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    #21
    This quote below is useful. Thanks to "Compliance Lady" (i think). It is no doubt on a sticky somewhere.


    "PSC - Inside IR35 - Quoted rate must be exclusive of Employer costs (ERNIC, App Levy), PAYE is processed on this rate so EENIC and Income tax are deducted at source. No holidays or pension rights.

    PSC - Outside IR35 - Quoted rate is gross and tax is down to your company structure etc. The total rate is paid to your Company and you do the rest.

    Umbrella - IR35 does not apply (you're an employee) - Quoted contract rate is the gross amount paid to Umb which includes Employer & Employee costs. So you will have deducted from this ERNIC, App Levy, ER Pen, Hol Acc (which you get back), EENIC and Income Tax plus the umbrella fee. You may be able to offset some expenses against your gross rate and reduce the overall tax take.

    PAYE - IR35 does not apply (you're a worker) - Quoted rate must be exclusive of Employer costs (ERNIC, ER Pen, App Levy, Hol Pay (which you get back)). PAYE is processed on this rate so EENIC, EEPen and Income Tax are edeucted at source.

    The confusion I think is a lot of people are saying 'Inside IR35' when they mean umbrella or PAYE. That makes it difficult for you to understand what the rate constitutes. The easiest way to understand it is to ask the recruiter 'Can I work through my PSC then?' if they say no, it's not inside IR35. It's either Umbrella or PAYE."

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      #22
      Originally posted by sludgesurfer View Post
      This quote below is useful. Thanks to "Compliance Lady" (i think). It is no doubt on a sticky somewhere.


      "PSC - Inside IR35 - Quoted rate must be exclusive of Employer costs (ERNIC, App Levy), PAYE is processed on this rate so EENIC and Income tax are deducted at source. No holidays or pension rights.

      PSC - Outside IR35 - Quoted rate is gross and tax is down to your company structure etc. The total rate is paid to your Company and you do the rest.

      Umbrella - IR35 does not apply (you're an employee) - Quoted contract rate is the gross amount paid to Umb which includes Employer & Employee costs. So you will have deducted from this ERNIC, App Levy, ER Pen, Hol Acc (which you get back), EENIC and Income Tax plus the umbrella fee. You may be able to offset some expenses against your gross rate and reduce the overall tax take.

      PAYE - IR35 does not apply (you're a worker) - Quoted rate must be exclusive of Employer costs (ERNIC, ER Pen, App Levy, Hol Pay (which you get back)). PAYE is processed on this rate so EENIC, EEPen and Income Tax are edeucted at source.

      The confusion I think is a lot of people are saying 'Inside IR35' when they mean umbrella or PAYE. That makes it difficult for you to understand what the rate constitutes. The easiest way to understand it is to ask the recruiter 'Can I work through my PSC then?' if they say no, it's not inside IR35. It's either Umbrella or PAYE."

      Not quite - the fact a contract / role has been deemed to be inside IR35 is a statement of fact. The consequence of that is that the same options is to insist the person uses an umbrella or works via agency PAYE.
      merely at clientco for the entertainment

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        #23
        Originally posted by eek View Post
        Not quite - the fact a contract / role has been deemed to be inside IR35 is a statement of fact. The consequence of that is that the same options is to insist the person uses an umbrella or works via agency PAYE.
        The grammar in your second sentence renders it impossible for me to understand. The entire post beyond the first two sentences was from a lady who advises professionally in this field whom I had discussion with outside of the forum. It sets out clearly what are the options in the vast majority of cases and goes some way to providing an answer as to why there is so much misunderstanding of the options in this area.

        Comment


          #24
          Originally posted by sludgesurfer View Post
          The grammar in your second sentence renders it impossible for me to understand. The entire post beyond the first two sentences was from a lady who advises professionally in this field whom I had discussion with outside of the forum. It sets out clearly what are the options in the vast majority of cases and goes some way to providing an answer as to why there is so much misunderstanding of the options in this area.
          Some of her details are wrong simply because IR35 is a decision made first and the (sane) options then flow from that initial decision by the client.

          So outside IR35 options:-

          Limited Company (sane)
          Umbrella (possible)
          PAYE (not sane)

          Inside IR35 options

          Limited Company (possibly via deemed payments but utterly insane for all people involved)
          Umbrella (sane if all 3 of the contractor, the agency and the client trust the umbrella company)
          PAYE (risk free for client, work for agency may not be best option for contractor)

          Blanket bans follow the Inside IR35 options.
          Last edited by eek; 20 February 2021, 11:42.
          merely at clientco for the entertainment

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            #25
            Thanks. I understand you now.

            Comment


              #26
              Originally posted by malvolio View Post
              Well yes, it is a stupid question, you're supposed to know these kinds of basics

              Anyway, it is net pay to you personally. Which means any pension funding is coming out of your taxed income, as are any travel and subsistence expenses. And you can only reclaim the tax on your pension contributions via self assessment.

              CT and VAT would not be your concern. You are, when all is said and done, an employee with no employment rights. That is the real crime here.
              Ridiculous statement, a crime really?

              Employment rights are not designed to protect people earning 150k+ a year. They don't need any government protections, they are compensated sufficiently, that's capitalism working, doesn't need any government intervention as there is no exploitation. I'm sure most here would prefer umbrella at 750 a day with no employment protections to perm employment at 60k with full employment protections (there will be someone to quote me and say 60k is better).

              Now low paid temp or otherwise contractors earning 100 a day or 120 a day with no employment rights, that's exploitation and needs to be tackled. They are not being compensated enough to offset lack of employment protections.

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