Inside IR35 advice & pointers

ruedeminc

HI All,

I was made redundant a few months ago and am about - eventually! - to be offered a position. Its a six month contract, and will be 'Inside IR35'.

The day rate looks a bit low compared to others I have seen.

Can anyone offer advice, pointers, or links on how this will work in detail, and what I may be seeing as take home pay…and any gotchas…am esp worried about pension (since I'm an old codger…).

Thanks in advance

mike

mebu60

Inside IR35 basically means you are an employee for tax purposes, usually with no employment rights, no holiday pay, no sick pay, no pension, etc unless you negotiated something in your contract. You will normally be paid via the company payroll of whoever your contract is with, i.e. net of income tax and NICS.

Read the contract thoroughly and make sure you are happy with it before signing it.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6682724/inside-ir35-advice-pointers

As the company if you have to use a specific umbrella or are free to choose. Then go to an appropriate umbrella firm based on their answer and plug the numbers into their website and it will tell you your take home pay.

Unless the client/agent has advised you should assume that the day rate is the umbrellas day rate and from that you will have to pay the umbrella fee, the employer and employee costs. Some do a small uplift on the rate for the fee and employer costs but if they do they normaly make a song anddance of it.

The pension is basically 0, if you want a pension the umbrella will set it up for you but both employee and employer contributions comes out of your day rate so there isnt the normal 3% free from your employer

Gonk1967

The umbrella company will sign you up automatically for a pension after 12 weeks. If it's a 6 month contract then I don't personally think its worth it… you can opt out.

You will normally have to pay the apprenticeship levy too.

As for take home pay, this website will give a good indication…

Work out pay from an umbrella company - GOV.UK

Grumpy_chap

HI All,

I was made redundant a few months ago and am about - eventually! - to be offered a position. Its a six month contract, and will be 'Inside IR35'.

The day rate looks a bit low compared to others I have seen.

Can anyone offer advice, pointers, or links on how this will work in detail, and what I may be seeing as take home pay…and any gotchas…am esp worried about pension (since I'm an old codger…).

Thanks in advance

mike

You will become the employee of an Umbrella Company. Usually there will be a limited choice that you can choose from that are agreeable to the end client / recruitment agency.

The UCs will provide an illustration of what you can achieve as take home pay. Essentially, your DAY RATE will be the gross company income, the UC will deduct their fee (often in the region £25 per week) and then what is left will cover the apprenticeship levy, employer's NI, and then your salary subject to the normal tax and NI deductions.

There are few deductions for expenses that can be taken between the UC fee and the tax / salary assessment. The most beneficial one is your pension contributions (employer and employee). When selecting the UC, ask if they allow you to SS down to NMW by making increased pension contributions. Assuming you have available headroom for pension contribution limits, this will be the route to minimise the tax take and maximise your pension.

QrizB

The day rate looks a bit low compared to others I have seen.

As you might gather from the previous posts, if the day rate is what's paid to the umbrella company then your actual salary will be somewhat lower again. If the day rate already looks a bit low, you might be disappointed by how much you actually take home!

Gonk1967

https://forums.moneysavingexpert.com/discussion/comment/82131935#Comment_82131935

Based on a day rate of £300, you'd be taking home about £950 a week.