Originally posted by Patrick@Intouch
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Previously on "Percentage take home retention rates - do they differ based on the accountancy firm?"
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Originally posted by northernladuk View PostYou sure you shouldn't stay brolly?
Thanks for letting me know it's normal to get a retention in the 70's.
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If you invoiced £60k per year through your company, incurred no costs in running the company and only took salary to the secondary threshold then you could retain around 79% of your company's invoiced turnover.
Turnover - £60,000
Salary - £ 8,632
Profit - £51,368
CT - £ 9,760
Divi's - £41,608
Your income then:
Salary - £ 8,632
Dividends - £41,608
Total - £50,240
Income tax - £2,740
After tax - £47,500 (79.17% of turnover)
Of course this doesn't allow for you to incur any costs in travelling to work, using a phone or engaging an accountant... so a retention rate somewhere in the 70's% would be reasonable.
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A thread with exactly the same question here but some useful points about company money and personal money which will be useful to the OP.
https://www.contractoruk.com/forums/...take-home.html
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Originally posted by northernladuk View PostEven an illustration isn't going to help. He's paid tax via his brolly this year so whatever the illustration is for this year it will be completely different next year.
I agree that a mid-year change would give a skewed view. However, I would want to see some detail behind the retention figures to understand what they are based on.
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Originally posted by ladymuck View PostDid any of the firms give you an illustration?
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Originally posted by ECommerceConsultant View PostLTD company Contractor accounting question
Retention rates don't seem all that great, many around 65%, when in some other forum threads, contractors are saying they get 82% take home retention rates.
Questions:
1) I'm just wondering - there are so many different accounting companies out there - are they all the same in the terms of the percentage returns you can get - and they only differ in terms of cost per month, competency, and reliability?
2) Or are there differences in the take home pay retention rate you can expect from the different accountants?
3) Is 82% achievable? or is 65% more realistic?
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You sure you shouldn't stay brolly?
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Retention rates without further detail are BS.
You can get 100% take home...as long as you invoice <£8k/year and have no other personal income. 82% is probably plausible for someone invoicing maybe £40k or something. For those invoicing more like £100k and wanting to extract most of it, they might end up with less than 65%.
Your company pays tax based on its profit. You personally pay tax based on your personal income (largely the salary/dividends you draw from the company). No accountant can magically alter those.
So to answer your questions, I'd suggest:
1) yes.
2) no.
3) see my comments above. Biggest variable will be earnings. Other significant variables will be things like level of pension contributions, do you have a low earning spouse to share dividends with, are you happy leaving some profits in the company rather than extracting max divis.
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Percentage take home retention rates - do they differ based on the accountancy firm?
LTD company Contractor accounting question
I've been contracting for a long time, but I've used an umbrella company, as I didn't want the extra paper work outside of work. I am now going to do the limited company set up for the first time, so it's all completely new to me. I've searched on here, and found some recommended contractor accountants, and spoken to them. Retention rates don't seem all that great, many around 65%, when in some other forum threads, contractors are saying they get 82% take home retention rates.
Questions:
1) I'm just wondering - there are so many different accounting companies out there - are they all the same in the terms of the percentage returns you can get - and they only differ in terms of cost per month, competency, and reliability?
2) Or are there differences in the take home pay retention rate you can expect from the different accountants?
3) Is 82% achievable? or is 65% more realistic?
Thanks in advance.Tags: None
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