Simple comparison.
150 pd with a reputable umbrella (e.g. lisa) should produce something like:
150 x 260 = 39,000 gross = 37,500 after fees = salary of 34k (+3572 ers ni) = 26,207 net
Outside IR35 and max dividend route (next year with the new higher dividend taxes assuming accountancy costs of 1500 same as umbrella costs then:-
37,500 - 10,000 salary = 27,500 less CT = 22000 dividend tax = 1200 dividend tax 500 er's and ee's ni on salary yields approx 30,300. So a decent bit ahead on the outside ir35 case. but if doing it for less than a year then costs still likely to be 1500.
Obviously you won't work 260 days in a year but it is just intended to show a reasonable relative comparison.
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Reply to: Contracting or Umberralla
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Previously on "Contracting or Umberralla"
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Originally posted by vik845 View PostI have done contracting before for 6 -7 months and my contract is outside ir35 checked with my accountant. I have heard that contractors will ending up paying more dividends from TAX period 2016/17 compared to 2015/16. will I still be better of contracting through ltd company?
Thanks
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Originally posted by vik845 View PostOnly if you get perm roles
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£150PD won't keep a Honda CRV in petrol.
(it also won't keep an A4 3L Allroad in tyres, but that's another story)
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Originally posted by MrMarkyMark View PostAt £150 PD, would you not be better off going perm?
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The general consensus I believe is under £30k its better to be brolly. I guess that will change with the new figures so would be interesting if someone could have a look at this and see what the new number would be.
It's also not a bad idea to stick to brolly if you are either unsure about accounting and the responsibilities that come with it and not sure you will be contracting for long. Even if on paper a limited is marginally better it's a lot more hassle, you've quite a bit to learn and will undoubtedly struggle with the concepts of expenses and the like and then you've got to shut it all down. Sometimes an easy life is worth a lot more than a marginal tax benefit.
And please don't use 'advise' instead of 'advice'. It pisses me off something shocking.
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Originally posted by vik845 View PostI have heard that contractors will ending up paying more dividends from TAX period 2016/17 compared to 2015/16.
That doesn't quite equate to "contractors will ending up paying more dividends" though.
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Originally posted by vik845 View PostI have done contracting before for 6 -7 months and my contract is outside ir35 checked with my accountant. I have heard that contractors will ending up paying more dividends from TAX period 2016/17 compared to 2015/16. will I still be better of contracting through ltd company?
Thanks
Leave a comment:
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I have done contracting before for 6 -7 months and my contract is outside ir35 checked with my accountant. I have heard that contractors will ending up paying more dividends from TAX period 2016/17 compared to 2015/16. will I still be better of contracting through ltd company?
Thanks
Leave a comment:
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Originally posted by vik845 View PostHello,
I have a picked up a contract @ £150 pd, should I go for ltd or Umbrella, any advise?
Many Thanks
Will the contract put you inside or outside IR35? If you don't know about IR35 and what it could mean then go umbrella for a couple of months while you do some research
If you have contracted before, understand and accept the obligations that you will have as the Director of a Ltd Co and are outside IR35 then definitely go Ltd as you will be financially better off
If you're not keen on the responsibilities that you will have as a company director then stick with umbrella as it will be less hassle for you
HTH
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