New contract- inside ir35 - umbrella help needed

[DolanContractorGroup]

yes even i thought so..

so it is too good to be true kind of stuff .. as it seems way high..
can you pls provide the calculation for 70% in hand as mentioned before ?

thansk

Hi kingkk,

If you were a basic rate tax payer, then you could look closer to 70%. However, your advised rate will bring you into the higher rate tax bracket, so this will sit closer to 60%.

Hope this helps.

Send me an email and I'll have some calculations sent over.

Kind regards


Zeeshan

[lucyclarityumbrella]

On £600 per day, your take home should be around £1,685 on a weekly basis, so about 56% unless you have pension - 70% is highly unlikely for a 40% tax payer.

[DolanContractorGroup]

thanks. . so contracting wise contacted and they are claiming to get in hand of 2580 something per week..
while i can see it cannot go beyond 1650~ per week.

what these guys do and i think the hmrc will be behind me for that in future ?

Hi kingkk,

A take home of £2500~ per week? On £600 per day?

No chance. There's something else going on here.


Kind regards

Zeeshan

[Amanensia]

thanks. . so contracting wise contacted and they are claiming to get in hand of 2580 something per week..
while i can see it cannot go beyond 1650~ per week.

what these guys do and i think the hmrc will be behind me for that in future ?

If you think about it logically all the Umbrella do is convert your daily billable amounts to an annual salary and pay it to you, after deducting tax, NI and their fee. So if you want back-of-the-envelope figures of what's possible, just convert your daily rate to an equivalent annual salary and plug it into any of the regular (non-Umbrella) permie salary calculators out there.

Take your daily rate, multiply by the number of days a year you expect to work, divide by 1.138 to allow for ERNI, and bung the resulting salary into a calculator.

For example, if you're on £500/day and expect to work 220 days in a year, you get:
500 * 220 / 1.138 = £96,660.
Tap that into a salary calculator and you get £5,383/month.

This is not 100% accurate but it's very close indeed. The Umbrella fee will then come off this.

If an umbrella calculator is quoting you more than this then either they are assuming you'll work a lot more days, or they are doing something dodgy!

[DolanContractorGroup]

So 70% is like max limit... i will call at around lunch time.

thanks

Hi kingkk,

Yes, that is generally the higher end. But again, it depends on your tax code, any salary sacrifice contributions (pension) and if you're a basic rate tax payer or higher rate (where you'll be taxed 40% on income).

If you're a higher rate tax payer, and you don't put anything away for pension, then expect to retain closer to 60%.

oh ok .. so i never had pension before as was on ict and now got another visa..
how much we can save it in pension pot ? and what fees can be considered as normal fees for the umbrella ?

i read that u can add business expenses and stuff like that .. really confused

thanks

If you travel to multiple sites in a single day, then these temporary workplaces can be claimed for. We can only pay mileage through payroll.

If you are classed as inside-IR35 then it is likely you will also be under the supervision, direction and control of the client, which means that other expenses (other than mileage to temporary worksites) may not be claimable.

For more info: Claiming expenses as an umbrella worker


Kind regards

Zeeshan

[lucyclarityumbrella]

oh ok .. so i never had pension before as was on ict and now got another visa..
how much we can save it in pension pot ? and what fees can be considered as normal fees for the umbrella ?

i read that u can add business expenses and stuff like that .. really confused

thanks

You can pay anything into the pension as long as the umbrella keeps you above National Minumum Wage every pay packet (any monies over £40k annual limit will have to be declared via self-assessment).

The umbrella margin can vary between companies, but as previously mentioned, I wouldn't join based on the margin, speak to the umbrella and make sure you get a good feeling

Chargeable expense can be put through an umbrella, but likelihood is business expenses are a no go!

[lucyclarityumbrella]

So 70% is like max limit...

It depends on whether you are looking to make pension contributions as this will also affect the percentage

[Amanensia]

I wouldn't get too hung up on what calculators say and what take-home pay figure you are quoted. I had an idle look into umbrellas a month or two ago and as has been mentioned above the only differences that affect what you'll earn are in the level of fees. PAYE is PAYE, everyone will deduct the same amount as tax and NI. Some providers' online calculators show more than others by assuming you work 5 days a week 52 weeks a year, which frankly I view as borderline dishonest. The only three things I would care about, in order of importance, would be:

i) Is it a reputable company? Judge this by your own research, here and elsewhere, and having a proper conversation with them. Are they convincing, reasonable and clued-up?
ii) How flexible can they be in terms of how you want to allocate your funds (eg pension contributions)? This only really matters if you want to do something other than taking all your funds as salary.
iii) What is their fee?

The final one I would frankly view as almost entirely irrelevant. The fee, unless extraordinarily out of line with the market, won't make a hill of beans difference really. Indeed I would tend to avoid the very cheapest providers as there will be an element of getting what you pay for in terms of customer service, competence etc.

[lucyclarityumbrella]

I had read the forms and can see that we cannot get more than 60% if it is inside i35.
Also can someone recommend better umbrella companies name with more savings if possible in terms of either pension saving or other ways to do it ?

Hi kingkk, your take home will be dependant on your day rate as to whether this places you as a 20% or 40% tax payer, so thats the first thing to look. If you do come across any companies offering a higher take home - do your research on here is all I will say

[Manic]

For inside roles the only differentiation in cost will be the charge for using the Umbrella, taxes should not be different. Consider whether you can use your own pension scheme out of Gross earnings as this will save you a few quid in NI.

[Bluebird]

Is it a permanent role or a contract roles inside IR35 - they are two different things aren't they?

[DolanContractorGroup]

hi all,

I am moving into contracting from permanent role and it is inside ir35.
I had read the forms and can see that we cannot get more than 60% if it is inside i35.

Also can someone recommend better umbrella companies name with more savings if possible in terms of either pension saving or other ways to do it ?

thanks

Hi kingkk,

I hope you're well.

If the role is definitely inside-IR35, and the client doesn't want to take you on as a limited company contractor, then you can expect to retain around 60-70% of your umbrella income. This would have obviously been more if you were an outside-IR35 contractor.

We have an umbrella service and a limited company accountancy service, so you can use umbrella for your inside-IR35 contracts and the accountancy service for your outside-IR35 contracts (no extra charge!), and can set up a max pension for you.

Give us a call on 01206 591000 and we'd be happy to help!


Kind regards

Zeeshan

[kingkk]

hi all,

I am moving into contracting from permanent role and it is inside ir35.
I had read the forms and can see that we cannot get more than 60% if it is inside i35.

Also can someone recommend better umbrella companies name with more savings if possible in terms of either pension saving or other ways to do it ?

thanks