Realistic take home income and IR35 Realistic take home income and IR35
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  1. #1

    Nervous Newbie

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    Lightbulb Realistic take home income and IR35

    Hey,

    I'm a Software Developer and I plan to move to London (from Sunderland) at the end of this year and work on a £400-£500 / day rate as a contractor.

    I read a lot about the IR35 and at some point I felt exactly like this title : IR35: the end of a dream - A contractor's view .Even if I read a lot, I find the IR35 rules very ambiguous.
    The description of all contract jobs seems exactly as a permie one : work on a client schedule (9-5:30 -- M-F), at the client Office, following their rules. So from my point of view all the contracts are inside IR35. Or it depends more of what is written in the contract than what will you do ?

    Another thing is what % should I expect to take home from £500/day rate ?
    Using Umbrella Company inside IR35 - take home : ~55%
    Using Umbrella Company outside IR35 - take home : ~65%
    On other calculators, even on this site, outside of IR35, it says that you can take home 80% ++

  2. #2

    TykeLike

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    A lot of the calculations were/are made on the premise that expenses can be used to reduce the tax liability and therefore "bump up" the take home pay percentage, as of April these will no longer be valid so take home pay will be lower
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  3. #3

    Nice But Dim

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    Quote Originally Posted by rolandd View Post
    Hey,

    I'm a Software Developer and I plan to move to London (from Sunderland) at the end of this year and work on a £400-£500 / day rate as a contractor.

    I read a lot about the IR35 and at some point I felt exactly like this title : IR35: the end of a dream - A contractor's view .Even if I read a lot, I find the IR35 rules very ambiguous.
    The description of all contract jobs seems exactly as a permie one : work on a client schedule (9-5:30 -- M-F), at the client Office, following their rules. So from my point of view all the contracts are inside IR35. Or it depends more of what is written in the contract than what will you do ?

    Another thing is what % should I expect to take home from £500/day rate ?
    Using Umbrella Company inside IR35 - take home : ~55%
    Using Umbrella Company outside IR35 - take home : ~65%
    On other calculators, even on this site, outside of IR35, it says that you can take home 80% ++
    Outside IR35 using your own Ltd Co. you can reasonably get somewhere between 65% and 75% depending on your circumstances. Anything over that and its going to start getting dodgy or be very specific to you, such as putting all your company earnings into a pension scheme etc.

    Office hours are't automatically an indication of status, you need to be there when the permies are in order to get work done. You can always negotiate some flexibility. Get your contracts professionally reviewed for IR35 status and look at your working arrangements as well. It is a grey area and there is lots of room for interpretation.
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  4. #4

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    You can't work outside IR35 through an umbrella company as you become an employee of the umbrella company are are paid through PAYE; if you are outside IR35 and work through your own Ltd Co you will have the entitlement to draw dividends from that company.

    Sites that are promising 80%+ take home on £500 per day are likely to be purveyors of tax avoidance schemes and will probably have been mentioned here: HMRC Scheme Enquiries
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  5. #5

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