Advertisement
Help Keep Boards Alive. Support us by going ad free today. See here: https://subscriptions.boards.ie/.
https://www.boards.ie/group/1878-subscribers-forum

Private Group for paid up members of Boards.ie. Join the club.
Hi all, please see this major site announcement: https://www.boards.ie/discussion/2058427594/boards-ie-2026

Umbrella or PLC (or any other means!) to maximise this payslip

  • 06-06-2011 12:34PM
    #1
    aallaann
    Closed Accounts Posts: 5 ✭


    Hello,

    I'm reposting from the taxation forum where the moderator locked the thread because contrary to the charter it asks for advice ... Hopefully you guys will be more helpful.

    I contract through an umbrella company. I was hoping someone could look through the typical pay slip below and tell me if it's worth forming a company and paying an accountant and whatever else is involved.

    I've got to try and find the best way to maximise what I get. I worked an additional 30 hours last month compared with the previous to try and up my take home ... €17 out of each of those additional hours went on tax, leaving me to take home just €5.

    So, if working harder isn't a viable option to increase my salary, I guess I need to find out how to do it smarter.

    My accounting and tax knowledge is very limited so I do appreciate your patience in your replies.
    Invoice Amount: (3623.15)
Less Expenses:
  Umbrella company fee (85.00)
  Employers PRSI (343.43)
Taxable Salary (3194.72)
Income tax (735.83)
Less annual personal tax credits
  Monthly tax credits deducted 302 (301.67)
  Additional unused cumulative tax credits (96.89)
PAYE (337.28)
PRSI Class A1 or A2 (105.75)
USC (166.84)
Total tax payable (609.87)
Net salary before expenses (2584.85)
Plus expenses (0.00)
Net Take Home Pay (2584.85)
Effective Tax Rate (28.66%)


Comments

  • #2
    Jim2007
    Moderators, Business & Finance Moderators Posts: 11,189 Mod ✭✭✭✭Jim2007


    Well we're not in the business of giving advice either, but I will make an observation, increasing your take home is not really an easy thing to achieve!

    For example, you might be able to reduce your taxes by paying more into the pension fund, but in order to do it you'd actually have to pay the money in, so you'd not get your hands on it!

    If you went with the company idea, you have to deal with a more complex tax situation, some of which is designed to prevent you doing what you are trying to do in the first place! There is also the double tax issue, first the company would have to pay taxes on any profits it makes and then you'd have to pay taxes on it again when you take it out, to avoid this you'd need to pay everything out as salary to yourself, so you'd be back to where you started, only the cost would be higher than with the payroll company I expect...

    In the end I doubt you gain much with this exercise, but you will some accountant/solicitor/advisor a little be richer :D

    Jim


  • #3
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,737 ✭✭✭antoinolachtnai


    Worth a trip to the accountant but I don't know if you'll do an awful lot better.

    Maybe you could claim some expenses. Depends on kind of work you do.

    85x12=1020 euros a year is a lot to be paying for the umbrella co. so there might be a better deal out there for you.

    You would be eligible for unemployment benefit with the stamps you are paying, so that might be an advantage.


  • #4
    kiff
    Closed Accounts Posts: 1 ✭kiff


    You really don't have a problem. I do contract work for a Government Department and am bound by that contract to do no outside work for anyone else. After tax, usc levy, pension levy and SI I am only left with 43% of my earnings. Yes, they take 57% of what I earn and at this stage I am working 7 days a week to make ends meet.


  • #5
    Stheno
    Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 51,685 Mod ✭✭✭✭Stheno


    aallaann wrote: »
    Hello,

    I'm reposting from the taxation forum where the moderator locked the thread because contrary to the charter it asks for advice ... Hopefully you guys will be more helpful.

    I contract through an umbrella company. I was hoping someone could look through the typical pay slip below and tell me if it's worth forming a company and paying an accountant and whatever else is involved.

    I've got to try and find the best way to maximise what I get. I worked an additional 30 hours last month compared with the previous to try and up my take home ... €17 out of each of those additional hours went on tax, leaving me to take home just €5.

    So, if working harder isn't a viable option to increase my salary, I guess I need to find out how to do it smarter.

    My accounting and tax knowledge is very limited so I do appreciate your patience in your replies.
    Invoice Amount: (3623.15)
Less Expenses:
  Umbrella company fee (85.00)
  Employers PRSI (343.43)
Taxable Salary (3194.72)
Income tax (735.83)
Less annual personal tax credits
  Monthly tax credits deducted 302 (301.67)
  Additional unused cumulative tax credits (96.89)
PAYE (337.28)
PRSI Class A1 or A2 (105.75)
USC (166.84)
Total tax payable (609.87)
Net salary before expenses (2584.85)
Plus expenses (0.00)
Net Take Home Pay (2584.85)
Effective Tax Rate (28.66%)
    Looks like you are being processed by the umbrella as a normal PAYE worker, so you are paying the normal taxes plus a fee.

    If you go down the line of having a limited company, you'll pay less PRSI (class S), no employers PRSI, and will be able to write off expenses against it.


Advertisement
Advertisement