Any point in contracting after April 2016?

[SpontaneousOrder]

True. My comment was a corporation tax impact only. Depends on how you get the cash to pay the expenses, in most cases dividends which are then used to pay for the expenses out of post tax income. Depending on your dividend tax rate you end up with a value more than 20%.

Either way my assertion was that the impact isn't going to cost you 100% more. It'll be more likely 20-25% more due to paying from post tax income. Easily covered with a modest rate rise.

Inside IR35 assumed due to agency supply is more of a worry but again, until you can see the whites of their eyes not a lot of point worrying.

More like >50% if you still want to take out up to the higher rate threshold. 80% after CT, around 50% left after tax is taken off that at higher rate.

On 1500 per month, for 10 months, thats about 7-8k worse off per year.

[diseasex]

More like >50% if you still want to take out up to the higher rate threshold. 80% after CT, around 50% left after tax is taken off that at higher rate.

On 1500 per month, for 10 months, thats about 7-8k worse off per year.

Not commenting on expenses but on higher tax on dividends etc in general - just keep the money inside of your ltd and invest... Low dividend = no problem . Economy will grow because contractors will now take the risk and invest within their company instead of pocketing cash...
To my understanding that's what they want and that's what im going to do..

[Intel]

More like >50% if you still want to take out up to the higher rate threshold. 80% after CT, around 50% left after tax is taken off that at higher rate.

On 1500 per month, for 10 months, thats about 7-8k worse off per year.

Back of a fag packet calculations. Simplified because I'm simple....

Assuming rate of 500.
220 days billable
10 months expenses at 1500 a month

Note that the below doesn't knock salary off before corporation tax, and having revised these figures 3 times I'm 1) not doing it again, 2) giving up on my dreams of becoming an accountant.

Doesn't change the outcome though, as per pr1's note, extra cost in this scenario is 40% of the total expenses claimed.

Current

Total Billable - 220 * 500 = 110000
Expenses - 15000
Profit - 95000
Corporation Tax = 19000
Profit after tax = 76000
2015 Salary and basic rate dividend allowance - 42385
Higher Rate Dividends - 33615
Higher Rate Dividend Tax = 33615*.25 = 8403
Total Income = 42385 + (33615*.75) = 67596

Expenses Out Of Taxable Income

Total Billable = 110000
Profit = 110000
Corporation Tax = 22000
Profit after tax = 88000
Salary and divi allowance = 42385
Higher rate dividend tax = 45615 * .25 = 11403
total income = 79596
Minus expenses of 15000 = 61596.

Difference between the two is 6000 (40% of the original expenses value)

NB: figures are subject to revision once I'm sober....... and once eek has pointed out yet another c*ck up in my data...

[TykeMerc]

Not commenting on expenses but on higher tax on dividends etc in general - just keep the money inside of your ltd and invest... Low dividend = no problem . Economy will grow because contractors will now take the risk and invest within their company instead of pocketing cash...
To my understanding that's what they want and that's what im going to do..

Invest in what I wonder?

Drawer space? Darning wool? More "I'm never coming back to CUK" posts? Or just more utter b0ll0cks?

I wonder just how many times this thread will be recreated by April 2016? It's already at least 3.

[diseasex]

Invest in what I wonder?

Drawer space? Darning wool? More "I'm never coming back to CUK" posts? Or just more utter b0ll0cks?

I wonder just how many times this thread will be recreated by April 2015? It's already at least 3.

whiskey has 40% try it. If you throw it up it will give you 100% return ;D

[TykeMerc]

whiskey has 40% try it. If you throw it up it will give you 100% return ;D

I see, more utter b0ll0cks as that post makes absolutely no sense at all.

[LondonManc]

Invest in what I wonder?

Drawer space? Darning wool? More "I'm never coming back to CUK" posts? Or just more utter b0ll0cks?

I wonder just how many times this thread will be recreated by April 2015? It's already at least 3.

Without a time machine you've had your lot pal.

[TykeMerc]

Without a time machine you've had your lot pal.

Whoops, thanks

[eek]

Back of a fag packet calculations. Simplified because I'm simple....

Assuming low rate of 350 (which still drops us into higher rate tax)
280 days billable
10 months expenses at 1500 a month

Current

Total Billable - 280 * 350 = 98000
Expenses - 15000
Profit - 83000
2015 Salary and basic rate dividend allowance - 42385
Higher Rate Dividends - 40615
Higher Rate Dividend Tax = 40615*.25 = 10153
Total Income = 42385 + (40615*.75) = 72846

Expenses Out Of Taxable Income

Total Billable = 98000
Profit = 98000
Salary and divi allowance = 42385
Higher rate dividend tax = 55615 * .25 = 13903
total income = 84096
Minus expenses of 15000 = 69096.

Difference between the two is 3750 (25% of the original expenses value)

NB: figures are subject to revision once I'm sober.......

You missed corporation tax off those examples...

[Intel]

You missed corporation tax off those examples...

Bullocks. This is why I employ an accountant.....

One second whilst I fix it.....