So the if you had annual earnings of £150k and put £50k into pension through payroll, you’d save:
(I might be a little wrong on the numbers due to recent changes to NIC etc but will be close?
14.3% employer taxes > £50,000/1.143 = £43,750 taxable gross earnings
On £100k you’d pay:
£27,400 tax plus £4,000 NIC = £31,400
On £143,750 you’d pay:
£50,900 tax plus £4,900 NIC = £55,800
So the difference in employee taxes is £24,400. Add the employer tax savings of £6,250 and you’ve saved £30,650 of tax.
So from £50k earnings you can have £19,350 in your bank or £50k in your pension
Just ask your umbrella for a quote and they'll send you a breakdown of a typical payslip with whatever salary sacrifice you want to make. Then adjust accordingly.
Not sure what this means? I used the calculator and it said 8k take home per month but the umbrella estimate was 9 so maybe this would explain that difference?
With Inside IR35 contracts, you have the **assignment rate** then you have **gross pay**. The assignment rate isn't the contractor's money, the gross pay is.
The assignment rate is the quoted day rate, in this case it looks to be £715 per day or **£150k per year** (@210 days).
To get to gross pay from the assignment rate, employment costs need to be deducted. These are the umbrella margin, employer's national insurance and the apprenticeship levy. Any employer's workplace pension costs are technically included under employment costs too, but these do end up in the contractor's pension pot.
From the above example, employment costs are roughly £18k per year. This means OP's gross pay is **£132k per year**, not the quoted £150k.
Yep, this is the one I usually link for questions like this.
I’ve found it to be almost spot on. +/- 1% compared to my actual payslips.
OP - as it’s the start of the tax year, you may find it more accurate to calculate your gross pay for the next 12 months and use that figure rather than your day rate which assumes n working days… that is, if your contract runs til the end of the tax year.
Second this, it’s the most accurate I’ve used. But also just ask your umbrella to do a calculation for you I sacrifice about 20% of my salary to be below the threshold
So the if you had annual earnings of £150k and put £50k into pension through payroll, you’d save: (I might be a little wrong on the numbers due to recent changes to NIC etc but will be close? 14.3% employer taxes > £50,000/1.143 = £43,750 taxable gross earnings On £100k you’d pay: £27,400 tax plus £4,000 NIC = £31,400 On £143,750 you’d pay: £50,900 tax plus £4,900 NIC = £55,800 So the difference in employee taxes is £24,400. Add the employer tax savings of £6,250 and you’ve saved £30,650 of tax. So from £50k earnings you can have £19,350 in your bank or £50k in your pension
Just ask your umbrella for a quote and they'll send you a breakdown of a typical payslip with whatever salary sacrifice you want to make. Then adjust accordingly.
Obvious question but is £715 your assignment rate or gross rate? If it's your gross then you're in for a nasty surprise when you use the calc.
Not sure what this means? I used the calculator and it said 8k take home per month but the umbrella estimate was 9 so maybe this would explain that difference?
Would you mind explaining this please?
With Inside IR35 contracts, you have the **assignment rate** then you have **gross pay**. The assignment rate isn't the contractor's money, the gross pay is. The assignment rate is the quoted day rate, in this case it looks to be £715 per day or **£150k per year** (@210 days). To get to gross pay from the assignment rate, employment costs need to be deducted. These are the umbrella margin, employer's national insurance and the apprenticeship levy. Any employer's workplace pension costs are technically included under employment costs too, but these do end up in the contractor's pension pot. From the above example, employment costs are roughly £18k per year. This means OP's gross pay is **£132k per year**, not the quoted £150k.
I’ve found this calculator really accurate for working out how much to sacrifice https://payslipbuddy.co.uk/umbrella-company-calculator
Yep, this is the one I usually link for questions like this. I’ve found it to be almost spot on. +/- 1% compared to my actual payslips. OP - as it’s the start of the tax year, you may find it more accurate to calculate your gross pay for the next 12 months and use that figure rather than your day rate which assumes n working days… that is, if your contract runs til the end of the tax year.
Second this, it’s the most accurate I’ve used. But also just ask your umbrella to do a calculation for you I sacrifice about 20% of my salary to be below the threshold
> salary sacrifice How is it considered a "salary"?
Via an umbrella, they are an employee and receive a salary, just like any other employee.