Take home percentage

Why are you keeping your expenses low?

Expenses reduce the take home percentage of your contract rate.

I used to live in Somerset and work in Coventry and my expense claims were relatively high ie. travel, accom, etc.

Since making the dubious decision to move up to Coventry, near my contract, my expenses have dropped from around £15k a year to less than £4K .

so if you leave 60,000 pounds in the company your going to pay a heap of CT on that...then you pay your CT on the dividend

If you are going to offer advice then please make the effort to understand this stuff first. You never pay CT tax twice over. CT is on company profit and has sfa to do with divvis apart from the need for profit at some point prior to the issue of divvis to fund them

Why are you keeping your expenses low?

Your dividend is paid out AFTER corporate tax is taken from your company...so if you leave 60,000 pounds in the company your going to pay a heap of CT on that...then you pay your CT on the dividend.

Wouldnt it be better to drive up your expenses legit so that at the end of the year you have less company profit to pay CT on?

Mailman

Rhino,

Thank you very much for the reply, just the kind of information I was looking for, very helpful!

Hi nissee

Umbrella return would rarely exceed 65% - more likely 62 - 64 %

Ltd company under IR35 would probably gain you a few percent on the umbrella because you can potentially claim an additional 5% of turnover as expenses, flat rate VAT, incentive for online PAYE and accountants rates tend to be less than umbrellas. 65 - 68% ??

Ltd company outside of IR35 - anything up to 80%
I know this sounds unachievable but that is my current return with a gross salary of £7500 per annum, low expenses, low accountancy fees and a crap rate that keeps me within the low personal tax bracket when my company dividends are paid to myself and my secretary. I am happy with this situation, apart obviously from the crap rate

Offshores could only really match the return of a ltd company working outside IR35 but used to be worthwhile if you were IR35 caught. Last years budget scuppered their operation and all the ones we know have stopped taking new clients.

In summary the way to go is contracting through a limited company outside of IR35 which means making sure that you, your agent and your client are all singing from the same hymn sheet as far as IR35 is concerned. You will also need to find yourself a straightforward, honest and reasonably priced accountant. A week ago I would have had no hesitation in recommending one but as they are currently proposing to charge a fee for online PAYE I suggest you look at all the alternatives.

Hello all,
I'm planning to go into contracting in the next few months and I'm trying to figure out how much of my rates I get to keep after the IR has taken their share.

I've looked at a few calculators on the web but they seem overly optimistic (they've mostly been on the websites of Umbrella companies so perhaps they're just trying to sell their own services).

So if anyone could give me a rough idea of what I might expect I'd be very grateful. I assume that I would be within IR35 (I'd probably be on-site software developer) and that my rates would be around £35ph. As far as I understand it, even with IR35 it's still better to have your own Ltd company, so I'm leaning toward that.

Thank you for any information.