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IR35 Rates so confussed!

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    IR35 Rates so confussed!

    Hey Folks,

    I'm in the process of applying for a Contract position. I get the feeling that the recruiter is not giving me the full picture.

    Advert states £45 per hour Ltd and £40 per hour PAYE. Inside IR35

    Given that the contract is inside of IR35 isn't the Ltd rate completely irrelevant? Either way surly I'll only receive a 'deemed payment' which is basically a NET PAYE pay cheque?

    I would gladly invoice gross through my own LTD Company so that I can take advantage of tax relief on pension etc. whilst still running a PAYE Payroll to demonstrate IR35 compliance.

    I am way off the mark?

    Thanks!

    #2
    Originally posted by 2contract View Post
    Hey Folks,

    I'm in the process of applying for a Contract position. I get the feeling that the recruiter is not giving me the full picture.

    Advert states £45 per hour Ltd and £40 per hour PAYE. Inside IR35

    Given that the contract is inside of IR35 isn't the Ltd rate completely irrelevant? Either way surly I'll only receive a 'deemed payment' which is basically a NET PAYE pay cheque?

    I would gladly invoice gross through my own LTD Company so that I can take advantage of tax relief on pension etc. whilst still running a PAYE Payroll to demonstrate IR35 compliance.

    I am way off the mark?

    Thanks!
    Yes - if you are inside from April your company will receive deemed payments after tax has been deducted.

    The only way to do sane salary sacrifice into a pension is via an umbrella.

    But given the rates being offered that £40 paye option looks like the better bet (although I suspect the agency will screw up and make an illegal deduction of Employer NI from it).

    Have you received the appropriate Key information documents the agency should have sent you (as required from April 2020)? Those should help you make the correct decision.
    merely at clientco for the entertainment

    Comment


      #3
      Eek - Thanks!

      I haven't received anything from the Recruiter yet, but I also haven't signed anything! I'll request the Key Info document.

      So the Employers NI should be deducted at source from the Fee Payer, not from the umbrella company correct?

      I'll have my accountant cast an eye over everything first, but its good to get it right in my own mind beforehand!

      Cheers!

      Comment


        #4
        IR35 Rates so confussed!

        Originally posted by 2contract View Post
        Eek - Thanks!

        I haven't received anything from the Recruiter yet, but I also haven't signed anything! I'll request the Key Info document.

        So the Employers NI should be deducted at source from the Fee Payer, not from the umbrella company correct?

        I'll have my accountant cast an eye over everything first, but its good to get it right in my own mind beforehand!

        Cheers!
        Employer NI will be deducted from your £40 an hour, your net in personal bank account will be about £21.20 hour

        Jesus I hear you say (and no expenses)

        Best to check with them


        Sent from my iPhone using Contractor UK Forum

        Comment


          #5
          Originally posted by GhostofTarbera View Post
          Employer NI will be deducted from your £40 an hour, your net in personal bank account will be about £21.20 hour

          Jesus I hear you say (and no expenses)

          Best to check with them


          Sent from my iPhone using Contractor UK Forum
          If it's a advertised as PAYE rate it really shouldn't be - An advertised hourly (PAYE rate) should be after all employer deductions.

          However it looks wrong to me as it should be at least 20% less than the limited / umbrella rate (to account for Employer NI and holiday pay).

          Basically I think the agency hasn't got a clue but that's not surprising as most really don't
          Last edited by eek; 12 February 2021, 09:16.
          merely at clientco for the entertainment

          Comment


            #6
            Thanks all .... seems like the wild west out there

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