Originally posted by northernladuk
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Now, in terms of the umbrella v ltd argument. Your point is entirely valid. I'm not sure where he cut off is, but consider umbrella v inside IR35 first.
With the umbrella there is an umbrella fee to be paid.
With the ltd there is accountancy - I would imagine these are broadly similar. But there are possible advantages:-
- 5% expenses allowance. Ok CT is paid, but cf tax an NI. This may save about 1% per year.
- 3% ish profit from vat FRS
- 2k from employers NI rebate thing that is being introduced.
Of course, whether these are appropriate to the OP's circumstance or not is a different matter.
Regards the outside IR35 case 30k seems high as the cut off (though it may be). Intuitively the marginal tax rate above the paye threshold of 10k could be simply 20%. This is against approx double that through paye (where brolly or inside ir35).
Now brolly costs have to be considered, perhaps as a guess the ltd work out 1k a year more. Then this would pretty soon be saved by avoiding ni. About an extra 5k.
To me it seems like the threshold would probably be in the region of 15-20k. But every situation will be different.
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