Switch to increased day rate within PS IR35 or leave?

[Andy2]

According to the brolly calculators i have seen , you are looking at a whopping 42% tax for a PS contract inside IR35

[LondonManc]

According to the brolly calculators i have seen , you are looking at a whopping 42% tax for a PS contract inside IR35

Well yeah, once you're past 43k pa you're on higher rate tax.

Under a fixed term contract, you'd get 65% of 100k:

Income Tax (PAYE) £29,200 29%
National Insurance (N.I) £5,333 5%
Total taxes £34,533 35%
NET INCOME £65,466 65%

Under an umbrella (CU in this case), you'd get 58% of your gross:

Employment Taxes £11,418 11%
Employee's NI £5,275 5%
Employee Tax £23,789 24%
Total All Tax £40,482 40%
CU Margin £1,302 1%
Total Net Income £58,220 58%

I've no idea how prevalent FTCs could become in the Public Sector but they could become an alternative and allow PSBs to recruit via FTC or outside IR35 on a case by case basis. I feel sorry for them because they've been swamped by a monster that they've never had to care about before.

[d000hg]

If they're only umbrella for a couple of months though...? Might still be able to remain a regular rate tax payer.

Anyhow if it's a non-starter no problem. Unless they'll pay even more...

[Andy2]

Well yeah, once you're past 43k pa you're on higher rate tax.

.

how does this work for a 6 months contract. Do you get taxed on basic rate only ? what if there is another 6 months extension then do they deduct higher taxes for next 6 months ?

[LondonManc]

how does this work for a 6 months contract. Do you get taxed on basic rate only ? what if there is another 6 months extension then do they deduct higher taxes for next 6 months ?

It's like the good old days of permiedom where, if you're benched for the next six months, you'll get a tax rebate at some point...

[Andy2]

It's like the good old days of permiedom where, if you're benched for the next six months, you'll get a tax rebate at some point...

There may be tax rebate but i don't think they will pay back both NIs