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IR35 : >42% tax, and call it fair?

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    #31
    Originally posted by DeathAndTax View Post
    When I started contracting as an actuary years ago, I first looked at umbrellas and they all said they refuse to take on actuaries because it is too high risk. That helped make the limited company route a no-brainer. FYI: Indemnity for actuaries costs from £1,500/year


    I've just done a search and that still seems to be the case today
    LINK: Please note our Professional Indemnity policy does not cover workers in the following trades:Actuaries/Independant Financial Advisors


    So if clients do blanket inside determinations, it seems the possibilities would be
    * Umbrella companies start covering actuaries/IFAs (possbilly at a higher monthly fee)
    * New umbrella companies are launched focussing on actuaries/IFAs
    * Umbrella companies insist that actuaries/IFAs still take out a separate PI policy costing £1500+/year
    * Contract inside35 via the Ltd and not get a single penny of tax relief towards £1,500 PI or accountancy costs
    My comment was based on IT contracting which is the main focus of this site, so I don't know anything about your situation, but sounds like the issue is due to the nature of the work regarding financial advice so requires a specialist approach to tailor to your needs to ensure both you and any service provider you operate via (such as an umbrella) would be suitably covered from any blowback.

    Just shows that HMRC trying to cover everyone with 'simple' rules (if you work then you're an employee) in the pursuit of 'fairness' causes much trouble for specialist niches of which we are all part of to varying degrees.
    Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

    Comment


      #32
      Originally posted by JohntheBike View Post
      OK, there will be some exceptions. There is of course the EES cap to consider. But in principle, it is a facility that can be available to an employee and I used it when I was in permanent employment. But HMRC have categorically stated that it won't be available for contractors judged inside from April 2020.
      What have they stated specifically? I have heard nothing about HMRC stopping salary sacrifice type contributions, which for those of us using an umbrella means we can make pension contributions pre-tax (but post minimum wage taxes) up to £40k/year as a basic rule.

      I presume they mean contractors using Ltds while inside IR35, where tax is deducted by the fee payer so pension contributions from the Ltd don't qualify for tax relief as the Ltd receives income post tax?

      Can you clarify if that is/isn't the case or point us to HMRC's official notes on this?
      Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

      Comment


        #33
        Originally posted by Hobosapien View Post
        What have they stated specifically? I have heard nothing about HMRC stopping salary sacrifice type contributions, which for those of us using an umbrella means we can make pension contributions pre-tax (but post minimum wage taxes) up to £40k/year as a basic rule.

        I presume they mean contractors using Ltds while inside IR35, where tax is deducted by the fee payer so pension contributions from the Ltd don't qualify for tax relief as the Ltd receives income post tax?

        Can you clarify if that is/isn't the case or point us to HMRC's official notes on this?
        yes, it's for contractors using an LTD who are assessed as inside IR35

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          #34
          I'm trying to work out what the actual tax differences are between Inside and Outside IR35 through Ltd company and inside IR35 through Umbrella.

          Was using the Nixon Williams calculator, and an inside IR35 contractor on 500 a day working 45 weeks should still have an income of around £6k p/m. However, on ITContracting this is £5.4k and Contractor Calculator it's £5.2k. This is using a Ltd company.


          Bit confused as to what is correct...

          Comment


            #35
            Originally posted by sim2kuk View Post
            I'm trying to work out what the actual tax differences are between Inside and Outside IR35 through Ltd company and inside IR35 through Umbrella.

            Was using the Nixon Williams calculator, and an inside IR35 contractor on 500 a day working 45 weeks should still have an income of around £6k p/m. However, on ITContracting this is £5.4k and Contractor Calculator it's £5.2k. This is using a Ltd company.


            Bit confused as to what is correct...
            There isn't a correct. There are alsorts of factors to be considered and we've long said these must be taken with a large pinch of salt. Even if we got them all the same they wouldn't actually match the reality for anyone due to all the different circumstances everyone has.

            Pick the average/median and just work with that. It will be close enough to allow you to make whatever decisions you are after.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #36
              Originally posted by northernladuk View Post
              There isn't a correct. There are alsorts of factors to be considered and we've long said these must be taken with a large pinch of salt. Even if we got them all the same they wouldn't actually match the reality for anyone due to all the different circumstances everyone has.

              Pick the average/median and just work with that. It will be close enough to allow you to make whatever decisions you are after.
              Cheers - not been on here for long so obviously haven't read back like I perhaps should have.

              Comment


                #37
                Originally posted by sim2kuk View Post
                Cheers - not been on here for long so obviously haven't read back like I perhaps should have.
                Best thing to do is use the Google search method to find stuff on the forums. It's explained in the Welcome/FAQ but in summary just type the

                (keywords) site:forums.contractoruk.com

                Change the keywords a bit if you don't find anything.
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment

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