Reply to: Switch to increased day rate within PS IR35 or leave?

[Andy2]

It's like the good old days of permiedom where, if you're benched for the next six months, you'll get a tax rebate at some point...

There may be tax rebate but i don't think they will pay back both NIs

[LondonManc]

how does this work for a 6 months contract. Do you get taxed on basic rate only ? what if there is another 6 months extension then do they deduct higher taxes for next 6 months ?

It's like the good old days of permiedom where, if you're benched for the next six months, you'll get a tax rebate at some point...

[Andy2]

Well yeah, once you're past 43k pa you're on higher rate tax.

.

how does this work for a 6 months contract. Do you get taxed on basic rate only ? what if there is another 6 months extension then do they deduct higher taxes for next 6 months ?

[d000hg]

If they're only umbrella for a couple of months though...? Might still be able to remain a regular rate tax payer.

Anyhow if it's a non-starter no problem. Unless they'll pay even more...

[LondonManc]

According to the brolly calculators i have seen , you are looking at a whopping 42% tax for a PS contract inside IR35

Well yeah, once you're past 43k pa you're on higher rate tax.

Under a fixed term contract, you'd get 65% of 100k:

Income Tax (PAYE) £29,200 29%
National Insurance (N.I) £5,333 5%
Total taxes £34,533 35%
NET INCOME £65,466 65%

Under an umbrella (CU in this case), you'd get 58% of your gross:

Employment Taxes £11,418 11%
Employee's NI £5,275 5%
Employee Tax £23,789 24%
Total All Tax £40,482 40%
CU Margin £1,302 1%
Total Net Income £58,220 58%

I've no idea how prevalent FTCs could become in the Public Sector but they could become an alternative and allow PSBs to recruit via FTC or outside IR35 on a case by case basis. I feel sorry for them because they've been swamped by a monster that they've never had to care about before.

[Andy2]

According to the brolly calculators i have seen , you are looking at a whopping 42% tax for a PS contract inside IR35

[motoukenin]

If you're inside IR35, surely you aren't the employer but the employee?
FTC sounds a better option than inside IR35.

Not so, most agencies are asking you to cut rates by 13%, this is for Employers NI and the apprentice levy

[d000hg]

I'm not au fait with the new rules but the big issue is that if you stay, they may deem your past work to be inside IR35 or otherwise penalise you?

Is there a 3rd option to consider: work with them via an umbrella for a couple of months or so NOT through YourCo Ltd? Would that distance things enough to avoid the potential problems? I have absolutely no idea how umbrella take-home compares to inside-IR35 though.

edit: ps mods maybe better this in a more serious sub-forum?

[bstar1]

I would leave. 3 things got me down about contracting :

The ever increasing shopping list of skills, being inversely proportional to rate.
The dumbing down of agents - new influx of green wet behind the ears thick numpty bastards.
The increasing tendency of clients to treat you as a temp.

I rather suspect Her Majesty's government have started a skills drain in the public sector and things have to get worse before they can get better. A few high profile cluster****s ought to do it.

Could'nt have put it better myself ! Well done.

[quackhandle]

Good God man, walk, bloody walk!

qh

[SueEllen]

Given the very low starting point, this shouldn't take long...

To be fair they also seem to deliberately try and annoy those permies with skills and actually do some work so they end up leaving.

One PS manager was demoted by them putting another layer of management on top of him. He applied for and got another job within a month of that happening. He had come from the private sector and lasted just over a year.

[Mordac]

I would leave. 3 things got me down about contracting :

The ever increasing shopping list of skills, being inversely proportional to rate.
The dumbing down of agents - new influx of green wet behind the ears thick numpty bastards.
The increasing tendency of clients to treat you as a temp.

I rather suspect Her Majesty's government have started a skills drain in the public sector and things have to get worse before they can get better. A few high profile cluster****s ought to do it.

Given the very low starting point, this shouldn't take long...

[LondonManc]

If inside IR35 you will also be responsible for Employers NI as well, which is uncapped above about 150 quid, so gets very expensive, all of the calculations I have seen suggest double the rate when you take into consideration the increased taxes, Employers NI , Employees NI and Expenses. The 20% UK gov has suggested is based on you being inside IR35 before and after but even then doesn't make sense above 350 per day.

If you're inside IR35, surely you aren't the employer but the employee?
FTC sounds a better option than inside IR35.

[motoukenin]

If your day rate was £300, working in the public sector happily satisfied your Ir35 status is outside, contracted for two years up until 31/march this year with all invoices and payments made before 6/April.

But the client you do project work for would pay £400 a day to keep you for 2+ more months... Almost certainly putting you within IR35 due to their lack of understanding of the issues would you renew or leave?

If inside IR35 you will also be responsible for Employers NI as well, which is uncapped above about 150 quid, so gets very expensive, all of the calculations I have seen suggest double the rate when you take into consideration the increased taxes, Employers NI , Employees NI and Expenses. The 20% UK gov has suggested is based on you being inside IR35 before and after but even then doesn't make sense above 350 per day.

[suityou01]

Ex contractor perspective

I would leave. 3 things got me down about contracting :

The ever increasing shopping list of skills, being inversely proportional to rate.
The dumbing down of agents - new influx of green wet behind the ears thick numpty bastards.
The increasing tendency of clients to treat you as a temp.

I rather suspect Her Majesty's government have started a skills drain in the public sector and things have to get worse before they can get better. A few high profile cluster****s ought to do it.