Reply to: New contractor help

[Peoplesoft bloke]

Is contracting still a lucrative despite government taking so much for most people on here ?

No it isn't.

[northernladuk]

You can reclaim it through self-assessment and wait for a cheque from HMRC. May take even a year or so...

Absolute rubbish... as usual.

[elsergiovolador]

True..although might be a common scenario.i.e someone gets well paid contract for a month for lets say £8k a month, the umbrella would assume that salary would be £96k so just NI would be a lot..but what if he only works one month and actualy owes no PAYE nor NI, anyone know this scenario ?

You can reclaim it through self-assessment and wait for a cheque from HMRC. May take even a year or so...

[fidot]

True..although might be a common scenario.i.e someone gets well paid contract for a month for lets say £8k a month, the umbrella would assume that salary would be £96k so just NI would be a lot..but what if he only works one month and actualy owes no PAYE nor NI, anyone know this scenario ?

I believe the contractor would still owe the NI as it is worked out on a weekly or monthly basis.

[andydd68]

Thanks. I didn't know this and stand corrected. However, in this case, I can't see that any of the mentioned circumstances apply.

True..although might be a common scenario.i.e someone gets well paid contract for a month for lets say £8k a month, the umbrella would assume that salary would be £96k so just NI would be a lot..but what if he only works one month and actualy owes no PAYE nor NI, anyone know this scenario ?

[fidot]

Not quite true but its not a simple process like PAYE - How to claim a National Insurance refund | AccountingWEB

Thanks. I didn't know this and stand corrected. However, in this case, I can't see that any of the mentioned circumstances apply.

[elsergiovolador]

Inside IR35 is really a contractor? Sounds more like a no rights employee to me.

[andydd68]

NB there are no refunds on NI just tax

Not quite true but its not a simple process like PAYE - How to claim a National Insurance refund | AccountingWEB

[fidot]

As mentioned you may get a bit more, most umbrellas will give you a quote although when your payslip arrives it often leaves a lot to be desired.

There are lots of online PAYE/NI calculators but most arnt designed with contractors in mind (they may or may not show Employers NI), you can get Brightpay software free trial which I found useful.

Also worth noting that most calculations assume that your £8k a month will be your full annual salary (i.e 8 x 12 = 96k), if you only work one month this year you wont owe any PAYE or NI, so a refund will be due also if you only work 4 months then it will be quite different as youll be below the 40% paye threshold.

As mentioned a Pension Salary sacrifice will help, whether your brolly will do it has been discussed, pre IR35 change I was about to go down this route and found my brolly Parasol could do monthly pension SS.

Its not quite true to say you cant use a Ltd Co...you can get paid into a Ltd..the money you receive will already be Net (i.e paye n NI deducted) but its hard to see any real benefit to this.

NB there are no refunds on NI just tax

[andydd68]

Thanks All very helpful.

Crazy that the government takes so much , afterall with contract it has end date, you dont have many of the benefits and security of standard employment etc.

Is contracting still a lucrative despite government taking so much for most people on here ?

Bit odd to say the gov takes so much, its pretty much the same for all perms/inside IR35....yes there are no real benefits but you are back to the IR35 argument and as rightly pointed out by the House of Lords report.

[andydd68]

As mentioned you may get a bit more, most umbrellas will give you a quote although when your payslip arrives it often leaves a lot to be desired.

There are lots of online PAYE/NI calculators but most arnt designed with contractors in mind (they may or may not show Employers NI), you can get Brightpay software free trial which I found useful.

Also worth noting that most calculations assume that your £8k a month will be your full annual salary (i.e 8 x 12 = 96k), if you only work one month this year you wont owe any PAYE or NI, so a refund will be due also if you only work 4 months then it will be quite different as youll be below the 40% paye threshold.

As mentioned a Pension Salary sacrifice will help, whether your brolly will do it has been discussed, pre IR35 change I was about to go down this route and found my brolly Parasol could do monthly pension SS.

Its not quite true to say you cant use a Ltd Co...you can get paid into a Ltd..the money you receive will already be Net (i.e paye n NI deducted) but its hard to see any real benefit to this.

[northernladuk]

Thanks All very helpful.

Crazy that the government takes so much , afterall with contract it has end date, you dont have many of the benefits and security of standard employment etc.

Is contracting still a lucrative despite government taking so much for most people on here ?

At the moment with gigs like hens teeth and the IR35 looming again next year? No. Worst period for contracting since it probably became a thing. Those making anything like they did last year are the very lucky ones at the moment IMO.

[Mangobongo]

Thanks All very helpful.

Crazy that the government takes so much , afterall with contract it has end date, you dont have many of the benefits and security of standard employment etc.

Is contracting still a lucrative despite government taking so much for most people on here ?

[Paralytic]

As others have said, this is what you'll get. The one thing you can do is to put funds into a pension via Salary Sacrifice (different Umbrellas have different offerings) - that will save tax and NI. There's dozens of posts on the Umbrellas board about it - just do a search.

[wattaj]

Just to reiterate this point:

DO NOT go to any umbrella promising you more than this as you will get into to tax trouble with HMRC.