Going to be my first Inside IR35. Recruiter being weird about Umbrella choices

[FreakShow]

I haven't contracted inside IR35 before. I am now in a position where that is happening though, so am looking to sort something out.

My recruiter has naturally suggested that they can help with that (i.e. which companies give them a kick back), and that there are two options:

The recruiter I've worked with to land this role, has said that there are two options:

1) 87% retention on my rate (which he says is pretty good)

2) They will give me all of my gross pay and I can do my own deductions, but they take a fee

She hasn't mentioned any names yet, but I am a bit confused, as I expected the first option, rather than the second, as that sounds more like an outside IR35 setup? My plan would be to pay a decent portion of things into pension, and maybe take advantage of any optional perks the umbrella may offer, like healthcare etc, but that's very dependent on whether the umbrella offers it or not, not a big one though.

I'm still waiting on contract for now, but wanted to get an idea of whether this is a red flag or something? It sounds a bit strange? Or am I misunderstanding what they've suggested?

[malvolio]

It's a red flag. Retention on inside is around 50-55%, 87% is ludicrous. You will be paid net not gross, so what taxes do they think you owe?

Tell them you're using Clarity and see what happens.

[hobnob]

If they're saying that your take home pay will be 87% of your daily rate, there's no way to do that legitimately. At best, they could charge you a minimal amount of tax for the rest of this financial year, but then you'd have to pay the rest of it when you do your SATR.

If they're saying that your gross salary will be 87% of your daily rate, I think they're overcharging you for their fees. (I seem to recall Parasol doing something similar a while back.)

[eek]

If they're saying that your take home pay will be 87% of your daily rate, there's no way to do that legitimately. At best, they could charge you a minimal amount of tax for the rest of this financial year, but then you'd have to pay the rest of it when you do your SATR.

If they're saying that your gross salary will be 87% of your daily rate, I think they're overcharging you for their fees. (I seem to recall Parasol doing something similar a while back.)

That's not how I read it - but equally I don't get why any agency is offering this sort of scheme anymore - the risk of the final tax bill being their (the agency's responsibility) is too great.

[cojak]

I would refuse to sign anything unless they give you names and the contract to review; due diligence is vital in this situation.

If you don’t like the smell of this contract be prepared to walk away and inform the end client of the reason for your refusal. It’s the agent that’s dodgy, not the client.

[FreakShow]

Of course I'm not signing or agreeing to anything without the information.

I will definitely need the contract to review and will gain a separate quote from a reputable umbrella compared to whoever they suggest.

I'm not sure of all the things that have been said in this thread but I'll take it on board.

I would of course hope for a full break down of costs, fees, and a demonstration of a payslip, including how I'd like my pension contributions taken.

[cojak]

Get it all in writing, verbal assurances aren’t worth the paper they’re written on and dodgy agents/umbrellas are always allergic to emails.

[jamesbrown]

I'm not sure of all the things that have been said in this thread but I'll take it on board.

It may be hard to take on board if you haven't understood it. The main thing to understand is that your recruiter is promoting a tax avoidance scheme in (1), which doesn't work, and whatever nonsense they are talking about with (2) is also a massive risk to both of you!

[eek]

Of course I'm not signing or agreeing to anything without the information.

I will definitely need the contract to review and will gain a separate quote from a reputable umbrella compared to whoever they suggest.

I'm not sure of all the things that have been said in this thread but I'll take it on board.

I would of course hope for a full break down of costs, fees, and a demonstration of a payslip, including how I'd like my pension contributions taken.

The thing is that if an agency is paying £x00 before employment costs to someone you pay is always going to end up being 52-58% of the starting figure unless you throw money into a pension.

Everything else needs:

Umbrella margin
Employer NI
Apprenticeship levy
Employer pension contribution (ideally by salary sacrifice at 9%)

deducted before you hit gross pay

then you have
employee NI
Income tax
Student loans
Employee pension (if not SS)
before you get to net pay.

[Chris Bryce]

This agency is absolutely promoting tax avoidance and should end up in the tulip list for doing so. If you're willing, please PM with the name/details and I'll take action.