Payment deductions

[craftandsew75]

I have a direct concerning question. Out of a payment of minimum $200 gross, you should expect almost half of that will deducted for service fees, VAT and bank transfer???

[petra_r]

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Ruby B wrote:
I have a direct concerning question. Out of a payment of minimum $200 gross, you should expect almost half of that will deducted for service fees, VAT and bank transfer???

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Um... no? Where do you get "almost half" from?

[craftandsew75]

I calculated that wrong, trying to toggle between US dollars and British Sterling. Nevertheless, makes a massive difference because the US dollar is worth less.

[feed_my_eyes]

It's 20% for Upwork's service charge (so $40, in this case) plus VAT on the service charge ($8). Then, depending on your withdrawal method, there will be further charges from your bank (mine was charging me $30), or $2 to withdraw to PayPal. The exchange rate from dollars to pounds is also awful at the moment.

[craftandsew75]

You can't change the VAT or service fees, so it's the money transfer set up, that's the problem. I've worked on other international work websites and have direct bank transfers. It doesn't cost me £16(in my case) to receive payment. I don't know a lot about the various money tranfsers and deposits in general but it becomes financially unsustainable...

[petra_r]

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Ruby B wrote:
 It doesn't cost me £16 (in my case) to receive payment.

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How is it costing you £16? When I used to withdraw to Royal Bank of Scotland there were no fees on the bank's side? (Direct to local bank)

That said, the exchange rate is poor which is why I use Payoneer and PayPal.

[craftandsew75]

Well when I take off what was said, the VAT and service fee, what's paid into my account is £16 less from the total compensation. So where's that gone or are the fees on this side?
I will check again, but when I looked at a PayPal payment through Upwork, instead of the bank, it worked out more.
Incidentally, when you say service fees, is that one charge for an fixed price job, or can it fluctuate over week to week, while the job is active? I did ask someone for a breakdown of service fees almost a week ago, but got no reply.

[craftandsew75]

Just checked and it works out cheaper to have direct bank transfer than PayPal. Roughly 70p per transfer, which is fine.

[feed_my_eyes · Accepted solution]

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Ruby B wrote:
Just checked and it works out cheaper to have direct bank transfer than PayPal. Roughly 70p per transfer, which is fine.

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It depends on what sort of exchange rate your bank offers. For me, PayPal is better. Even a penny's difference means £10 on every 1,000 you earn. Plus I can hold money in U.S. dollars there for longer than I'm allowed to hold my payments on Upwork, so I can wait and see whether the exchange rate improves before withdrawing to my bank. (I'm gambling that when Biden takes over on 20 January, the dollar will go back up.)

[AleksandarD]

Hi Ruby,

Let me try to shed some light on this.

On your contract, in a time span of three weeks, you earned a total of $218. Out of that amount, $43.6 are the freelancer service fees ($4.00, $17.10, and $22.50). You are also charged VAT for each week and the total amount for VAT was $8.72 ($0.80, $3.42, and $4.50). Lastly, the cost per withdrawal direct to your local bank is $0.99.

218 - (43.6+8.72+0.99) = 164.69 which is exactly the amount you withdrew.

You may want to check this help article to learn more about Direct to Local Bank fees and timings.

Edited to add: It's actually two weeks, not three as you received a bonus, but the calculation remains the same.

Thank you.

[craftandsew75]

Thanks, this was what I requested some days ago, ideally before the payment. Makes more sense now and I can now bear this in mind going forward.

[craftandsew75]

So in laymen's terms, expect a 60-40% work transaction to you, unless your job is worth $500+.

[feed_my_eyes]

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Ruby B wrote:

So in laymen's terms, expect a 60-40% work transaction to you, unless your job is worth $500+.

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How are you still getting this calculation? Upwork's fee is 20% on the first $500 plus 20% of that fee (not another 20% of your total payment). In any case, you should take all of this into account when you decide how much to charge (if the dollar keeps declining against the pound, I'll definitely have to raise my hourly rate). $27/hour is pretty low for somebody who lives in the UK.

[craftandsew75]

I am including the VAT which is still a form of transaction, which is 20%? When setting your pay rate, you have to take all of this into consideration. This was my first job on this particular site. Now I know how the land lies, I will have to take this all into account and make amendments accordingly. 

As for my rate, anyone who was doing what I do in the UK and was paid exchange rate £21phr, they would be paid VERY handsomely in that profession.

Not all jobs are equally paid, based on skill alone.

I offer 2 services on here. If I could rate them separately on here, I would do that.

[feed_my_eyes]

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Ruby B wrote:

I am including the VAT which is still a form of transaction, which is 20%?

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I'll try this one more time. The 20% VAT is not on the project total, it's only on the service charge. So, if you're paid $200, the service charge is $40, and the VAT on the service charge is $8. That doesn't work out to 40-60%. I don't know how to be any clearer than that.

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Ruby B wrote:

As for my rate, anyone who was doing what I do in the UK and was paid exchange rate £21phr, they would be paid VERY handsomely in that profession.

Not all jobs are equally paid, based on skill alone.

I offer 2 services on here. If I could rate them separately on here, I would do that.

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That's fine and it's none of my business of course, but you seemed to be posting here because you weren't happy with the amount that you were getting paid? £21/per hour might be a good rate for a full-time job, but freelancing is a whole other ballgame. So the only remedy for that is to raise your rates. Also, you can definitely set up a specialised profile for your other service and charge a different rate for that.

[craftandsew75]

Hi Ruby,

Let me try to shed some light on this.

On your contract, in a time span of three weeks, you earned a total of $218. Out of that amount, $43.6 are the freelancer service fees ($4.00, $17.10, and $22.50). You are also charged VAT for each week and the total amount for VAT was $8.72 ($0.80, $3.42, and $4.50). Lastly, the cost per withdrawal direct to your local bank is $0.99.

218 - (43.6+8.72+0.99) = 164.69 which is exactly the amount you withdrew.

I was sent the calculations above by a moderator. $164.69 is roughly £133.65. 

In my bank account for this particular job, I have exactly £118.82 to spend.

I am rubbish at maths, so if someone can explain this total, much appreicated.

[petra_r]

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Ruby B wrote:

$164.69 is roughly £133.65. 

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No, it isn't. Nowhere near! Even at the mid marke rate it would be only 121.87

[craftandsew75]

i'm just going from a currency conversion on my phone, but that's fine. Bing says £121.54

[petra_r]

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Ruby B wrote:

i'm just going from a currency conversion on my phone, but that's fine. Bing says £121.54

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And that's the mid-market rate which you don't get as a retail customer

[feed_my_eyes]

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Ruby B wrote:

Hi Ruby,

Let me try to shed some light on this.

On your contract, in a time span of three weeks, you earned a total of $218. Out of that amount, $43.6 are the freelancer service fees ($4.00, $17.10, and $22.50). You are also charged VAT for each week and the total amount for VAT was $8.72 ($0.80, $3.42, and $4.50). Lastly, the cost per withdrawal direct to your local bank is $0.99.

218 - (43.6+8.72+0.99) = 164.69 which is exactly the amount you withdrew.

I was sent the calculations above by a moderator. $164.69 is roughly £133.65. 

In my bank account for this particular job, I have exactly £118.82 to spend.

I am rubbish at maths, so if someone can explain this total, much appreicated.

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Math isn't my strong point either, but I'll have a go at this.

- Your gross payment was $218 U.S. At the exchange rate that you seem to have gotten on the day of your withdrawal, that would have been about £158, even if Upwork hadn't deducted any fees at all.

- After Upwork deducted their 20% service charge plus VAT, your net payment was $164.69, which resulted in the £118 that you received in your bank account.

- So the amount of money, in pounds, that you actually "lost" - £158 - £118 = £40 - is about a 25% deduction. Not 40% or 60%.

You also should keep in mind that the exchange rate is absolute rubbish at the moment. The combination of a new president in the White House and an economic hit over Brexit will probably make the dollar go up against the pound, meaning more take-home pay for us Brits on Upwork.

[petra_r]

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Ruby B wrote:

So in laymen's terms, expect a 60-40% work transaction to you, unless your job is worth $500+.

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I am completely lost how you are arriving at such numbers? Are you mixing up Pounds and Dollars again?

[prestonhunter]

There is no "almost half."

The largest amount of money that Upwork deducts is 20%.

That is ONLY on the first $500 you earn.

After $500, this fee drops to only 10%.

Whether we are talking about 20% or 10%, these are much less than "almost half."

As for VAT... Upwork doesn't impose VAT.

VAT is something imposed by a regional government.

Upwork doesn't impose VAT or income taxes.
If you working NOT THROUGH Upwork, you would be subject to the same taxes.

I sort of understand the frustration... if a person looks at a certain amount of money a client is going to pay and then makes calculations that they might not be able to keep ALL of it... But it just isn't fair or accurate to lump VAT in with Upwork fees.

[cetus]

fee for connects to apply for projects ( 50/50 for gains but mostly leaning towards loss)

fee for getting hired (+10 connects for answering an interview (sometimes bugged))

earnings deducted with service fee (bonus gets deducted too if there is any)

fee for withdrawal of earnings (-2)

paypal fee is ok and understandable.

all in all, fair enough. unless a project's budget is at the low end.

good for established freelancers/small-mid talent handlers.

but really challenging for starters.

That's life, I guess.