IR35 Calculator
AM Limited ("AML") has an IR35 Calculator that allows employees contracting via AM Limited to calculate quickly and easily how much of their contract value they will take home after tax, N.I and fees have been deducted. AML ensure that employees contracting through them will take home over 80% of your gross contract value and the IR35 Calculator will indicate exactly how much of the gross contract value this equates to.
How Does It Work In Practice
All AML employees are employed under a contract of employment and are paid a salary that is subject to UK PAYE and national insurance contributions. As a result of their employment, AML employees are entitled to receive discretionary awards from AML's Employee Benefit Trust.The Trust has been set up by AML for the sole benefit of AML's employees. It has independent Trustees that are able to make discretionary awards to AML's employees (the beneficiaries) in the form of an interest-free loan as a result of their employment.
Any awards being made out of the Trust in the form of a loan to employees are taxable under the Beneficial Loan Rules as if the benefit were provided by the employer (Benefit in Kind). An individual will pay tax on the HMRC assessed benefit which is the official rate of interest, currently 6.25%. This amount will then be taxed at 22% or 40% depending on whether the individual is a basic or higher rate taxpayer, giving an effective rate of between 1.3% to 2.5%.
This structure results in AML employees enjoying an income of over 80% and in some cases 85% of their contract value after payment of all tax and costs.
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