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Page 3 of How much tax would you pay if you earned £100k?

General Forum

RE: How much tax would you pay if you earned £100k?

Robee J Shepherd (undefined) posted this on Wednesday, 27th November 2019, 22:15

Quote:
sj says...
"Rob, I didn't take it that way but was this thread making a political point?"

Hmm was it political, that depends on your definition I guess.

I think the main reason I posted it was, a lot of people get annoyed at the increases in the top rate of tax when it doesn't or never will affect them, or if it does, not much. It feels like rich people use that and stir it up because it's convenient for them.

Maybe that's political? Might be.


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RE: How much tax would you pay if you earned £100k?

r8sso (Elite) posted this on Thursday, 28th November 2019, 08:22

I've been contracting for 10 years in IT and I'm now facing the prospect of going PAYE with the large bank I'm contracted to, due to this IR35 ruling that HMRC just can't seem to implement correctly. It's a tough pill to swallow after 10 years I tell you, especially as I'll be paying the employer and employee contributions.

So if you were to gross 100k and put it in "listen to the tax man" website then with student loan payments you'd take home ~£55,600 (44.5% off takes). If you add on the fact I'd have to pay NI employers contribution on top of my own contributions then that would be another 13% - so close to 58% off takes!

You work in IT Rob and most likely work through a Limited company. I don't think the Isle of Wight is quite like the Isle of Man for taxes but I'd bet the reason you were grouping yourself with the people who will never earn 100k is more to do with the way you pay yourself then what HMRC say you personally earn on paper...

This item was edited on Thursday, 28th November 2019, 08:23

RE: How much tax would you pay if you earned £100k?

Robee J Shepherd (undefined) posted this on Thursday, 28th November 2019, 21:00

Quote:
r8sso says...
"but I'd bet the reason you were grouping yourself with the people who will never earn 100k is more to do with the way you pay yourself then what HMRC say you personally earn on paper"

You bet wrong, whilst I do work through a limited company, I don't bill near 100k. I am a top rate tax payer though.

For people who are wondering what IR35 is, basically what a lot of contractors used to do before it was...

1. Set up their own company and contract themselves out from it, doing effectively a single job that should really be PAYE
2. Draw a low salary and pay dividends to avoid the full rate of income tax
3. Sometimes even employing their spouse, so both of them can draw a salary and pay less tax

IR35 is legislation designed to stop that, if you are doing a job that appears to be the same as being employed, you are treated as employed and have to pay tax appropriately.

Next year it is changing in who is held responsible, much to a lot of people's annoyance and fear.


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RE: How much tax would you pay if you earned £100k?

Si Wooldridge (Reviewer) posted this on Friday, 29th November 2019, 09:19

Quote:
Robee J Shepherd says...
"Next year it is changing in who is held responsible, much to a lot of people's annoyance and fear."

Rob, not aware of this, so can you explain how it is changing?

---------

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RE: How much tax would you pay if you earned £100k?

Robee J Shepherd (undefined) posted this on Friday, 29th November 2019, 10:37

Quote:
Si Wooldridge says...
"can you explain how it is changing?"

Yep, the government is pushing liability up the supply chain. So just like how employers became culpable for illegal workers, they will become culpable for contractors using IR35 when they should not be.


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RE: How much tax would you pay if you earned £100k?

r8sso (Elite) posted this on Friday, 29th November 2019, 12:12

Quote:
Robee J Shepherd says...
"doing effectively a single job that should really be PAYE"

In my area, and lots of others, that's not the case.  I work in Change & Transformation, in particular payments for banks.  I work on fixed term regulatory projects that the FCA/CMA etc... want implemented by certain dates.  I go into bank and deliver for that project then at the end of it I'm done.  The bank don't have the resources to staff a one off project like this so need to bring in consultancy firms (huge costs) or self employed skilled workers.  In my 10 years I've worked on 7 different fixed term projects.

On the flip side to this, you have some plumber who is self employed to Pimlico, has worked there for 20 years, can't work for any other company other than Pimlico and has a Pimlico branded van.  They are basically a Pimlico Plumber but Pimlico don't want to pay the pension/employers NI/sick days/holidays so they use this arrangement to reduce their liabilities.

Unfortunately HMRC, like the inept organisation they are, have rushed through some blanket rules to catch everyone by scaring large private companies into potential huge tax bills if they continue to hire contractors.  They implemented this a few years ago in the public sector and they are already seeing huge negative impacts on the NHS as they can't get the skilled workers they need as they don't have the flexibility.

So yes, much to my annoyance.

Labour have actually said they'll scrap IR35 but it's not in the draft manifesto yet so worthless words at the moment.

RE: How much tax would you pay if you earned £100k?

sj (Elite) posted this on Friday, 29th November 2019, 12:53

I think IR35 is needed but as ever, isn't being implemented correctly.
One of the things behind it is for years you've had contractors earning lots of money - usually significantly more than the their manager.  In recent years they've been looking to say things like 'I've worked here for years, I should get sick pay/various benefits.'   Can't have it both ways.  Like you say Rosso, somebody coming in of a well defined project deliverable should be treated differently to someone who is effectively a permanent employee in all but their actual employer.  Strictly speaking, in our place, contractors should not be managed 'day to day' but have a well defined deliverable they just get on with.

Ste



We will pay the price but we will not count the cost..

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