Rate from PAYE to Ltd Company

puicks

Dear members,

I am currently working via an agency and recieve £16 per hour. They have asked me to go Limited company but have offered me a rate of only £17.06. This means that I am only getting £1.06 more for going Limited company.

Do you think this rate is reasonable? If not, do you know where I can get Legal advice to help me sort out my pay as the agency will not offer me any more. Or basically, what other options are there for me.

Thanks

bigbmxdave

Im guessing they want you to go limited company because they dont want to deal with the tax side of things on their end.

I'm sure they will be fine with you going via an umberalla company like I do. I currently pay £26 a week for an umberalla company to deal with the pay from my contract. if you're working 37.5 hours a week you're getting £39.75 extra.
take away the fee from your umbrella company and you're getting a pay rise of £13.75 a week

davester

you only talk about tax what about employer/employee National insurance contributions, last thing you want is to retire to find you paid nothing for so long you wont even get full state pension. Also if you go self employed might find it harder to claim benefits if your circumstances change.

bigbmxdave

NI is taken care of with the tax via the umbrella company

puicks

Thank you to all of you who responded. I am still not clearer though as to what you think of the pay rate that I am being offered.

Maybe I should ask again:

If someone is on lets say £14 per hour on PAYE, about how much per hour do you think they would get if they work via a limited company rate? I am looking for an hourly rate. Please do not include any fees or whatsoever that I will be paying out. Just a simple hourly rate.

Thanks

StormyWeather_2

They've offered you the increase hourly rate because they won't be paying employer's NI.

Look at what they pay now in NI and compare that to how much of the saving they'll be passing onto you.

Would you be taxed under the IR35 rules?

antrobus

puicks wrote: »

Dear members,

I am currently working via an agency and recieve £16 per hour. They have asked me to go Limited company but have offered me a rate of only £17.06. This means that I am only getting £1.06 more for going Limited company.

Do you think this rate is reasonable? If not, do you know where I can get Legal advice to help me sort out my pay as the agency will not offer me any more. Or basically, what other options are there for me.

Thanks

As I understand it, Employers NIC is currently at 13.8% on weekly earnings above £136. So .....

if you were working 40 hours per week and getting a £17.06 ph corporate rate you'd receive £682.40.
if your company paid you a salary of £616.14, you'd pay £66.26 in Employers NIC - because £616.14 + £66.26 = £682.40

if you were working 40 hours per week as an ordinary agency grunt and got £16 per hour you'd earn £640, and the agency would pay the Employers NIC

Since £616 is less than £640, you'd be better off staying as you are.

P.S. I think the above calculation is correct - but it's that sort of number crunching you have to do