What rate of tax does a contractor pay vs a paye employee.

Hollister11

I would be interesting in contracting after gaining experience after college.

Currently paye employees end up paying 51%, what do contractors usually pay.

The_Pretender

Pretty much the same. The big difference is you may be able to expense certain purchases if they're necessary for work.

Rulmeq

You would lose the PAYE credit of €1,650, although it's being restored (as the Earned Income Tax Credit), next year it will be €950 (up from €550 in 2016), and Michael Noonan had committed to matching the PAYE credit.

You will be able to claim expenses that are work related (phone, rent, gas, electric, broadband, etc. assuming you are working from home - if you're not, my advice is don't try and claim what you're not entitled to, the revenue love finding those who do, and the fines and interest are much worse than what you might get out of it).

If your income is over the VAT threshold, you will be able to register for VAT, and claim it back on any purchases you make (you will have to charge VAT as well). So if you're buying computer equipment etc to do your job, then you can do something like rent the equipment on HP, and get the VAT back on the total amount, this can be great to help with cashflow early on, although if you're depending on it, you could be in trouble, you're basically borrowing from your future self

Edit: Oh, and based on the reply below you will need to budget for an accountant (you can probably get one for €300-400 ex VAT), you will need a good bank account too, and you will have to file your taxes (or get the accountant to do it for you). If you are not good at budgeting, then you're not a good candidate for it (it takes discipline when you get all the money into your hands, including VAT, and not end up spending it!) If you go the route of a limited company, then the expenses go up pretty quickly, the accountant will want closer to €2k per year, and you need to file your accounts with the CRO (and pay them €20 for the pleasure, although you can file online for free).

Joe Hill

The_Pretender wrote: »

Pretty much the same. The big difference is you may be able to expense certain purchases if they're necessary for work.

Plus the added administrative costs of contractors