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Contractor vs PAYE Day Rate Calculator


    Are you being made to go PAYE? Have you been told you are inside IR35? Find below a link to our Day Rate Calculator.

    Several contractors have now received a Status Determination Statement (SDS) that tells them they are inside IR35 and stating that they have to go PAYE.

    Contractors should now have their contract review completed by QDos or Markel and have completed their online Cest Tool review. Therefore, if the result of these reviews contradicts the SDS, they will be in a position to appeal.

    Both of the documents mentioned above will be needed for appeal.

    IR35 – the three main tests

    Below we have outlined the three main tests for IR35. These will be the main points that contractors will be able to reference when appealing their SDS.

    In order to be inside IR35:

    1. The individual is obliged to provide the services personally.

    If an individual is expected to perform services personally, and cannot use a substitute to complete the work, they are considered an employee and would not be outside IR35. A contractor should be able to provide their services using a representative of their choosing. They should be able to provide an alternative representative if needed to complete the work if they are ill/on holiday etc.
    If a contract states that no alternative representatives may provide the service and the work much be carried out personally it will fail this test and likely fall inside IR35.

    2. The individual is subject to control by the engager as to how they provide the services.

    Independent contractors should determine their working methods. Additionally, their clients should not have the right to exercise any significant control over the work carried out. If the contractor is being overly supervised in their work, it will suggest that the client does have a level of control that could be interpreted as employment, and would therefore be inside IR35.

    3. There must be an obligation on the engager to provide work and on the individual to undertake the work.

    After the contract has ended, there should be no expectation that the contractor will perform any further work.  Nor that the client will offer other work. In order to be deemed outside IR35, a contractor should be able to refuse work offered by their client. This includes additional work offered during the period of the contract that is not mentioned in the contract.

    Day Rate Calculator

    Click here to access our calculator designed for contractors to input the day rate that the agency charges them back to the end client. It will then produce the day rate that they should receive from the agency. This calculator has a number of options and fully disburses a contractors current limited company day rate between Employers NI, Employers Pension and the Apprenticeship Levy leaving the gross day rate which would appear on a PAYE payslip. Please note that the employers pension contribution is part of the disbursed initial gross day rate. If you elect to opt out of workplace pension your day rate for PAYE purposes will increase.

    Finally, as always, we are very happy to answer any questions about the contents of this blog post. Please feel free to contact us.