Are contracts more or less the same when comparing Umbrella to Outside IR35?

[northernladuk]

Possibly but we've said over and over again you can't just do a direct this equals that. They are two completely different beasts.

[Speedbird676]

My client, in the South East, pays £500 per day. The pay scale for an equivalent permie role is £45-50k.

So, assuming £50k/year vs. £500/day, the comparison on net monthly take home would be:

1. Permie: £3,128
(assumes no pension contributions for fair comparison)

2. Ltd Company Contractor: £6,181
(assumes no pension contributions, no expenses, all equity extracted every year, £1,200 annual accountant fee for fair comparison with Umbrella)

3. Umbrella Contractor: £5,382
(assumes no pension contributions, no expenses, £1,200 annual umbrella fee)

Would I consider going from Ltd to Umbrella? Yes

Would I consider going from Ltd to Permie? No

[PeterSim]

My client, in the South East, pays £500 per day. The pay scale for an equivalent permie role is £45-50k.

So, assuming £50k/year vs. £500/day, the comparison on net monthly take home would be:

1. Permie: £3,128
(assumes no pension contributions for fair comparison)

2. Ltd Company Contractor: £6,181
(assumes no pension contributions, no expenses, all equity extracted every year, £1,200 annual accountant fee for fair comparison with Umbrella)

3. Umbrella Contractor: £5,382
(assumes no pension contributions, no expenses, £1,200 annual umbrella fee)

Would I consider going from Ltd to Umbrella? Yes

Would I consider going from Ltd to Permie? No

This is why big corporations are loving IR35, they are going to be forcing everyone in to perm positions for half the rate, saving millions for them. If they go umbrella because they can't find willing suckers to rip off as perm, they still win because they pay no VAT and they still have all the benefits of a contractor, easy to fire, no benefits, no bonus, no sick pay, no holidays. It's win win win for them.

If i was a big corporation I would be super happy about IR35.

[ladymuck]

This is why big corporations are loving IR35, they are going to be forcing everyone in to perm positions for half the rate, saving millions for them. If they go umbrella because they can't find willing suckers to rip off as perm, they still win because they pay no VAT and they still have all the benefits of a contractor, easy to fire, no benefits, no bonus, no sick pay, no holidays. It's win win win for them.

If i was a big corporation I would be super happy about IR35.

Where did you get no VAT from? A client pays VAT to the umbrella company.

[LetterBox]

My client, in the South East, pays £500 per day. The pay scale for an equivalent permie role is £45-50k.

So, assuming £50k/year vs. £500/day, the comparison on net monthly take home would be:

1. Permie: £3,128
(assumes no pension contributions for fair comparison)

2. Ltd Company Contractor: £6,181
(assumes no pension contributions, no expenses, all equity extracted every year, £1,200 annual accountant fee for fair comparison with Umbrella)

3. Umbrella Contractor: £5,382
(assumes no pension contributions, no expenses, £1,200 annual umbrella fee)

Would I consider going from Ltd to Umbrella? Yes

Would I consider going from Ltd to Permie? No

What is the sector / skill set? Unless they are short contracts it seems a shed load of money for a client to give out (500 + agency slice) for a 45-50kpa body.

[Speedbird676]

This is why big corporations are loving IR35, they are going to be forcing everyone in to perm positions for half the rate

I doubt it. Most organisations use contracotrs for one of two reasons:

1. They have an FTE quota and contractors aren't included in it, so it is a way of increasing headcount via the back door.
2. They need to flex up and flex down depending on demand, especially in a project environment. It doesn't make sense to suddenly take on a whole load of resource that you then have an ongoing commitment to.

[Paralytic]

I doubt it. Most organisations use contracotrs for one of two reasons:

1. They have an FTE quota and contractors aren't included in it, so it is a way of increasing headcount via the back door.
2. They need to flex up and flex down depending on demand, especially in a project environment. It doesn't make sense to suddenly take on a whole load of resource that you then have an ongoing commitment to.

3. They save on employer tax, pension contributions, holiday pay etc

[Speedbird676]

3. They save on employer tax, pension contributions, holiday pay etc

And that!