VAT, on a 47 week year, I'm invoicing £130k in theory.

My simple spreadsheet says VAT is £20k/yr worst case.

Expenses amount to £20k.

So corporation tax works out conveniently about £20k.

So I'm only taking home £130k-£20k-£20k-£20k, i.e, about half my invoiced value?

I'm SURE this is all wrong and I should sack my accountant.

this might be helpful.. get the download

http://forums.contractoruk.com/accou...heet-calc.html

[Bluebird]

I think I'm missing something.

Day rate is 495/day.

Therefore, including VAT, on a 47 week year, I'm invoicing £130k in theory.

My simple spreadsheet says VAT is £20k/yr worst case.

Expenses amount to £20k.

So corporation tax works out conveniently about £20k.

So I'm only taking home £130k-£20k-£20k-£20k, i.e, about half my invoiced value?

I'm SURE this is all wrong and I should sack my accountant.

495*5*47= £116k

Salary = £10k PAYe = £2k
Expenses = £20k

Bal = £84k - CT = 17.5k = £66.5

So you get 66.5k + 10k = 76.6k [ or about 66% ]

Don't forget though, out of your £20 expenses you will probably have some benefit from [ meals & subsitance, nice new laptop etc etc ], so over all you probably actually get some where in the region on 80k which
is nearer 70%.