Help with tax? - Seems I got charged more than a small county

**cojak** · 30 July 2011, 11:32

Who is your umbrella company and what is your contracted hourly/daily rate? Without knowing your gross income it would be difficult to say.

And are you new to contracting (or even employment)?

(I'm asking these questions because it will be easier for the specialists here to answer you with these basic facts in front of them.)

I would call your umbrella and ask the same question that you've asked us.

**mrmonkey** · 30 July 2011, 12:04

Hiya thanks for the reply - 90 per day, 5 days per week. Yep this is my first time contracting - not my first job. 1 year contract.

**mrmonkey** · 30 July 2011, 12:07

oh and the company name is giant?

**Wanderer** · 30 July 2011, 17:03

Originally posted by mrmonkey View Post

90 per day, 5 days per week. Yep this is my first time contracting - not my first job. 1 year contract.

The reason your take home is so low is that you have to pay employer's NI (which a permie employer would normally pay for you) so you can knock another 12% off your £90/day to get your actual rate which is closer to £80/day. Then factor in that you're not getting paid for holidays, sick, pension etc and it looks like your employer is taking the pee a bit.

Contracting hourly rate should be a permie salary / 1000, so if you could expect a permie salary of (say) £20k then your contracting rate should be £20/hour or £140/day for a 7 hour day. Don't get taken for a ride by unscrupulous employers - I would suggest looking around for a permie job till you get a bit of experience behind you or find a contract which pays a rate that reflects the risks you are taking (no job security/redundancy/employment rights).

Sorry if that sounds a bit harsh.

**cojak** · 30 July 2011, 17:46

No, was firm but fair.

Sadly I have to agree with Wanderer, £90pd is not a realistic rate if you're living in the South. You'ed be better off as a permie.

**kingcook** · 30 July 2011, 18:36

Originally posted by mrmonkey View Post

Am i getting ripped off

Yes -- you are getting ripped off

For the client/agent to be paying you £90/day, they are taking the piss. Mind you, each to their own. Personally if i got offered that rate i would laugh in their face and choose to go on the dole.

It sounds like you need to get a bit more experience in a permie role. Come back to contracting in a few years time when you have built up the experience.

**LisaContractorUmbrella** · 1 August 2011, 14:29

Originally posted by mrmonkey View Post

Hi everyone, I wonder if you could help me work this out before i go jump off a bridge.

I got my first payslip from my umbrella company today. After the net profit bonus, basic salary, holiday pay were totaled i had £1,885.

But out of this sum i was charged:

143 student loan
561 employee tax!!!!!!!!!!!!!!!
128 social security

My tax code is 747L W1. Is this correct? My girlfriend earns far more than i do and pays a fraction of the amount of employee (income) tax. Am i getting ripped off, is there some kind of magical calculation that i don't know about? I started on the 16th of June and was paid up to the 22nd of July.. Does the fact that this spanned 2 months have some kind of effect in paying twice as much tax as her? On my pay slip it says i am paid weekly.. would that have some kind of effect?

Any help would be much appreciated as i can barely pay my rent this month.

Hi Mr Monkey,

I have put your gross pay through our calculator and I cannot see how tax and NIC's contributions can be anywhere near £689.00 for the month; I have made no assumptions for expenses and total tax and NI comes in at £444.00. The only thing I can think is that maybe you had underpaid tax through a previous employer and when your P45 figures were entered into your umbrella company's systems an adjustment was made - do you have your P45 figures to hand??

**ASB** · 1 August 2011, 16:22

It looks to me as though this has been calculated on a basic of a single week this would happen since you state you are payrolled weekly and also that you have a W1 based tax code at the moment.

When you are not on a week one tax code it will sort itself out.

This could be because you have not given the agency a P45 and they have had to request a coding notice with a P46.

It will resolve itself when the proper tax code is received or a tax return submitted.

**contractor55** · 2 August 2011, 07:03

Contracting hourly rate should be a permie salary / 1000, so if you could expect a permie salary of (say) £20k then your contracting rate should be £20/hour or £140/day for a 7 hour day

Where does the perm /1000 figure come from? If you are on say £60K as a perm are you saying you should aim for £60/Hr as a contractor - 8 hr day £480 day , £2400 week to be the same ?

Help with tax? - Seems I got charged more than a small county