Inside IR35 umbrella take home pay higher than expected...

[plmatch]

Hi,

I took a new inside IR35 contract for the first time as the rate was higher than my usual outside rate and project seemed interesting.
My day rate is £675 and when talking to umbrellas I was quoted take home around the £1700-1750 mark.

After receiving my first couple of payslips, the take home is £2250.


I see from the pay slip that basic pay and holiday pay has been added to the above figure which I think is giving the inflated pay.
Is there anyone here that can tell me if my take home pay looks correct?

(Apologies if there isn't enough info in my post and if more is needed then please let me know.)

Thanks

[eek]

Basic pay is nothing to do with this - that's there to cover some payroll issues that rarely effect most contractors

Advanced holiday pay also isn't an issue but I'm glad to see you have got that ( otherwise it's a problem). Accruals holiday pay can be "stolen" from you if you don't take the holiday and claim it correctly.

What you really need to do is to check that the tax appearing in your personal HMRC tax account online tally with the information on your payslip.

As for the amount it's often the case early pay checks will be higher because there are income tax allowances from earlier periods being used, it may correct itself over tine

[Bodger]

You can log into the HMRC portal and update your expected income for the year. This will get a new tax code assigned, and the umbrella can tax you accordingly. Saves you getting a tax bill towards the end of the year.

[NotAllThere]

But if your pay ends up being significantly higher, you'll be required to pay interest on the payment on account that they deem you should have made.

[plmatch]

Yes, I had a chat with them and it seems the higher pay is due to tax allowances at the start that (been away from all this too long ) and short itself out as I continue.

[northernladuk]

Yes, I had a chat with them and it seems the higher pay is due to tax allowances at the start that (been away from all this too long ) and short itself out as I continue.

That would mean you are relying on HMRC to sort it out. Never a good idea. Log on to the portal and put the right figures in and help it get sorted quicker.

[eek]

That would mean you are relying on HMRC to sort it out. Never a good idea. Log on to the portal and put the right figures in and help it get sorted quicker.

Nope, you would be reliant on the mathematical formula used for the last x years to resolve the figure. HMRC won't do anything as once the unused allowances have been consumed (say in a month or 2) the figures would revert to normal.

Actually changing your figure on the portal may make things worse rather than better were the OP to leave before March next year.

Basically there are no easy options here as PAYE is designed with the assumption of permanent work from April through to March.