Contract to permie Salary Worth it ????
+ Reply to Thread
Page 1 of 6 1 2 3 ... LastLast
Posts 1 to 10 of 59
  1. #1

    Nervous Newbie


    Join Date
    Mar 2017
    Posts
    2
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default Contract to permie Salary Worth it ????

    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.

    More specific details:
    Contract role:
    - walk commutable
    - 9-5 most days
    - old tech

    Permie role:
    - car commutable (30mins)
    - 9-7+ often
    - cutting edge tech


    Talking about cash aspect only:
    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)!
    Last edited by newcontract; 31st March 2017 at 09:29.

  2. #2

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    33,277
    Thanks (Given)
    137
    Thanks (Received)
    1360
    Likes (Given)
    1732
    Likes (Received)
    5827

    Default

    Have a dig through some of the other posts we've had trying to work this out and see if there are any factors you haven't considered?

    https://www.google.co.uk/search?q=co...hrome&ie=UTF-8

    IMO the 236 days is a bit on the high side for a start.
    Sick pay?

    IMO it's not all about the direct cash comparison. There are many soft points to think about. Permie gig might be commutable, not all contract ones are, no bench time, ability to learn. Not sure a comparison to the pound is really the best basis for a decision.
    Last edited by northernladuk; 30th March 2017 at 10:37.
    'CUK forum personality of 2011' - Winner - Yes really!!!!

  3. #3

    Double Godlike!


    Join Date
    Dec 2012
    Posts
    10,384
    Thanks (Given)
    755
    Thanks (Received)
    742
    Likes (Given)
    4942
    Likes (Received)
    2860

    Default

    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.

  4. #4

    Godlike


    Join Date
    Sep 2014
    Location
    Non-Event Horizon
    Posts
    8,678
    Thanks (Given)
    334
    Thanks (Received)
    587
    Likes (Given)
    2210
    Likes (Received)
    2630

    Default

    260 week day in a year
    8 public holidays
    25 days holiday (because we're comparing like-for-like)
    5 sick days (again, being honest with yourself and not having to drag yourself in for a day rate for a fairer comparison)
    2 more days for funerals, emergencies, etc.
    You're at 220, which is assuming that you're in a contract all year, no bench time.

    That's 110k

    There are also no bonus, promotion or training opportunities in contracting. No redundancy after two years like there is with employment. You're forgetting what the good bits of being a perm were.

    I'd be inclined to accept 100k but be keen to know what the promotion route was. That's just me though; if I was to go back perm, I'd want to climb the corporate ladder.
    The greatest trick the devil ever pulled was convincing the world that he didn't exist

  5. #5

    Still gathering requirements...


    Join Date
    Jan 2012
    Posts
    85
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    7

    Default

    Quote Originally Posted by LondonManc View Post
    260 week day in a year
    8 public holidays
    25 days holiday (because we're comparing like-for-like)
    5 sick days (again, being honest with yourself and not having to drag yourself in for a day rate for a fairer comparison)
    2 more days for funerals, emergencies, etc.
    You're at 220, which is assuming that you're in a contract all year, no bench time.

    That's 110k

    There are also no bonus, promotion or training opportunities in contracting. No redundancy after two years like there is with employment. You're forgetting what the good bits of being a perm were.

    I'd be inclined to accept 100k but be keen to know what the promotion route was. That's just me though; if I was to go back perm, I'd want to climb the corporate ladder.
    In your calculations, you remove holidays and sick days from contract and in his he adds to perm. You should either one or another, but not both.

    At the end of day, even if we take your calculations, with LTD he should get 78% take home, which is not too difficult to achieve ~ 85k or 7.15k per month. In case or perm - 4.9k, that is 50% less of disposable income. But again, he could move a lot of perm salary to pension to avoid 40% tax, but in that case, he will have even less disposable income. Main problem with perm high taxes.

  6. #6

    Faqqed Off

    TheFaQQer's Avatar
    Join Date
    Oct 2006
    Posts
    36,015
    Thanks (Given)
    372
    Thanks (Received)
    1267
    Likes (Given)
    3628
    Likes (Received)
    3152

    Default

    Quote Originally Posted by AndrewK View Post
    with LTD he should get 78% take home
    Invoice 118000
    Corporation tax 23600
    Net 94400

    How do you get to 78% take home?
    Best Forum Advisor, 2014
    Work in the public sector? You can read my FAQ here
    Click here to get 15% off your first year's IPSE membership

  7. #7

    Still gathering requirements...


    Join Date
    Jan 2012
    Posts
    85
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    7

    Default

    Quote Originally Posted by TheFaQQer View Post
    Invoice 118000
    Corporation tax 23600
    Net 94400

    How do you get to 78% take home?
    You should ask your accountant .
    You do have expenses? Travel, mobile, office equipment etc. Plus you salary is expense before corp tax. Plus dividends to your family and all other small tweaks. I am not even talking that all gadgets are VAT free (for business purpose).

    All that doesn't exist in perm role.

  8. #8

    Faqqed Off

    TheFaQQer's Avatar
    Join Date
    Oct 2006
    Posts
    36,015
    Thanks (Given)
    372
    Thanks (Received)
    1267
    Likes (Given)
    3628
    Likes (Received)
    3152

    Default

    Quote Originally Posted by AndrewK View Post
    You should ask your accountant .
    You do have expenses? Travel, mobile, office equipment etc. Plus you salary is expense before corp tax. Plus dividends to your family and all other small tweaks. I am not even talking that all gadgets are VAT free (for business purpose).

    All that doesn't exist in perm role.
    Ah, OK.

    So, you take off your 11k salary first. That leaves you with 107k. How does spending money on office equipment come into any equation for whether you are better off or not? It isn't your "take home" unless you are looking to use your company assets for personal use, in which case you need to account for the benefit in kind on that - either way, it's not cash in your pocket in any way shape or form.

    Travel as a business expense is hardly "take home" in your pocket, is it? If you are using that as part of your take home then you're doing something really wrong. Or alternatively, that year that the consultancy I worked at put me up in the Hilton for 150 nights and paid for 30+ round trip tickets to get to client site my salary was actually huge! Wow, I've never looked at it that way before - I wasn't an underpaid permie, I just didn't appreciate that the business expenses that the company paid should have been considered as part of my package

    You pay your wife 5k in dividends (falling to 2k) next year tax free. That saves a tiny amount of money. You now pay dividend tax on the rest of your money.

    You have nowhere near 78% take home, which is what you claim.
    Last edited by TheFaQQer; 30th March 2017 at 11:40.
    Best Forum Advisor, 2014
    Work in the public sector? You can read my FAQ here
    Click here to get 15% off your first year's IPSE membership

  9. #9

    Still gathering requirements...


    Join Date
    Jan 2012
    Posts
    85
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    7

    Default

    Quote Originally Posted by TheFaQQer View Post
    Ah, OK.

    So, you take off your 11k salary first. That leaves you with 107k. How does spending money on office equipment come into any equation for whether you are better off or not? It isn't your "take home" unless you are looking to use your company assets for personal use, in which case you need to account for the benefit in kind on that - either way, it's not cash in your pocket in any way shape or form.

    You pay your wife 5k in dividends (falling to 2k) next year tax free. That saves a tiny amount of money. You now pay dividend tax on the rest of your money.

    You have nowhere near 78% take home, which is what you claim.
    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).

  10. #10

    Godlike


    Join Date
    Sep 2014
    Location
    Non-Event Horizon
    Posts
    8,678
    Thanks (Given)
    334
    Thanks (Received)
    587
    Likes (Given)
    2210
    Likes (Received)
    2630

    Default

    Quote Originally Posted by AndrewK View Post
    In your calculations, you remove holidays and sick days from contract and in his he adds to perm. You should either one or another, but not both.

    At the end of day, even if we take your calculations, with LTD he should get 78% take home, which is not too difficult to achieve ~ 85k or 7.15k per month. In case or perm - 4.9k, that is 50% less of disposable income. But again, he could move a lot of perm salary to pension to avoid 40% tax, but in that case, he will have even less disposable income. Main problem with perm high taxes.
    I was more demonstrating that 236 is an unreasonable number to use for billing days if you're trying to compare with permanent days worked.

    That's without considering expenses v zero expenses and other factors.
    The greatest trick the devil ever pulled was convincing the world that he didn't exist

+ Reply to Thread
Page 1 of 6 1 2 3 ... LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts

Content Relevant URLs by vBSEO 3.6.0 ©2011, Crawlability, Inc.