How on earth do you calculate take home pay when inside IR35?

[jm789]

I have tried 3 online IR35 calculators and each one tells me a different take home pay - a £2k difference from lowest to highest take home pay calculation!

I have tried to come up with it myself but i am likely wrong - can you help me?


Rate = £550pd
Employers NI = £75.90 (13.80%)
Apprenticeship Levy = £2.75 (0.5%)
Giant Fee Payer Solution Margin = £5.50 (1%) - They are a fee payer solution which will deduct the Employers NI and Apprenticeship Levy and their own 1% fee before I receive my money into my Ltd company.

Rate post-above fees = £465.85pd
Per week = £2,329.25
Per Year = £107,145.50 (counted as working 46 weeks in the year)

With the above calculated, would i just simply dump this yearly figure into listentotaxman and whatever stated in their will be my final yearly pay? or have i missed calculated the stuff above? missed something else? completely incorrect?

[WTFH]

Take your per year value, then pump it in here:
Income tax calculator: Find out your take-home pay - MSE

Remember, it’s not going into your Ltd, it’s going to you on PAYE terms.

If you’re inside IR35, using Your own Ltd has no benefit and is just additional cost.

[jm789]

Thank you WTFH for this - the link provided matches up with listentotaxman, I dropped in the £107145 and captured the yearly take home pay.

I must be miss-informed by my agency as they have indicated that the pay after the initial deductions will go into my Ltd company.

If I go through an Umbrella company, am I correct in stating they will deduct the Apprenticeship Levy, Employers NI and their own fee before making a payment to me and then I would require to do self-assessments to ensure the correct tax is being paid or will they deduct all taxes/fees including income tax and providing me the final pay (the yearly figure shown within your link)?

[BlasterBates]

Contractor Calculators | Contractor UK

[WTFH]

jm789,
I notice that you have referred to a website in your posts. I've done some research on it and I would advise that it should be avoided.
It claims to be a Limited Company, but is not registered in the UK.
It does not have an About Us page, with any details
It links to another business which is currently overdue in submissions to CoHo.
The other business is one of several different businesses that are allegedly accountants, run by the same people from the same address.
It smells extremely fishy to me.

So, for all those reasons, I'd suggest you avoid using them.

[JohntheBike]

the IR35 calculators is too simplistic. It doesn't take into account income splitting or when EES isn't payable. It doesn't take into account the tax code either.

[jamesbrown]

I must be miss-informed by my agency as they have indicated that the pay after the initial deductions will go into my Ltd company.

You may not be misinformed. If the contract is between the agency and YourCo and the contract is inside IR35, then the payment will be made to YourCo (there is no contractual basis to make a payment to you personally) and you will be free to further pay that money from YourCo to you personally without any further deduction of tax.

[jamesbrown]

Oh, and they should pay VAT on top of the post-tax amount too, assuming you are registered for VAT.

[WTFH]

the IR35 calculator is too simplistic. It doesn't take into account income splitting or when EES isn't payable. It doesn't take into account the tax code either.

Income splitting only applies outside IR35.

[eek]

the IR35 calculator is too simplistic. It doesn't take into account income splitting or when EES isn't payable. It doesn't take into account the tax code either.

If you are inside IR35 there are:-

No expenses
No income splitting

there is a lump of money which can only go in 2 directions - to you as salary after tax has been deducted, or into your pension pot (hopefully as salary sacrifice) with no money deducted.

If you want to do the former agency payroll or an umbrella is less hassle, if you want the latter using an umbrella will avoid money disappearing to HMRC as employer NI.