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Half year employee/remaining half contracting

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    Half year employee/remaining half contracting

    Hi,

    I have an employee of a multination company. I have been made redundant from them now. My salary from this employment has been 33,000 GBP for 2015/2016.

    I am about to start contracting via a limited company. I would be its sole director. I would be working from home. I am negotiating my new contract. The terms of negotiation should be such that I should be getting 5000 GBP per month after taxes.

    Assume that I can claim expenses of 300 GBP per month. How much should my limited company be paid each month to achieve this if the contactor duration is 3 months and if the contract duration is 6 months?

    Thanks.

    #2
    Originally posted by comcontractor View Post
    Hi,

    I have an employee of a multination company. I have been made redundant from them now. My salary from this employment has been 33,000 GBP for 2015/2016.

    I am about to start contracting via a limited company. I would be its sole director. I would be working from home. I am negotiating my new contract. The terms of negotiation should be such that I should be getting 5000 GBP per month after taxes.

    Assume that I can claim expenses of 300 GBP per month. How much should my limited company be paid each month to achieve this if the contactor duration is 3 months and if the contract duration is 6 months?

    Thanks.
    Explain the £5k per month after tax, makes no sense...

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      #3
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        #4
        Originally posted by stek View Post
        Explain the £5k per month after tax, makes no sense...


        This sounds like someone who is trying to reverse calculate.


        "My target is this, how can I achieve it?"


        (the question they want to ask is: what should I charge as my daily rate so that I can clear 5k per month, and how do I do it?)
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          #5
          Originally posted by WTFH View Post
          This sounds like someone who is trying to reverse calculate.


          "My target is this, how can I achieve it?"


          (the question they want to ask is: what should I charge as my daily rate so that I can clear 5k per month, and how do I do it?)
          Ahh yeah..

          Wonder if the OP has considered the implications ie divvies taxed at higher rate..

          Comment


            #6
            Originally posted by stek View Post
            Ahh yeah..

            Wonder if the OP has considered the implications ie divvies taxed at higher rate..


            Nope. I think they want US to consider them.
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              #7
              This can hardly be difficult to work out for yourself.

              I did a similar move when I moved to contracting, was in the higher tax bracket so just left all money in the company until new tax year. Ok I had saved up enough war chest before doing the plunge, but I assume you already have some savings? Only thing to consider is the new dividend tax regime, might be worth taking some before April?

              Comment


                #8
                I also think you are putting the cart before the horse here. You are assuming working from home is something you can negotiate, which in a vast number of cases it isn't. It can be a flexibility once you are in but it's rarely a given.

                Also you get paid what they want to pay you and then you negotiate. All gigs come with a rate card from the client which the agent then buggers about with and pops something out. You then negotiate around that figure. You won't find many gigs that will just ask you what you want. Even if they did trying to match your permie gig is a very poor way about it. You work in a completely different field with many different risks. You need to understand what market rate and supply and demand is, not try and match permie rate.

                Look around the job sites and ITjobswatch to see what the market rates are. Don't get giddy at the high rates though as 33k doesn't indicate a very senior role so may not match the gigs you think you can do.

                And another point you are assuming expenses but in contracting you may have to travel a lot further to get end to end gigs. One might have next to no expenses, the next might need a grand or so per month etc.

                Go out to market and look what there is rather than trying to match your permie package.
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                  #9
                  Originally posted by northernladuk View Post
                  I also think you are putting the cart before the horse here. You are assuming working from home is something you can negotiate, which in a vast number of cases it isn't. It can be a flexibility once you are in but it's rarely a given.

                  Also you get paid what they want to pay you and then you negotiate. All gigs come with a rate card from the client which the agent then buggers about with and pops something out. You then negotiate around that figure. You won't find many gigs that will just ask you what you want. Even if they did trying to match your permie gig is a very poor way about it. You work in a completely different field with many different risks. You need to understand what market rate and supply and demand is, not try and match permie rate.

                  Look around the job sites and ITjobswatch to see what the market rates are. Don't get giddy at the high rates though as 33k doesn't indicate a very senior role so may not match the gigs you think you can do.

                  And another point you are assuming expenses but in contracting you may have to travel a lot further to get end to end gigs. One might have next to no expenses, the next might need a grand or so per month etc.

                  Go out to market and look what there is rather than trying to match your permie package.
                  33k for 6 months (april to now) - presumably around 66k annual

                  Comment


                    #10
                    Why has no one asked him what his accountant says?

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