Reply to: Discussing inside rates with an agent

[andymalory]

In my experience, an inside IR 35 rate is the gross rate that would typically be paid for an outside IR35 gig. The umbrella (or whatever) then takes off their commission, ErNI, the apprenticeship levy, employer pension contributions, etc., and then income tax (according to your tax code) and EeNI before you see any money. A PAYE rate on the other hand is the gross salary payable after all the employer charges have already been taken care of.

Exactly this, but the problem is technically speaking what you are defining as 'gross' isn't actually gross. The gross rate would be the one from which your employee income tax and employee NI is derived.

[andymalory]

And that is where all the tax issues derive from...

If agencies didn't lie / exaggerate (the latter there to keep Andy Hallett happy) we wouldn't have a tenth of the tax avoidance issues in this industry.

The problem is most don't even know they are exaggerating! They just think "this is how its done".

[andymalory]

Therein lies the problem. It's misleading as you're then expected to do a load of calculations to get an idea of what you would expect to take home. If it was a PAYE rate then at least it's on the same playing field as an employee.

Exactly!

[andymalory]

My interpretation of that would be that the rate is gross and you/the umbrella company are responsible for everything.

Is it a common practice to show a PAYE equivalent rate (net of employer's NI and fees)? If so I'm not sure that I have clocked that, and I would imagine agents prefer to advertise a gross figure for the simple reason that it is a larger number.

What is the definition of gross in this?

[PerfectStorm]

You're expecting too much for what should be an everyday question for an agent - after all, the law only came in 6 years ago - give them a chance!

[JustKeepSwimming]

Just a FYI, I did a gig recently with a "magic circle" large law firm, and it was fine, not toxic at all.

Seconded. From what i've experienced law firms have done well to get rid of the toxicity they had, probably helps there is a lot more diversity. There is also a huge difference between expectations on the billable (lawyers) and non-billable (IT/projects etc), the latter really is just a standard 9-5.

[ladymuck]

Just a FYI, I did a gig recently with a "magic circle" large law firm, and it was fine, not toxic at all.

Good to know. Never worked in that industry so a bit of real world knowledge is helpful

[GJABS]

It's with a huge law firm so I suspect the working environment will be toxic.

Just a FYI, I did a gig recently with a "magic circle" large law firm, and it was fine, not toxic at all.

[ladymuck]

To give the agent credit they were actually very understanding of my questioning and ended up giving me a call to talk about it. They did confirm the rate was a pre-everything being deducted.

Ultimately, it's going to end up being a rate cut for a 12 month gig that really ought to be a FTC or perm employment. It's with a huge law firm so I suspect the working environment will be toxic.

[m0n1k3r]

In my experience, an inside IR 35 rate is the gross rate that would typically be paid for an outside IR35 gig. The umbrella (or whatever) then takes off their commission, ErNI, the apprenticeship levy, employer pension contributions, etc., and then income tax (according to your tax code) and EeNI before you see any money. A PAYE rate on the other hand is the gross salary payable after all the employer charges have already been taken care of.

[gables]

Therein lies the problem. It's misleading as you're then expected to do a load of calculations to get an idea of what you would expect to take home. If it was a PAYE rate then at least it's on the same playing field as an employee.

I just halve the day rate then subtract 500 quid for every 1000 going into pension

[eek]

My interpretation of that would be that the rate is gross and you/the umbrella company are responsible for everything.

Is it a common practice to show a PAYE equivalent rate (net of employer's NI and fees)? If so I'm not sure that I have clocked that, and I would imagine agents prefer to advertise a gross figure for the simple reason that it is a larger number.

And that is where all the tax issues derive from...

If agencies didn't lie / exaggerate (the latter there to keep Andy Hallett happy) we wouldn't have a tenth of the tax avoidance issues in this industry.

[ladymuck]

The response was a bit of waffle and then finally they said 'we quote an all-in rate so your umbrella can give you the detailed breakdown'.

So mattser's interpretation was right.

[SueEllen]

I have asked for a KID. Place your bets:

a) The response is 'what's a KID'
b) The response is we only issue a KID with the contract'
c) The response is 'your umbrella should issue the KID'
d) Something else
e) No response

Your response will be

[ladymuck]

I have asked for a KID. Place your bets:

a) The response is 'what's a KID'
b) The response is we only issue a KID with the contract'
c) The response is 'your umbrella should issue the KID'
d) Something else
e) No response