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  1. #11

    I live on CUK

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    To do a fair calculation:
    1. Match the number of sick days
    2. Match the number of bank holidays
    3. Take another 10 days of your contract
    4. Take away from your yearly contract rate - accountant, business insurance of all kinds e.g. PI, contract review costs, cost of business bank account, business internet e.g. email, training.

    Then do the comparison.
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  2. #12

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    I don't know what planet you guys are living in with those calculations I have seen on this thread!

    I spent 5 years as a contractor on daily rates near 4 figures and I never ever calculated anything using 236 or even 220 days (even though I was lucky enough with no time on bench across those years). I always calculated on 200 days a year, with anything above that as a bonus (similar to being a permie - I kept it as an end of Ltd company year bonus)

    Reason? Sickness / something happening with the kids or family / emergencies / time off for whatever reason / always chance of bench as I am a contractor after all.

    Expenses for me included a pretty good website, golden insurance with all the trimmings (eg IR35 protection, income protection etc etc) and a few other bits which takes away £3,000 a year

    I paid myself an ok salary rather than the usual c£11k (and got the rest in dividends). No point pissing off the tax man if he comes to check the books. If he comes, I'm clean which makes things a lot easier.

    The 13% paid VAT but charging 20% was an added bonus, I will give you that.

    There's no way I kept 78%, more like 72% absolute max on any year but I'm conservative and not the type who wanted to cream as much as I could off the system.

    So, for the guy being offered £90k, that is not a bad salary compared to your current take home:

    200 days a year of £500 is £100k
    75% of £100k is £75k
    Expenses of £3k, you now have £72k just for you



    Full time role you are being offered:
    £90k plus all the benefits, lets be conservative and only make it £100k gross
    UK Salary calculator shows that you take home £66k


    Hence difference is only £6k and that's without taking all the benefits of being a permie!!! I enjoyed my 5 years as a contractor and there's no denying it was perfect timing (ie was getting married and it paid for a chunk of the wedding, bought a house in SW London etc) but considering all the changes coming in and the permie offer made to me, it was my chance to get back on the career ladder in a company that I am beginning to love.

    And that will be the key for you - never mind the £90k offer. How much do you like the company in question? Can you see a career? Culture? The people?

    If you get that warm fuzzy feeling with them, go for it and enjoy perm life. Contracting is tough and although I enjoyed my 5 years (I think its good for the soul to be your "own man" for a bit) I am secretly glad not to have the worry of contract ending over my head, especially at the rates I was on. I feel more relaxed.

    Best of luck whatever you decide to do, I may change my name here to "PermMCConPerm"

    ;p
    Last edited by PermMCCon; 30th March 2017 at 13:41.

  3. #13

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    Quote Originally Posted by PermMCCon View Post
    I don't know what planet you guys are living in with those calculations I have on this thread!

    I spent 5 years as a contractor on daily rates near 4 figures and I never ever calculated anything using 236 or even 220 days (even though I was lucky enough with no time on bench across those years). I always calculated on 200 days a year, with anything above that as a bonus (similar to being a permie - I kept it as an end of Ltd company year bonus)

    Reason? Sickness / something happening with the kids or family / emergencies / time off for whatever reason / always chance of bench as I am a contractor after all.

    Expenses for me included a pretty good website, golden insurance with all the trimmings (eg IR35 protection, income protection etc etc) and a few other bits which takes away £3,000 a year

    I paid myself an ok salary rather than the usual c£11k (and got the rest in dividends). No point pissing off the tax man if he comes to check the books. If he comes, I'm clean which makes things a lot easier.

    The 13% paid VAT but charging 20% was an added bonus, I will give you that.

    There's no way I kept 78%, more like 72% absolute max on any year but I'm conservative and not the type who wanted to cream as much as I could off the system.

    So, for the guy being offered £90k, that is not a bad salary compared to your current take home:

    200 days a year of £500 is £100k
    75% of £100k is £75k
    Expenses of £3k, you now have £72k just for you



    Full time role you are being offered:
    £90k plus all the benefits, lets be conservative and only make it £100k gross
    UK Salary calculator shows that you take home £66k


    Hence difference is only £6k and that's without taking all the benefits of being a permie!!! I enjoyed my 5 years as a contractor and there's no denying it was perfect timing (ie was getting married and it paid for a chunk of the wedding, bought a house in SW London etc) but considering all the changes coming in and the permie offer made to me, it was my chance to get back on the career ladder in a company that I am beginning to love.

    And that will be the key for you - never mind the £90k offer. How much do you like the company in question? Can you see a career? Culture? The people?

    If you get that warm fuzzy feeling with them, go for it and enjoy perm life. Contracting is tough and although I enjoyed my 5 years (I think its good for the soul to be your "own man" for a bit) I am secretly glad not to have the worry of contract ending over my head, especially at the rates I was on. I feel more relaxed.

    Best of luck whatever you decide to do, I may change my name here to "PermMCConPerm"

    ;p
    Following same logic we could take 100 days. There is 261 working days this year. In your calculations you will get another interesting bonus - 61 days off. Around of 3 months off? Not a bad benefit I would say. Or 4 working days week.

  4. #14

    My post count is Majestic

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    Factor in the steady 90k for a few years vs the arse falling out of the contractor market (potentially and arguably) over the same period.
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  5. #15

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    Quote Originally Posted by AndrewK View Post
    Following same logic we could take 100 days. There is 261 working days this year. In your calculations you will get another interesting bonus - 61 days off. Around of 3 months off? Not a bad benefit I would say. Or 4 working days week.
    Let's go a bit slower.

    You cannot work public holidays. There are 8 of those

    You won't work every single day. Knock at least 5 weeks off for holidays, furlough, sickness, bereavement, other.

    How many days did you bill in each of the last three years?
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  6. #16

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    Quote Originally Posted by newcontract View Post
    Hi all, long time lurker first time poster here, with a burning question...

    I am currently on a 500/day contract with high chances of getting extended over a few years and also being offered 90k/yr in a similar role as permie.

    I have read a lot of posts here which suggest 90k/yr > 500/day, however the numbers just don't work out in my head.

    I am thinking, in a best case scenario for the permie job:
    - 5 weeks holiday (worth ~ 9k - but cant take the money)
    - 12% pension (worth ~10k)
    - bonus 3-4% (worth ~3k)
    - private medical (worth ~2k)

    all of that totals up to around £114k gross for the perm job.


    with the contract role, based on 236 working days a year, it comes to 118k, and I would pay considerably less income tax?

    What am I missing here?

    appreciate your opinions (and ideally with numbers)!
    Holidays in most places as permy you can sell them, I get 30 a year and sell 5 gives me a couple of extra K.

    Training paid for, I've managed to get around £8k of training each year for last 2 years.

    Life Insurance, I get approx £1mil cover at no cost, and they even pay it into trust so no inheritance tax due on it.

    A lot less paper work and admin.
    Last edited by BoggyMcCBoggyFace; 30th March 2017 at 13:26.

  7. #17

    Faqqed Off

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    Quote Originally Posted by AndrewK View Post
    Cool. Just for case of simplicity I will say, last year i paid 15% to HMRC from my all income. No any avoidance, just expenses, pension, dividends. And draw whatever conclusion you want. I am not even mentioning fact, that you could invest those money via another company and offset losses (if you decide you need a backup plan).
    Expenses you get as an employee - same as if you run your own company. If you think legitimate business expenses are part of your take home pay then you have a different definition of take home pay or legitimate than most people.

    Pension - yep, with you on that one. But you were earlier saying "he will have even less disposable income" if he pays into pension. Unless you are already drawing a pension, then it's not part of your take home pay.

    Dividends - £5k tax free from the new tax year, £2k tax free from 2018 onwards. Even with income splitting with your spouse, it's not going to save that high percentage - unless of course your rate is ridiculously low. If you only earn £10k a year, it's dead easy to pay very little tax on that, for example.

    There are ways to reduce your tax bill legitimately. There are ways to invest for the future. There are ways to reduce your tax burden down to lower than the 15% you claim to have paid. However, none of those actually combine to hit the 78% take home that you talk about.
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  8. #18

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    Quote Originally Posted by TheFaQQer View Post
    Expenses you get as an employee - same as if you run your own company. If you think legitimate business expenses are part of your take home pay then you have a different definition of take home pay or legitimate than most people.

    Pension - yep, with you on that one. But you were earlier saying "he will have even less disposable income" if he pays into pension. Unless you are already drawing a pension, then it's not part of your take home pay.

    Dividends - £5k tax free from the new tax year, £2k tax free from 2018 onwards. Even with income splitting with your spouse, it's not going to save that high percentage - unless of course your rate is ridiculously low. If you only earn £10k a year, it's dead easy to pay very little tax on that, for example.

    There are ways to reduce your tax bill legitimately. There are ways to invest for the future. There are ways to reduce your tax burden down to lower than the 15% you claim to have paid. However, none of those actually combine to hit the 78% take home that you talk about.

    I agree with Faq above, contractors are not flavor of the month at the moment... but don't worry, as an ex contractor you wont see me doing the "eye roll" or that "jealous look" or the "you pay for the drinks youre loaded!" which seems to be de rigeur with permies sometimes.

    Although I might do an infamous round of "Guess what boys? Another 10% contractor rate cut. Wait, what the hell, lets make it 20%!!!"

    Muhahahaahahahahaha

  9. #19

    Godlike

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    Quote Originally Posted by MrMarkyMark View Post
    Just a general comment, someone I know went in for a similar deal, previously on £550 PD.
    Around 97K basic, I believe.

    He said he has never felt so short of money.

    He also has a 3 month notice period factored in now too.

  10. #20

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    Quote Originally Posted by newcontract View Post
    Hi all, long time lurker first time poster here, with a burning question...

    I am currently on a 500/day contract with high chances of getting extended over a few years and also being offered 90k/yr in a similar role as permie.

    I have read a lot of posts here which suggest 90k/yr > 500/day, however the numbers just don't work out in my head.

    I am thinking, in a best case scenario for the permie job:
    - 5 weeks holiday (worth ~ 9k - but cant take the money)
    - 12% pension (worth ~10k)
    - bonus 3-4% (worth ~3k)
    - private medical (worth ~2k)

    all of that totals up to around £114k gross for the perm job.


    with the contract role, based on 236 working days a year, it comes to 118k, and I would pay considerably less income tax?

    What am I missing here?

    appreciate your opinions (and ideally with numbers)!
    what exactly are the benefits?

    If you are getting a paid pension and other frilly bits on top, I'd say it is very attractive.

    I'm earning £520 a day and I'd go perm for £90k

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