Do you earn a lot but chose to work through an umbrella?

[escapeUK]

It’s probably a few grand a year. No real way of being accurate as running through a brolly is absolute whereas you can’t lock down a ltd co to a set retention figure so easily.

You are living in a fantasy world. And I should know as I have worked for over a year via Umbrella and 3 years via Ltd.

Lets take some examples, lets base on £1500 a week and run some examples. Ive based on working 52 weeks (unlikely I know) this gives £6500 a month, £78,000 a year. For arguments sake I am going to expense nothing, as both Umbrella and ltd can do this and I am trying to show just the difference.

Lets do Umbrella first, using contractor umbrella's calculator

Employer's NI 702.25
Employee's NI 393.38
Employee Tax 1,442.07
Total All Tax 2,537.70
CU Margin 85.00
Total Net Income 3,877.32 therefore yearly income £46,527.84

So Ltd, Im going to base on taking salary of £7488 the rest goes in Dividends (£70512 - 20% corp tax = £56409. Lets put that through the dividend tax calculator.

The extra tax to pay is £6,229 (11.0% of net dividend).

Band Rate Lower Limit Upper Limit Tax
basic rate 10% 0 £34,370 0
higher rate 32.5% £34,370 £150,000 £6,229

Total Tax: £6,229


Yearly income = £57,668 therefore £4805.66 per month

Difference is £928.35 a month or £11,140 per year!!!!!!

Calculators used were from Umbrella Company IR35 Calculator : Contractor Umbrella

[Mose]

You are living in a fantasy world. And I should know as I have worked for over a year via Umbrella and 3 years via Ltd.

Lets take some examples, lets base on £1500 a week and run some examples. Ive based on working 52 weeks (unlikely I know) this gives £6500 a month, £78,000 a year. For arguments sake I am going to expense nothing, as both Umbrella and ltd can do this and I am trying to show just the difference.

Lets do Umbrella first, using contractor umbrella's calculator

Employer's NI 702.25
Employee's NI 393.38
Employee Tax 1,442.07
Total All Tax 2,537.70
CU Margin 85.00
Total Net Income 3,877.32 therefore yearly income £46,527.84

So Ltd, Im going to base on taking salary of £7488 the rest goes in Dividends (£70512 - 20% corp tax = £56409. Lets put that through the dividend tax calculator.

The extra tax to pay is £6,229 (11.0% of net dividend).

Band Rate Lower Limit Upper Limit Tax
basic rate 10% 0 £34,370 0
higher rate 32.5% £34,370 £150,000 £6,229

Total Tax: £6,229


Yearly income = £57,668 therefore £4805.66 per month

Difference is £928.35 a month or £11,140 per year!!!!!!

Calculators used were from Umbrella Company IR35 Calculator : Contractor Umbrella

what a mental post!

What exactly is your point????

[escapeUK]

What exactly is your point????

If you cant work it out, Im not here to educate you. But dont worry, someone has to pay for our bloated state, hopefully its you.

[stek]

what a mental post!

What exactly is your point????

escapeUK makes a valid point, if u r even on a moderate rate, a brolly is costing u many thousands, so either ur rate is dead low or you have ur sums wrong.

[Wanderer]

escapeUK makes a valid point, if u r even on a moderate rate, a brolly is costing u many thousands, so either ur rate is dead low or you have ur sums wrong.

Or you are caught by IR35...

[Mose]

Wut? I didn't put up any sums. The really super experienced guy who would know as he has amassed over 4 solid years in the seat, including over a year with an umbrella company, put up the apparently in depth detailed analysis of my finances...

I don't know why they bother keeping this forum going - everyone might as well just e-mail this guy personally, he probably knows every single thing about contracting. 4 years! I can only dream of what it must be like to be some worldly.

Mod snip > rather unnecessary unpleasantness... <

Moron.

[Waldorf]

Among other factors, working through a brolly will possibly prevent you from gaining from the vat flat rate system, this calculator compares the two and allows you to enter the main factors to consider,
https://www.nixonwilliams.com/net_pay_calculator.asp

[captainham]

Wut? I didn't put up any sums. The really super experienced guy who would know as he has amassed over 4 solid years in the seat, including over a year with an umbrella company, put up the apparently in depth detailed analysis of my finances...

I don't know why they bother keeping this forum going - everyone might as well just e-mail this guy personally, he probably knows every single thing about contracting. 4 years! I can only dream of what it must be like to be some worldly.

Mod snip > rather unnecessary unpleasantness... <

Moron.

Calling somebody a moron because you don't understand their point is very grown-up.

The point escapeUK was making was a side-by-side comparison of Brolly vs. LtdCo, taking the same base income as the starting point. The lunatic is the one that doesn't realise a LtdCo allows you to take home more cash versus a brolly, assuming of course that you are outside IR35 and that you are prepared for the extra hassle of running a LtdCo (although this is minimal in my opinion).

It wasn't an in-depth review of your finances because how can he possibly know what they are? It was an example, as highlighted by the sentence that started with "Let's take some examples..."

[psychocandy]

Wut? I didn't put up any sums. The really super experienced guy who would know as he has amassed over 4 solid years in the seat, including over a year with an umbrella company, put up the apparently in depth detailed analysis of my finances...

I don't know why they bother keeping this forum going - everyone might as well just e-mail this guy personally, he probably knows every single thing about contracting. 4 years! I can only dream of what it must be like to be some worldly.

Mod snip > rather unnecessary unpleasantness... <

Moron.

To be fair to EscapeUK he was only quoting an example of the difference in the two methods.

[jmo21]

Wut? I didn't put up any sums. The really super experienced guy who would know as he has amassed over 4 solid years in the seat, including over a year with an umbrella company, put up the apparently in depth detailed analysis of my finances...

He quoted your post where you said "it's probably only a few grand a year".

He then worked an example to show even on a low rate (£300/day) with no expenses factored in, although based on 52 weeks, the difference was £11k+