Reply to: best umbrella

[Denny]

Don't get it! Why can you still get 95% of all your income if the contract is under IR35? I thought you can only get PAYE and it is not worth opening a ltd company if the contract falls in IR35. Please can anyone clarify this issue as there is a bit confusion?

It's gross into your business account.

Then minus 5% allowable as business running costs and all legitimate expenses on top. Then the figure you're left with: you deduct PAYE tax and employers and employees NI on the rest, taking into account the tax free allowance for each year, and tax percentage bandings that apply to all employees. You also make a bit on top of the VAT you charge the client if you are on the flat rate scheme by deducting the percentage owed to the VAT man (1% less in the first year) and keeping the rest. Do bear in mind though that this VAT margin will attract interest if left in your account, and all will be taxable as well.

[TheFaQQer]

I think this is a reference to the fact that you have to pay 95% of your income from an IR35 contract as PAYE. The other 5% you can keep in the company and distribute after CT if you wish. It's supposed to be to cover running expenses.

The amount you gain from the 5%, together with the saving on umbrella fees should be more than an accountant would cost you (obviously this depends on what the 5% actually works out at) in most cases.

Plus anything you can make by being on FRS for VAT.

[Hex]

I think this is a reference to the fact that you have to pay 95% of your income from an IR35 contract as PAYE. The other 5% you can keep in the company and distribute after CT if you wish. It's supposed to be to cover running expenses.

The amount you gain from the 5%, together with the saving on umbrella fees should be more than an accountant would cost you (obviously this depends on what the 5% actually works out at) in most cases.

[clwd]

Or under IR35, if you are, you can get 95% of all your income, or 95% of all your income less the umbrella's fees, which will be a lot more than most accountants.

Don't get it! Why can you still get 95% of all your income if the contract is under IR35? I thought you can only get PAYE and it is not worth opening a ltd company if the contract falls in IR35. Please can anyone clarify this issue as there is a bit confusion?

[malvolio]

I am supposed to budget on my staff actually doing 1400 hours a year. Of course with all the reviews assessments time recording etc I think the actual number of production hours is probably about 3.

I am not so concerned about the hours/revenue figures as I am about actual working hours. You plan service desks on the basis of n users making m calls a week and taking x minutes to handle (typically m=1 and x=10 minutes), then dividing by man hours to get how many warm bodies you need. I always put the staff at 6 hours a day. Doesn't matter how long they're in the office, that's as much productive time that you'll get out of anyone - and the formula has held up for many years!

[ASB]

365 days - 20 days a/l - 104 weekends - 8 bank holidays = 233, so 220 is probably fair. But nobody books half-hours, surely...

I am supposed to budget on my staff actually doing 1400 hours a year. Of course with all the reviews assessments time recording etc I think the actual number of production hours is probably about 3.

[malvolio]

And working every bank holiday and having no holidays at all and never being on the bench.??

I would suggest 7.5 * 22 * 220 is probably better guidance.

365 days - 20 days a/l - 104 weekends - 8 bank holidays = 233, so 220 is probably fair. But nobody books half-hours, surely...

[unemployed]

And working every bank holiday and having no holidays at all and never being on the bench.??

I would suggest 7.5 * 22 * 220 is probably better guidance.

suddenly going back to perm work sounds more appealing

[ASB]

ah right ! was basing my calculation on 7.5 hrs a day.

And working every bank holiday and having no holidays at all and never being on the bench.??

I would suggest 7.5 * 22 * 220 is probably better guidance.

[unemployed]

Very rough just to illustrate the point, but £22 ph * 8 hours a day * 260 working days a year and rounded. If you want better numbers take a look at http://calculator.contractoruk.com/ - there's about £4691 a year more by being outside IR35 (and using an umbrealla is the same as being inside, but you pay for the privilege)

ah right ! was basing my calculation on 7.5 hrs a day.

[malvolio]

well im dipping my toe in contracting so will see how it goes, how did you get to the figure of 46k gross btw ?

Very rough just to illustrate the point, but £22 ph * 8 hours a day * 260 working days a year and rounded. If you want better numbers take a look at http://calculator.contractoruk.com/ - there's about £4691 a year more by being outside IR35 (and using an umbrealla is the same as being inside, but you pay for the privilege)

[unemployed]

So you don't earn enough to make it worthwhile earning more, is that what you're saying?

£22 ph is roughly £46k a year gross, and even more roughly £38k net with your own company or £33k on full PAYE. So that's 14% of your gross income gone for no reason.

Or under IR35, if you are, you can get 95% of all your income, or 95% of all your income less the umbrella's fees, which will be a lot more than most accountants.

Still, your call....

well im dipping my toe in contracting so will see how it goes, how did you get to the figure of 46k gross btw ?

[Torran]

you got that right , hardly worth setting up a limited company for £22ph is it ?
maybe in years to come if im not a one man band , this may be the way but for now an umbrella will be good enough , i am not greedy.

so the consensus is giant are rubbish. Anyone used parasol ?

Sweet baby jeesurs mate there must be 101 threads asking this question. You don't even need to search. There is a live thread in the legal bit.

*shakes self*

sorry, yes I'm with Parasol and they are absolutely fine.

[malvolio]

you got that right , hardly worth setting up a limited company for £22ph is it ?

So you don't earn enough to make it worthwhile earning more, is that what you're saying?

£22 ph is roughly £46k a year gross, and even more roughly £38k net with your own company or £33k on full PAYE. So that's 14% of your gross income gone for no reason.

Or under IR35, if you are, you can get 95% of all your income, or 95% of all your income less the umbrella's fees, which will be a lot more than most accountants.

Still, your call....

[unemployed]

Nah, the OP will either be inside IR35 or finds LtdCo too much effort...

you got that right , hardly worth setting up a limited company for £22ph is it ?
maybe in years to come if im not a one man band , this may be the way but for now an umbrella will be good enough , i am not greedy.

so the consensus is giant are rubbish. Anyone used parasol ?