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Previously on "IR35 - been offered a contract inside and not sure how it compares in my situation..."

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  • Lance
    replied
    Originally posted by jamesbrown View Post
    The fee payer is the intermediary that pays the fees. The OP has already confirmed that they are direct to the client.
    Pfftt.. details....

    Leave a comment:


  • jamesbrown
    replied
    Originally posted by elsergiovolador View Post
    Depending on the setup, but I think that's rather rare. Fee payer is whatever pays the tax. Even if it was the client, the same situation applies.
    The fee payer is the intermediary that pays the fees. The OP has already confirmed that they are direct to the client.

    Leave a comment:


  • elsergiovolador
    replied
    Originally posted by jamesbrown View Post
    KUATB. The client is the fee payer.
    Depending on the setup, but I think that's rather rare. Fee payer is whatever pays the tax. Even if it was the client, the same situation applies.

    Leave a comment:


  • PurpleGorilla
    replied
    Originally posted by jatt17 View Post
    In all honesty - if they've quoted me the "wrong" rate then i'm not even going to considerate it for a minute, not just because of the difference in money but because they want to deem me an employee yet get me to pick up the employers tax bill - so that would be a 100% no.

    If they've offered me the "right" rate then I'll probably be up for it, because it'd work out pretty much exactly the same as the normal rates I've had so far (circa £450).

    Let's see. It's all good - I've got other stuff on the cards that's "outside".
    Does it matter if you pay the employer NI?

    Look at the net money in hand after all the taxes.

    If the money is good; forget the rest of it.

    Life’s too short!


    Sent from my iPhone using Contractor UK Forum

    Leave a comment:


  • jamesbrown
    replied
    Originally posted by elsergiovolador View Post
    The client most likely pays the intermediary that deducts taxes a day rate that is all inclusive - it also includes Employer's NI and Apprenticeship Levy. If they said you get 550 after employer taxes, then likely the client pays about 630 per day. Contractor pays employee and employer tax when caught inside. Fee payer will not magically come up with money to cover this tax, so the client pays the rate that includes it.
    HMRC tried to hide this fact behind semantics to make MPs accept this absurd.
    KUATB. The client is the fee payer.

    Leave a comment:


  • elsergiovolador
    replied
    Originally posted by jatt17 View Post
    In all honesty - if they've quoted me the "wrong" rate then i'm not even going to considerate it for a minute, not just because of the difference in money but because they want to deem me an employee yet get me to pick up the employers tax bill - so that would be a 100% no.

    If they've offered me the "right" rate then I'll probably be up for it, because it'd work out pretty much exactly the same as the normal rates I've had so far (circa £450).

    Let's see. It's all good - I've got other stuff on the cards that's "outside".
    The client most likely pays the intermediary that deducts taxes a day rate that is all inclusive - it also includes Employer's NI and Apprenticeship Levy. If they said you get 550 after employer taxes, then likely the client pays about 630 per day. Contractor pays employee and employer tax when caught inside. Fee payer will not magically come up with money to cover this tax, so the client pays the rate that includes it.
    HMRC tried to hide this fact behind semantics to make MPs accept this absurd.

    Leave a comment:


  • jatt17
    replied
    Originally posted by jamesbrown View Post
    I still think it's more likely than not that they've quoted the "wrong" rate, but we'll see - you may be right.

    For existing contracts, it's hard to get away with deducting these employment costs from the existing rate (without legal challenge), which is one reason (among many) that so many contracts will get canned leading up to April 2021. For new contracts, there will be a lot of confusion around the true rates and most of that will be obfuscation by agents.
    In all honesty - if they've quoted me the "wrong" rate then i'm not even going to considerate it for a minute, not just because of the difference in money but because they want to deem me an employee yet get me to pick up the employers tax bill - so that would be a 100% no.

    If they've offered me the "right" rate then I'll probably be up for it, because it'd work out pretty much exactly the same as the normal rates I've had so far (circa £450).

    Let's see. It's all good - I've got other stuff on the cards that's "outside".

    Leave a comment:


  • jamesbrown
    replied
    Originally posted by jatt17 View Post
    I've not been in contact with an agency, I was put forward directly to the public sector client by someone who is employed by them and after conversations with them, they've told me they are keen for me to join. I'm still to hear what's next in getting the ball rolling but all I know so far it's a 6 month rolling contract, deemed inside IR35 and the day rate is £550 - that's what the public sector client has advertised to me as the worker.
    I still think it's more likely than not that they've quoted the "wrong" rate, but we'll see - you may be right.

    For existing contracts, it's hard to get away with deducting these employment costs from the existing rate (without legal challenge), which is one reason (among many) that so many contracts will get canned leading up to April 2021. For new contracts, there will be a lot of confusion around the true rates and most of that will be obfuscation by agents.

    Leave a comment:


  • jatt17
    replied
    Originally posted by eek View Post
    +1 agencies use Smurf rates when talking about inside IR35 contracts (as Dave Chaplin calls them), when they should be advertising salary based rates (as the OP seems to believe the inside IR35 rate is being advertised at).

    Has the agency provided you with the Key Information document that they should be sending out since April 6th Providing a 'Key information document' for agency workers: guidance for employment businesses - GOV.UK
    I've not been in contact with an agency, I was put forward directly to the public sector client by someone who is employed by them and after conversations with them, they've told me they are keen for me to join. I'm still to hear what's next in getting the ball rolling but all I know so far it's a 6 month rolling contract, deemed inside IR35 and the day rate is £550 - that's what the public sector client has advertised to me as the worker.

    Leave a comment:


  • eek
    replied
    Originally posted by GhostofTarbera View Post
    I bet you a million pounds it is, as is 100% of all cases we have seen here.

    Like your optimism


    Sent from my iPhone using Contractor UK Forum
    +1 agencies use Smurf rates when talking about inside IR35 contracts (as Dave Chaplin calls them), when they should be advertising salary based rates (as the OP seems to believe the inside IR35 rate is being advertised at).

    Has the agency provided you with the Key Information document that they should be sending out since April 6th Providing a 'Key information document' for agency workers: guidance for employment businesses - GOV.UK
    Last edited by eek; 9 August 2020, 10:18.

    Leave a comment:


  • GhostofTarbera
    replied
    Originally posted by jatt17 View Post
    Yeah - this is probably what I'll probe a bit more come Monday when I'll hopefully have some paperwork, and then I'll be able to make sure that Employers NI isn't being deducted from the day rate that was advertised to me.
    I'd be very surprised if it is - when the rules are that those costs can't be directly or indirectly passed onto the worker, if a public sector department is in breach of their own governments rules then it's probably scandalous.
    I bet you a million pounds it is, as is 100% of all cases we have seen here.

    Like your optimism


    Sent from my iPhone using Contractor UK Forum

    Leave a comment:


  • jatt17
    replied
    Originally posted by jamesbrown View Post
    Well, just make sure you're being quoted the rate you think you're being quoted because those "employment costs" are coming from somewhere.
    Yeah - this is probably what I'll probe a bit more come Monday when I'll hopefully have some paperwork, and then I'll be able to make sure that Employers NI isn't being deducted from the day rate that was advertised to me.
    I'd be very surprised if it is - when the rules are that those costs can't be directly or indirectly passed onto the worker, if a public sector department is in breach of their own governments rules then it's probably scandalous.

    Leave a comment:


  • jamesbrown
    replied
    Originally posted by jatt17 View Post
    I’ve read elsewhere that the day rate advertised should not include employer NI contributions as these “should not be passed onto the worker”.
    I’d read that the contracting rate has a “client charge rate” applied on top when the client is billed to cover employment costs... is this not necessarily the case?
    Well, just make sure you're being quoted the rate you think you're being quoted because those "employment costs" are coming from somewhere.

    Leave a comment:


  • PurpleGorilla
    replied
    Originally posted by jatt17 View Post
    Hey all,

    First post so apologies if this question has been asked time and time again..

    My current situation is that I'm in a contract which expires in September, and I'm engaged as 'outside IR35' - it's with a private sector consultancy.
    My day rate for that engagement is £450.

    I'm likely to be offered an extension, but I've also been offered a contract in the public sector which is deemed as 'inside IR35' and I'm 'taxed at source' - the day rate for that engagement is £550.

    I'm not quite sure how they stack up - I'm used to taking out up to £50,000 in salary and dividends from my limited company each tax year and letting the rest sit there (I dunno what for!) - and I've got a fair bit of cash built up in my business bank account, but for this example if I was taking it all out each year - how does it compare?

    £450 p/day * 230 = £103,500
    £550 p/day * 230 = £126,500

    My expenses are pretty low - I've generally worked mostly at home so I don't take much in T&S expenses.

    I've also got the added fun of paying 9% of any income above approx £19k for my student loan.

    I've got no idea how the two stack up... can anyone help with what my take home per month would be if I was engaged inside IR35 on a public sector contract and also accounting for student loan?

    Thanks...
    You’re looking at approx £1515 after all taxes a day once you get settled, and the satuatory minimum pension kicks in.


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  • GhostofTarbera
    replied
    IR35 - been offered a contract inside and not sure how it compares in my situation...

    Originally posted by jatt17 View Post
    Apologies if I’ve disappointed your expectations of me as a contractor but I’m afraid I’m not as clued up as others on this stuff. Hence why I’m humbly asking for assistance - i’d appreciate it if you can try to assist rather than make an entire reply all about how i’m not “worth my salt” as a contractor. That isn’t very helpful.
    If you take the extension on inside IR35 basis , HMRC will rub there hands and assume you have ALLWAYS been inside IR35 for same roll (discussed a million times here)

    And go after you for all past years with current client

    Paint that target on your back

    Your will go to top of the zzzzlist

    If you ignore that advice (as you will)

    You will get 52-54% of your gross rate paid into your personal account


    Sent from my iPhone using Contractor UK Forum

    Leave a comment:

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