When the subject of IR35 comes into conversation for contractors, one of the first and most important thoughts is how your take-home pay would be impacted if your contract was inside IR35. IR35 calculators became an easy way to find a snapshot figure of your earnings depending on your situation.
If your contract is inside IR35 and you’re looking to calculate your take home pay you may have stumbled upon a calculator. Many of these will ask you to simply enter your daily or hourly rate along with whether your contract is inside or outside IR35. Others, like the HMRC calculator, work out how much you need to pay to HMRC if your contract falls inside IR35.
However, HMRC’s own calculator has come under fire for being inaccurate and not taking important factors into account. This is why we have created this guide. There’s so many calculators out there and we think it’s important that you know even HMRC’s own tool has proved to be unreliable.
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IR35 take-home pay calculator
The issue with using an online IR35 calculator is that no two contracts are exactly the same, which makes it difficult to get an accurate or consistent figure. Not only that, but calculating your take-home pay if your contract is inside or outside of IR35 can be dependent on a number of variables.
This could include your short, medium and long-term business goals and aspirations, never mind your daily rate, approximate expenses, attitude to pensions or likely capital purchases. It’s highly unlikely that an online calculator would be able to predict your pay based on all of the above factors.
Inside IR35 or outside IR35: take-home pay calculator
Instead of relying on inaccurate, inconsistent or outdated figures, our take-home pay calculator will provide an overview of what you could expect to earn based on a number of different factors, including your day rate.
Our take-home pay calculator is a good way to get a snapshot of your earnings, but for a more detailed understanding of the complexities on how to set up a limited company, start contracting or managing your own company, we recommend that you speak to an accountant.
IR35 calculator 2019/20
With the upcoming reforms to the private sector in 2020, there has been a great deal of uncertainty around the legislation. Many limited company directors are wondering how their take-home pay could be impacted. Following the reforms to the public sector in 2017, in which the responsibility for determining IR35 status shifted from the contractor to the end client, similar rules are expected to apply to private-sector workers. Given these changes, it’s only natural to wonder how your take-home earnings could be affected.
Whilst there are still some questions which have yet to be answered about these reforms, we have put together some information about what the future could mean for you in our blog.
Inside IR35 tax calculator
The cost of being inside IR35 is well known and many contractors believe that they will lose a lot of their freedoms. Whilst this does limit your ability for tax planning and claiming a number of expenses, it’s not the end of the world. If your contract is found to be inside IR35, you will be treated as an employee. This means you will pay the same National Insurance and tax contributions as a regular employee.
Our guide to working inside IR35 can give you a broad idea of what to expect along with the implications of how your take-home pay is affected if you are deemed inside IR35. There’s also information around how the Flat Rate VAT Scheme can benefit you, what expenses you can claim.
If your contract is inside IR35, you should also be aware that your earnings will be subject to deemed payment. This means that all your earnings will be ‘deemed’ as employment income to the contractor and are usually paid at the start of the tax year.
Get advice from our IR35 experts
SJD Accountancy has a wealth of knowledge in reviewing contracts for their IR35 status and can offer a free verbal IR35 contract review. If you would like us to review your contract and day to day practices or at all worried by IR35 please call our IR35 specialists on the number below: