Caveat: I’m new to contracting so there may be a mistake in here somewhere.
Here’s the November to November plan:
1) Answer the call from D Odgey Umbrella co., laugh down the phone and say you can do better than their take home estimate without the need for offshore accounts, loans or discretionary annuity payments.
2) Tell current employer to stick their perm job but you will take their offer of silence money *ahem* I mean severance. Understand that you will never work for them again but this could be beneficial for future IR35 status. Split as follows:
a) £30K tax free
b) Put £10K in pension
3) Secure contract at a decent rate. I’m a newbie so don’t really know what a decent rate is but assume that it’s double the rate paid for an equivalent perm service.
4) Start one man/woman limited company with catchy name like Super Big Ltd
5) Pay yourself a tax free salary of £8632 plus tax free dividends of £2K plus £3868
6) Flat rate VAT saving for this illustration is £1500
7) Draw £35500 and deduct at 7.5% tax £2663
8) Corporation tax based less deductions (accountants fee £1086, salary expenses £9K and further 8K pension contribution from Ltd). £12K
I’m going to include Pension in take home (I realise it’s deferred tax free income) and deduct expenses:
30000+10000+14500+1500 +35500+8000 + 9000= £108500
Less 2663 + 12000 + 1086 = £15349
Net £93,151 or 86% take home
Okay, I realise this is a one year offer that depends heavily on step 2 but hypothetically does this look like sensible numbers if I were about to embark on step 4? <insert gagged mouth smilie>
My local contractor specialist accountants is a company called Gorilla Accounting and I'm looking to have a face to face with them shortly.
Here’s the November to November plan:
1) Answer the call from D Odgey Umbrella co., laugh down the phone and say you can do better than their take home estimate without the need for offshore accounts, loans or discretionary annuity payments.
2) Tell current employer to stick their perm job but you will take their offer of silence money *ahem* I mean severance. Understand that you will never work for them again but this could be beneficial for future IR35 status. Split as follows:
a) £30K tax free
b) Put £10K in pension
3) Secure contract at a decent rate. I’m a newbie so don’t really know what a decent rate is but assume that it’s double the rate paid for an equivalent perm service.
4) Start one man/woman limited company with catchy name like Super Big Ltd
5) Pay yourself a tax free salary of £8632 plus tax free dividends of £2K plus £3868
6) Flat rate VAT saving for this illustration is £1500
7) Draw £35500 and deduct at 7.5% tax £2663
8) Corporation tax based less deductions (accountants fee £1086, salary expenses £9K and further 8K pension contribution from Ltd). £12K
I’m going to include Pension in take home (I realise it’s deferred tax free income) and deduct expenses:
30000+10000+14500+1500 +35500+8000 + 9000= £108500
Less 2663 + 12000 + 1086 = £15349
Net £93,151 or 86% take home
Okay, I realise this is a one year offer that depends heavily on step 2 but hypothetically does this look like sensible numbers if I were about to embark on step 4? <insert gagged mouth smilie>
My local contractor specialist accountants is a company called Gorilla Accounting and I'm looking to have a face to face with them shortly.
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