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  • FIRST POST
    • Pizza1314
    • By Pizza1314 10th Mar 18, 12:15 PM
    • 4Posts
    • 0Thanks
    Pizza1314
    Confused about Pay rate - ltd?
    • #1
    • 10th Mar 18, 12:15 PM
    Confused about Pay rate - ltd? 10th Mar 18 at 12:15 PM
    I just received a job offer for my very first professional job after graduation. The initial offer has the following information.

    Rate : £15 per hour ltd
    hours : 37 hours Monday to Friday
    Notice : 1 week
    Contract duration : 1 year

    Apparently I am a "Contractor"? and will be paid weekly through another company after submitting my time-sheet.

    After some googling, apparently £15 per hour does not translate into 15*37*52=28860 Annual Salary. As technically I'm not considered as an employee of the company? So I will have to pay additional tax (quite confused on what will actually happen)

    Also, should this type of employment be considered as "fix term contract"? and does that mean I will also share the same holiday & benefit entitlement as a permanent employee by law.

    I mean 29k salary does sound too good to be true for a graduate. But can someone shed some lights on what kind of tax will be deducted from the £15 per hour. And am I entitled to any kind of holiday payment at all under this plan?
    Last edited by Pizza1314; 10-03-2018 at 12:17 PM.
Page 1
    • agrinnall
    • By agrinnall 10th Mar 18, 12:29 PM
    • 20,154 Posts
    • 15,877 Thanks
    agrinnall
    • #2
    • 10th Mar 18, 12:29 PM
    • #2
    • 10th Mar 18, 12:29 PM
    I would suggest that you arrange a short meeting with an accountant to get a full explanation of how this situation works, and whether you fall inside or outside IR35. You also need to understand the difference between you and your company.
    • Pizza1314
    • By Pizza1314 10th Mar 18, 12:41 PM
    • 4 Posts
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    Pizza1314
    • #3
    • 10th Mar 18, 12:41 PM
    • #3
    • 10th Mar 18, 12:41 PM
    I believe I will need to pay inside IR35, as I will be working for the "employer" directly, at their office for 37 hours a week.

    Does this by-pass the law for which all full time employees need to receive at least 5.6 weeks of paid holiday?
    Last edited by Pizza1314; 10-03-2018 at 12:53 PM.
    • Russ66
    • By Russ66 10th Mar 18, 5:01 PM
    • 532 Posts
    • 174 Thanks
    Russ66
    • #4
    • 10th Mar 18, 5:01 PM
    • #4
    • 10th Mar 18, 5:01 PM
    Rate : £15 per hour ltd

    The rate stated is for a self employed person working via their own limited company.

    Contract duration : 1 year

    Apparently I am a "Contractor"? and will be paid weekly through another company after submitting my time-sheet.


    This is different where you work via an "Umbrella" company at an extra weekly cost to you.

    No holiday pay etc plus you have to also pay the employers part of your NI.

    It is the way agencies appear to offer you more as it costs them less.

    The government and most of the unions are trying to stop this practice.

    Find another job on PAYE if you don't fancy contracting.
    You're Damned If You Do & You're Damned If You Don't
    • motorguy
    • By motorguy 10th Mar 18, 5:14 PM
    • 16,619 Posts
    • 9,814 Thanks
    motorguy
    • #5
    • 10th Mar 18, 5:14 PM
    • #5
    • 10th Mar 18, 5:14 PM
    I believe I will need to pay inside IR35, as I will be working for the "employer" directly, at their office for 37 hours a week.

    Does this by-pass the law for which all full time employees need to receive at least 5.6 weeks of paid holiday?
    Originally posted by Pizza1314
    As has been said, if you're going through an umbrella company, then you're going to have to pay Employers national insurance as well as Employees NI and PAYE tax.

    They do have to pay you annual leave, but they will basically hold a percentage of your day rate back to cover it.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • PasturesNew
    • By PasturesNew 10th Mar 18, 5:18 PM
    • 62,492 Posts
    • 366,038 Thanks
    PasturesNew
    • #6
    • 10th Mar 18, 5:18 PM
    • #6
    • 10th Mar 18, 5:18 PM
    As a contractor you have two choices:
    1] Set up your own Ltd company, with the costs and hassle that involves. If you come to the end of your contract and don't have another it can be a pain in the butt to try to sign on, while closing down your Ltd company and paying to have all the accounts done etc.
    2] Sign up to an umbrella company who will invoice the client, do all your paperwork, produce you a payslip ... and charge you a fee for doing all that. Benefits to you are that if at the end of the contract you don't have another the umbrella will issue you a P45 and that's the end of it and you can sign on or get an employed role.

    For a situation of "didn't expect that, out of my depth, didn't choose this route" I'd suggest an umbrella company (at a cost to you) is the easiest route to go without "getting in a mess".

    Your "salary" of £15 equates to closer to £8-10/hour really.... as you'll be paying yourself your holiday pay and paying into your pension from it yourself ... etc etc
    • Pizza1314
    • By Pizza1314 10th Mar 18, 6:05 PM
    • 4 Posts
    • 0 Thanks
    Pizza1314
    • #7
    • 10th Mar 18, 6:05 PM
    • #7
    • 10th Mar 18, 6:05 PM
    Welp. Thanks everyone

    I have been specifically avoiding agencys during my job hunt due to their lack of ethics. I found this job on the companys own career site, and during the interview none of salary/benefits package was mentioned. And this still happens to me.
    As for the umbrella company, I believe I won't even have a choice as on the offer letter they stated I will be payrolled through their partner on a weekly basis.
    Any Idea on how to calculate a realistic Salary based on what I've been given?
    1. Assume I work all the days possible (excluding bank holiday)
    2. Assume I take the standard 28 days annual leave
    Last edited by Pizza1314; 10-03-2018 at 10:39 PM.
    • motorguy
    • By motorguy 10th Mar 18, 8:37 PM
    • 16,619 Posts
    • 9,814 Thanks
    motorguy
    • #8
    • 10th Mar 18, 8:37 PM
    • #8
    • 10th Mar 18, 8:37 PM
    Heres an inside IR35 Umbrella company PAYE calculator link

    https://www.contractorumbrella.com/calculator.html

    Out of your net pay, the agency will hold back approx 1/2 days pay per week to cover them for your annual leave requirement (20+8 days per year = 2.33 days per month)

    You'll be on £2,405 gross per month and according to that you'll be getting £1,695 net home with you BEFORE they take out the A/L entitlement. So thats 23 days pay - they'll hold back 1/10th ish of that to cover you for annual leave. So you'll have about £1,450-£1,500 home with you
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • getmore4less
    • By getmore4less 10th Mar 18, 8:59 PM
    • 32,035 Posts
    • 19,223 Thanks
    getmore4less
    • #9
    • 10th Mar 18, 8:59 PM
    • #9
    • 10th Mar 18, 8:59 PM
    Statutory holiday you work 46.4 weeks

    You can divide the £ph by 1.1207 to cover that.

    £13.38ph, £495.22pw for 52weeks.

    monthly will be around £2,146
    Last edited by getmore4less; 10-03-2018 at 9:02 PM.
    • motorguy
    • By motorguy 10th Mar 18, 10:42 PM
    • 16,619 Posts
    • 9,814 Thanks
    motorguy
    Statutory holiday you work 46.4 weeks

    You can divide the £ph by 1.1207 to cover that.

    £13.38ph, £495.22pw for 52weeks.

    monthly will be around £2,146
    Originally posted by getmore4less
    Which comes out at around £1,500 ish net according to that contractor calculator.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • Pizza1314
    • By Pizza1314 10th Mar 18, 10:45 PM
    • 4 Posts
    • 0 Thanks
    Pizza1314
    Thank you so much guys!!

    tl;dr, take home pay for £15 per hour, 37 hours per week "contracting" work turns out to be around £1500 realistic take-home pay a month - or around £21.5k "salary".

    Guess it's better knowing the figure now rather than signing the contract assuming it will be 29k.
    • motorguy
    • By motorguy 10th Mar 18, 10:46 PM
    • 16,619 Posts
    • 9,814 Thanks
    motorguy
    Welp. Thanks everyone

    I have been specifically avoiding agencys during my job hunt due to their lack of ethics. I found this job on the companys own career site, and during the interview none of salary/benefits package was mentioned. And this still happens to me.
    As for the umbrella company, I believe I won't even have a choice as on the offer letter they stated I will be payrolled through their partner on a weekly basis.
    Any Idea on how to calculate a realistic Salary based on what I've been given?
    1. Assume I work all the days possible (excluding bank holiday)
    2. Assume I take the standard 28 days annual leave
    Originally posted by Pizza1314
    Theres agreement you'd have around £1,500 net through an umbrella company and pay Employers NI, A/L etc out of it. Working that back from here

    https://www.thesalarycalculator.co.uk/salary.php

    Your hourly rate compare - as you say - to a salary of around £21,500-22,000, if you were working somewhere in a PAYE role and getting 20+8 days annual leave per year
    Last edited by motorguy; 11-03-2018 at 12:03 PM.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
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