The financial benefits on contracting don't seem worth it

[sal]

you will be working 7 months per year (which is a rule of thumb I have read)

No idea where did you get these 7 months from, let alone being the norm. Most contractors get contracts back to back and only take breaks when they want.

Probably your are coming from the figure of of around 220 days per year but these are working/billable days not calendar days. amounting to 10 calendar months of work and 2 months of bench/vacation.

Rough calculations:

220x£300=£66k gross income
-£9k sallary
-£5k expenses
-£2k accountancy etc. fees
=£50k taxable company profit
-£10k CT
=£40k distributable profit

so you end up with 9k+40k=49k pusshing you over the threshold so you have to pay about 2.5k income tax leaving you with

£47.5k vs 27k as permie

[TheFaQQer]

No idea where did you get these 7 months from, let alone being the norm. Most contractors get contracts back to back and only take breaks when they want.

I accept that I am far from the norm, but for six completed years when I bothered to count the days worked, I averaged 163 days a year billing. And that includes the year when I billed 242 days.

[malvolio]

I accept that I am far from the norm, but for six completed years when I bothered to count the days worked, I averaged 163 days a year billing. And that includes the year when I billed 242 days.

Current gig, over 2.5 years, I've averaged 78% billable time out of the total possible.

In near 19 years of contracting, I've also averaged around 7 months a year in contract.

OTOH I do charge quite a lot...

[sal]

I understand that there are a lot of contractors cutting back days/hours as a matter of choice as they earn more than enough and value their free time.

My point was that the majority are working way more than the OP suggested 7 months, and when you compare a contractor take home for 10 months of work against permie for 10 months (assuming 20 days paid leave + 6 days of public holidays + odd sick leave) you still end up with close to twice as much in favor of the contractor.

But then i guess there is no point in trying to educate people, that think we are stupid enough to work for peanuts while soiling our pants in insecurity about our job.

[PurpleGorilla]

No idea where did you get these 7 months from, let alone being the norm. Most contractors get contracts back to back and only take breaks when they want.

Probably your are coming from the figure of of around 220 days per year but these are working/billable days not calendar days. amounting to 10 calendar months of work and 2 months of bench/vacation.

Rough calculations:

220x£300=£66k gross income
-£9k sallary
-£5k expenses
-£2k accountancy etc. fees
=£50k taxable company profit
-£10k CT
=£40k distributable profit

so you end up with 9k+40k=49k pusshing you over the threshold so you have to pay about 2.5k income tax leaving you with

£47.5k vs 27k as permie

I would add in the £5k of expenses.

An employee pays most expenses out of their own pocket.

[TheFaQQer]

I would add in the £5k of expenses.

An employee pays most expenses out of their own pocket.

When I was permie, I can't remember anything that I paid for as an expense that I didn't claim back from the company. When I got my first contract, it was a shock that I had to book my own travel, and just how expensive it was - I'd never had to concern myself with the cost before.

[PurpleGorilla]

The financial benefits on contracting don't seem worth it

When I was permie, I can't remember anything that I paid for as an expense that I didn't claim back from the company. When I got my first contract, it was a shock that I had to book my own travel, and just how expensive it was - I'd never had to concern myself with the cost before.

I paid my petrol for 15 years as a permie. What did I do wrong!