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IT Contractor Calculator

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The IT industry is a great place to be for contractors and the need for skilled freelancers is soaring. The demand for skilled, experienced IT consultants is high so it can be expected that contracts are pouring in. Whether you are just starting out or have been working as a freelancer for some time, there is no better time than now to become your own boss and earn a great living.

You can gain many advantages from being self-employed including tax efficiency, flexibility and higher take home pay. You can challenge yourself on a professional level and expand your skills but as work starts building up and the business grows, it is vital that you ensure all the finances remain above board.

It is easy to become confused with so many different numbers being quoted to you in terms of Dividend Tax and Take Home Pay. But it is important that you stay on top of your paperwork and affairs and here Nixon Williams can help.

As an expert accountancy service, we can manage all your books properly so as the contracts keep rolling in and time becomes precious, we can take care of your accounts for you.

We at Nixon Williams have developed our own calculators to help Contractors/Freelancers to get a better understanding. The calculators available for use are:

Dividend Tax Calculator
As our clients work through limited companies and obtain their salary via dividends, we have developed a Dividend Tax calculator showcase its tax efficiency. This easy to use calculator simply requests your salary, bank interest and any dividends you have already received. Once you have input your details the total gross income is displayed below.

IR35 Checker
Since the introduction of the IR35, the importance of finding whether you are caught or exempt by the regulations has never been so important. Before getting your contract professionally analysed, we have developed a Questionnaire that asks 10 simple questions which will give you ease of mind when understanding your status.

We can recommend an independent specialist in determining whether your contact is affected by the IR35 legislation.

All of our calculators can be found on our Nixon Williams: Tax Calculator app, which is available for both iPhone/Android phones. Click here to go to our app page and download today!


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Monthly take home pay (% of annual income)


Not on the flat rate scheme
Second shareholder?
Warning: your expenses currently exceed your annual income. Please reduce your costs. Your annual pension contribution exceeds the annual allowance of £40,000 – you may therefore incur an additional tax charge on the excess contribution. Please refer to our pensions factsheet for more details about the tax implications of pension contributions.
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  Outside IR35 Year 1 Outside IR35 Year 2 Inside IR35 Year 1 Umbrella
Annual Income @ £1000 per day
Add Flat Rate VAT Saving
Turnover
Mileage @ 20 miles per day
Home office @ £4 per week
Pension contributions @ £1073.33 per month
Other expenses @ £11 per day
Accountancy fees
Salary
Employer's NIC
Pre-Tax Profit
Corporation Tax
Post Tax Profit
Dividends declared (net)
Profit Retained in the company
Personal Income Details
Gross Salary
Less - PAYE on Salary
Less - NIC on salary
Net Dividends
Less - Tax on Dividends
Pension Contributions
Expenses
Total Income After All Taxes
Monthly Take home pay
Take home pay as % of annual income

Assumptions

  1. Uses tax rates and allowances for 2014/15
  2. Assumes all contracts are OUTSIDE IR35
  3. Assumes no others sources of income for the contractor and spouse's other income taxed fully at source
  4. Based on income/expenses as detailed
  5. The Higher Rate taxes will be LOWER if you work fewer weeks, increase expenses, pay more into your pension or your rate falls.
  6. The Higher Rate taxes will be HIGHER if you work more weeks, reduce expenses, pay less into your pension or your rate increases.




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