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Taxed more than I earn.

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    Taxed more than I earn.

    Is this really what hmrc are getting away with now.

    I'm paid via a reputable umbrella company. Which looked OK the first week but now it goes something like this.

    Total earnings 3500 a week.
    deductions 1800
    Pay 1700

    Or there abouts.

    How can that be in anyway fair. I'm taxed more than I literally take home.
    Before anyone comments I have some huge medical debts to clear and ive studied so hard for this role and is extremely demanding on me.

    #2
    And you're shocked about this?

    It sounds a bit on the low side, so you probably want to look closely at the breakdown (perhaps that includes a student loan payment) but, either way, I guess you can add ErNI, EeNI, PAYE and AI and see what you get in terms of deductions. Between £100-125k, you lose your personal allowance so your marginal tax rate is very high.

    You could always dump more into a pension.

    Or not work via an umbrella company.

    Fair is a relative thing, I suppose. I agree that a take home of 50% is pretty crap, but you know upfront what the situation is with an umbrella and you should hike your prices to reflect it, assuming you're in demand.

    Comment


      #3
      Oh, I guess you just got hammered with the 2.5% NI rise too, so it's probably about right. Anyway, don't work for an umbrella and/or increase your prices.

      Comment


        #4
        Thank you but how do I avoid umbrella and still work contract for my client.
        I'm losing about 425 in NI and levy payments plus 22 fee from umbrella.

        Then a further 700 or so in tax and more NI.

        Comment


          #5
          Originally posted by JPC View Post
          Thank you but how do I avoid umbrella and still work contract for my client.
          I'm losing about 425 in NI and levy payments plus 22 fee from umbrella.

          Then a further 700 or so in tax and more NI.
          It might be hard if you're in a sector that has no outside IR35 contracts, but that is the obvious solution.

          I would still double-check your numbers, though. For example, if I plug your numbers in here, I get something rather higher (£1,889.88), although it does make some assumptions, of course (but it includes the new Health and Social Care Levy):

          https://clarityumbrella.co.uk/contra...ay-calculator/

          A salary sacrifice pension contribution probably remains your best bet to reduce tax while sticking with an umbrella.

          Comment


            #6
            Originally posted by JPC View Post
            Is this really what hmrc are getting away with now.

            I'm paid via a reputable umbrella company. Which looked OK the first week but now it goes something like this.

            Total earnings 3500 a week.
            deductions 1800
            Pay 1700

            Or there abouts.

            How can that be in anyway fair. I'm taxed more than I literally take home.
            Before anyone comments I have some huge medical debts to clear and ive studied so hard for this role and is extremely demanding on me.
            Back in early 2000, I was in a permie job. 50K + BUPA + fully expensed car. My take home was 45% of my gross earnings. Welcome to the real world. Fairness and tax are not words that go together.

            Taxed more than I earn.
            Nope. You earn the 3500. That's more than 1800.

            Down with racism. Long live miscegenation!

            Comment


              #7
              How are they handling holiday pay as that will be a £422 or so deduction from the headline figure unless it’s being paid in advance which it doesn’t seem to be based on the other figures?

              but as others have said the only way to escape tax is to delay it by putting it into your pension pot.

              - edit ran it through a calculator - £422 of that £3500 is definitely being kept back for holiday pay so you either need to get it paid in Advance or find out their holiday pay policy and processes for that umbrella and ensure you get the money back.

              (it's a simple test an assignment fee of £3100 generates a take home pay of about £1700).
              Last edited by eek; 15 April 2022, 07:01.
              merely at clientco for the entertainment

              Comment


                #8
                Originally posted by eek View Post
                How are they handling holiday pay as that will be a £422 or so deduction from the headline figure unless it’s being paid in advance which it doesn’t seem to be based on the other figures?

                but as others have said the only way to escape tax is to delay it by putting it into your pension pot.

                I dont want to work till I'm 65 I want to have enough to retire earlier my plan being passive income. Yet taxation prevents that. It also ironically prevents me paying more people local to me to do jobs I otherwise wouldn't be doing also. Yes I do work most weekends too.

                I dont want to pay it into a pension pot as I don't know whether I'll be around to benefit from it you never know.

                We all just seem to roll over and accept it. Why? Taxation in this example is blatantly a resentment tax, we are given no permanent protection such as sick pay training etc. And when we complain the sentiment seems to be " that's just how it is."

                The acceptance of hierarchy allowing one human to dictate how we ultimately thrive in a 'free society' doesn't in any way reward the hard working. You have to be way higher up to benefit. Dictate and free dont ever mix.

                Yet we have worse services than ever in this country. When did you last see a council worker mow a lawn anywhere. Let alone empty a bin and rely on charities for cures to terminal illness and rescue. Or have a dentist available. And dont get me started on the state of our home internal civil service infra.



                Comment


                  #9
                  Originally posted by JPC View Post


                  I dont want to work till I'm 65 I want to have enough to retire earlier my plan being passive income. Yet taxation prevents that. It also ironically prevents me paying more people local to me to do jobs I otherwise wouldn't be doing also. Yes I do work most weekends too.

                  I dont want to pay it into a pension pot as I don't know whether I'll be around to benefit from it you never know.

                  We all just seem to roll over and accept it. Why? Taxation in this example is blatantly a resentment tax, we are given no permanent protection such as sick pay training etc. And when we complain the sentiment seems to be " that's just how it is."

                  The acceptance of hierarchy allowing one human to dictate how we ultimately thrive in a 'free society' doesn't in any way reward the hard working. You have to be way higher up to benefit. Dictate and free dont ever mix.

                  Yet we have worse services than ever in this country. When did you last see a council worker mow a lawn anywhere. Let alone empty a bin and rely on charities for cures to terminal illness and rescue. Or have a dentist available. And dont get me started on the state of our home internal civil service infra.


                  Um what has tax got to do with the fact the umbrella has retained £422 or so for Holiday pay to pay you later...

                  Or have you missed the important bit of my post (the fact only £1400 has gone in tax and £400 is sat in a separate pot you need to access) within your rant....
                  merely at clientco for the entertainment

                  Comment


                    #10
                    Nothing more than a rant obviously not aimed at you. and I appreciate you taking the time to point out this 422 to me thankyou. ?

                    Comment

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