Invoicing Agency POST Inside IR35 via Limited Company

[ntdmr]

Why is this a factor?

I use the flat rate VAT scheme. I like that extra 3.5% that comes back to me.
I am trying to maximize my take home pay inside IR35.

[Hairlocks]

My agency doesn't run PAYE as far as I know. My contract will have my rate (£500), Somewhere in my chain the employERs NIC and apprenticeship level is paid on my behalf from my rate, and then the remainder comes to me, which I will then have to put through my own limited companies PAYE to pay myself?

My chain is Me -> Agency -> REED -> Public Sector Client

"Based on the assumption that your role will fall inside of IR35 come April 2017 – should you continue to work through your PSC we would expect your day rate to be reduced to £437.45 (approximate figure – we will confirm this exact figure closer to the time). You would invoice us per day at this rate and prior to making payment to you the necessary NI and Tax will be deducted at source by £165.62. Based on a full month worked the approximate take home under this method would be: £271.83 per day worked" - from my agent

If I go umbrella I lose the ability to charge VAT?

I filled in the missing XXX for you, the bold tells me they paying the personal TAX and NI to HMRC for you before the money gets to your company.

Please tell me why you are worried about the VAT, when expenses are not allowed, you are going to miss out on a whole £0.88 a day (not your money anyway). I would tell the agent the £62.55 a day employers NI and apprenticeship level is not your problem (which it isn't).

[Hairlocks]

I use the flat rate VAT scheme. I like that extra 3.5% that comes back to me.
I am trying to maximize my take home pay inside IR35.

your working it out wrong.

(invoice x 1.2 ) x 0.165 goes to HMRC. Therefore you get a whole 0.2%

[ntdmr]

your working it out wrong.

(invoice x 1.2 ) x 0.165 goes to HMRC. Therefore you get a whole 0.2%

I quite possibly am... this is what I thought:

20 days * £500 = £10,000 + VAT = £12000.
£2000 VAT charged.
Pay back at 16.5% = £1650.
Therefore £350 comes back to me.

[ntdmr]

I filled in the missing XXX for you, the bold tells me they paying the personal TAX and NI to HMRC for you before the money gets to your company.

Please tell me why you are worried about the VAT, when expenses are not allowed, you are going to miss out on a whole £0.88 a day (not your money anyway). I would tell the agent the £62.55 a day employers NI and apprenticeship level is not your problem (which it isn't).

These are the figures I got based on my current rate of £425.
- Based on the assumption that your role will fall inside of IR35 come April 2017 – should you continue to work through your PSC we would expect your day rate to be reduced to £375.41 (approximate figure – we will confirm this exact figure closer to the time). You would invoice us per day at this rate and prior to making payment to you the necessary NI and Tax will be deducted at source by <AGENT NAME>. Based on a full month worked the approximate take home under this method would be: £4,908.00

- Alternatively should you choose to work with one of our Approved Umbrella Companies of Giant or Parasol come April 2017, your daily rate would remain at £425.00 per day. There are two options with Umbrella, they will access directly with you your eligibility to claim expenses – should you be able to claim expenses based on a full month work the approximate take home would be £5,475.00, should the decision be made that you are not eligible to claim expenses based on a full month work the approximate take home would be £5,302.00

[teapot418]

I quite possibly am... this is what I thought:

20 days * £500 = £10,000 + VAT = £12000.
£2000 VAT charged.
Pay back at 16.5% = £1650.
Therefore £350 comes back to me.

Pay back at 16.5% of 12000 = £1980

Therefore £20 comes back to you.

[ntdmr]

Pay back at 16.5% of 1200 = £1980

Therefore £20 comes back to you.

Thanks!
I am starting to think umbrella is the way to go with this going forward! Hopefully can find the cheapest one I can?

[teapot418]

Thanks!
I am starting to think umbrella is the way to go with this going forward! Hopefully can find the cheapest one I can?

Personally I'd go with an umbrella with a good reputation, rather than the cheapest

[ntdmr]

Personally I'd go with an umbrella with a good reputation, rather than the cheapest

My agent is recommending Giant or Parasol. I also believe my accountants offer one.
Open to recommendations / will look through these forums.

[teapot418]

My agent is recommending Giant or Parasol. I also believe my accountants offer one.
Open to recommendations / will look through these forums.

ContractorUmbrella is recommended round these parts. I don't have first hand experience, but Lucy, their MD posts here, so worth giving them a call.