Reply to: Take home pay %

[LisaContractorUmbrella]

I found one advertising upto 92.5% retention but won't bother posting it. Not worth the discussion.

So that's 7.5% for the umbrella company and sweet fanny adams for HMR&C - they won't like that

[kal]

I found one advertising upto 92.5% retention but won't bother posting it. Not worth the discussion.

Wow 92.5%!!, first it was 85%, then 90%, those percentages keep going up and up, personally I'm waiting for the 'fully compliant, no risk, QC guaranteed IR35 proof solution' giving me 105% retention ... surely its only a matter of time?

[northernladuk]

You could join a scheme and get 85%.

Ok, I'll get my coat.

I found one advertising upto 92.5% retention but won't bother posting it. Not worth the discussion.

[kingcook]

Looks like I will go down the ltd company route once my current contract has ended.

I'd speak to an accountant about doing it mid-contract (not entirely sure if that's possible without causing the client/agency grief, i.e. having to terminate contract and doing a new one for limited company).

Or aim at doing it at renewal if it's on the cards (I did).

[kingcook]

Hello,
I started contracting a few months ago and have to say i'm a bit disappointed as my take home pay is about 55% of my invoiced value, I was always under the impression that it would be more.

For example (this is for 1 month):
Invoiced amount £10,000
Umbrella fee £140
Expenses £ 700

Take home pay approx £5,500.

I have started looking into the limited company set up.
Based on an invoiced amount of £10,000 I have worked out that take home pay will be about £6,700 per month.

Is this about right or is something going wrong somewhere?

Join Bolshie Bastard in his "Just say no to brollies!" campaign!

[DonkeyRhubarb]

You could join a scheme and get 85%.

Ok, I'll get my coat.

[northernladuk]

Thanks all for the replies.
It seems things are pretty much as they should be.

Looks like I will go down the ltd company route once my current contract has ended.

Although very trust worthy my wife has an income so wouldn't be worthwhile splitting the dividends.

With regard to dividends, can these be taken any time in real terms but must be at set intervals in the company books?

Best start reading the first timers guides and speak to an accountant before you start second guessing what you can and can't do in your LTD. For this one though you can declare and pay yourself a dividend as often as you want. Books have to show when they were taken... Now back to the newbie guides.

[warrenboon]

Thanks all for the replies.
It seems things are pretty much as they should be.

Looks like I will go down the ltd company route once my current contract has ended.

Although very trust worthy my wife has an income so wouldn't be worthwhile splitting the dividends.

With regard to dividends, can these be taken any time in real terms but must be at set intervals in the company books?

Still worth considering splitting the divs if your Mrs is below the higher rate threshold.

[gbonner]

Thanks all for the replies.
It seems things are pretty much as they should be.

Looks like I will go down the ltd company route once my current contract has ended.

Although very trust worthy my wife has an income so wouldn't be worthwhile splitting the dividends.

With regard to dividends, can these be taken any time in real terms but must be at set intervals in the company books?

[Zippy]

I'd have a look at your payslip and see if there is a figure for 'Employment costs'. If so, compare with Lisa's figures (Employer's NI). Still don't think that would account for the difference though.

[LisaContractorUmbrella]

Could be the 10k includes vat?

Don't think so - a quick run through the calculator would give a net of £5168 on earnings of £8333.33 so still well adrift from the figure the OP gave

[proggy]

And what happens to the profits, CT and VAT in the current one while you are at war with your partner smarty pants?

It remains there, if someone takes it out without the others agreement it's called theft.

[northernladuk]

You don't need it to start another company and then invoice through that. Simple. Don't think your cut out....

And what happens to the profits, CT and VAT in the current one while you are at war with your partner smarty pants?

[jamesbrown]

Could be the 10k includes vat?

Since the OP mentions the amount invoiced, that would be my guess too.

[stek]

Take home pay %

Our calculator works out the take home as follows:

Income 10,000.00
Expenses 700.00



Employer's NI1,037.91
Employee's NI 431.30
Employee Tax2,420.13
Total All Tax3,889.34
CU Margin 95.00
Total Net Income6,019.40

The difference could be because you are not on a standard tax code or it could be that the umbrella company is making deductions other than those listed above.

If you moved to Ltd you would definitely be better off if your working practises put you outside IR35 so you should consider the level of supervision, direction and control that your client will have, whether there is mutuality of obligation within the working relationship and whether or not you would have an unfettered right of substitution.

Could be the 10k includes vat?