How much better off are we?

[Lewis]

I think what I get for my age is fantastic, I don't know many people <30 on the money I get, not that I tell people I keep it all quiet - best way really. But yes, I had a huge jump in money in terms of what I was getting say just a few years ago. I earn more money now myself than me and my partner used to earn combined, which is handy as she's not working and looking after our 2 little ones until they reach school.

Having contracted now for 2 years I MUCH prefer it over permie roles, it's a bit more risky, but if you are switched on and can sell yourself well for the skills and abilities you have to offer, then it's worth taking the risk I think. I think it would have to take something big to get me back in a perm role, I enjoy being separated from all the line management and office politics that you find in most places. If anything it's also taught me how to 'run a business', i.e. my Ltd Co. as I do everything myself, accounts, returns, invoices, payroll, etc. I can use these skills to run any business of my choosing in the future if I ever decide to do something different.

It does draw a bit of resentment from the perms I work with, I've heard a few things like "scummy contractors", or "agency staff" comments etc, but I really don't care when I send in my invoice and check my business account.

I agree 100%

The longer you contract the harder it is to conceal earnings from friends and family though. It's unavoidable, you don't have to say anything, they'll notice your house is bigger than theirs, you go on holiday more often than they do and to more exotic places. I say ... you just need to "keep it real" and not take yourself seriously. It's just luck that contracting pays well. Enjoy it while it lasts but don't think it makes you better than anyone else.

[Dow Jones]

No difference

I don't think you can say that contractors are definitely better off comparing with a similar permie, depends on the employer and the person.
Purely in financial terms, I'd say same or not worse off.
Take a decent salary of over £ 50k which translates to £ 3k p/m = £ 36k p/a, divide that by 45 wks (25 days hols + 8 bank hols + 'sick' pay = ca 7 wks) equals to £ 800 p/w net = £ 160 p/d
When you work out the same on average contracting rate:
£ 300 p/d less 20% tax = £ 240 p/d ie 50% more (?)
However, one should average out all contracting at maybe 80 % rather than 100% of the time for every year (I've worked mine at just over 80 % for the last 10 years), so £ 240 x 80% = £ 192, maybe 20% more in net terms, but excluding bonuses, pensions, private health and other benefits, it sorts of cancels out the extra bit.
Contracting is a short-term, not a long-term proposition. Once you get married and have children, it becomes harder to move around, so mostly for the younger ones.

[TheBigYinJames]

Take a decent salary of over £ 50k ....When you work out the same on average contracting rate: £ 300 p/d

These things are not the same. A £300pd development contract is about equal in 'status' with a £35k permie job. You're not going to get £50K+

Contracting is a short-term, not a long-term proposition. Once you get married and have children, it becomes harder to move around, so mostly for the younger ones.

I've been doing it for 15 years, through two kids. You don't have to move around, you can do weekly commutes, or hang around for contracts close to home (admitetdly this will reduce your earnings, so since you will be in-between more. But it's easily doable.

[Lewis]

I don't think you can say that contractors are definitely better off comparing with a similar permie, depends on the employer and the person.
Purely in financial terms, I'd say same or not worse off.
Take a decent salary of over £ 50k which translates to £ 3k p/m = £ 36k p/a, divide that by 45 wks (25 days hols + 8 bank hols + 'sick' pay = ca 7 wks) equals to £ 800 p/w net = £ 160 p/d
When you work out the same on average contracting rate:
£ 300 p/d less 20% tax = £ 240 p/d ie 50% more (?)
However, one should average out all contracting at maybe 80 % rather than 100% of the time for every year (I've worked mine at just over 80 % for the last 10 years), so £ 240 x 80% = £ 192, maybe 20% more in net terms, but excluding bonuses, pensions, private health and other benefits, it sorts of cancels out the extra bit.
Contracting is a short-term, not a long-term proposition. Once you get married and have children, it becomes harder to move around, so mostly for the younger ones.

I'm sorry but your calculations make no sense to me. I agree that £50K permanent salary = £2,900 per month after tax.

£300 per day working a typical 45 weeks @ 5 days a week = £67,500K into company. You should expect somewhere between 70% and 80% take home depending upon circumstances (sometimes even more). So from £47K to £54K after tax.

To get £47K after tax you would need a salary of £70K
To get £54 after tax you would need a salary of £82K

Ok, so you might get a 10% bonus and 10% pension. So best case permi = £50K *1.2 = £60K. You are still better off contracting.

But the most important point is that if you can earn £50K permi you could probably go out and get a contract for over 400 p/day! I have worked with people on 450 p/day who in my opinion shouldn't be paid more than £35K permi.

Anyway, enough time on this one .. over and out.

Plus the short/long-term stuff is rubbish. I've been contractign 10 years, am married with children and intend to contract until retirement.

[NickFitz]

I have worked with people on 450 p/day who in my opinion shouldn't be paid more than £35K permi.

I have a friend who has been paid £1000 a day. He couldn't be a permy as there is no reason for an organisation to employ somebody with his knowledge and skills on a permanent basis.

Still, he made so much on that one contract that he could pay off his mortgage in a few months and, when the contract ended, devote his time to what he actually enjoys doing. He's doing OK at that, too... as well as making about 20K a year from Google AdSense, simply by regularly updating his (one) web site.

[contractor79]

I have worked with people on 450 p/day who in my opinion shouldn't be paid more than £35K permi.

[contractor79]

I have a friend who has been paid £1000 a day. He couldn't be a permy as there is no reason for an organisation to employ somebody with his knowledge and skills on a permanent basis.

Still, he made so much on that one contract that he could pay off his mortgage in a few months and, when the contract ended, devote his time to what he actually enjoys doing. He's doing OK at that, too... as well as making about 20K a year from Google AdSense, simply by regularly updating his (one) web site.

cool story, £1000/day, is mad

[chris79]

cool story, £1000/day, is mad

Yeah, was mad to begin with but like anything I got used to it and now I want more.

[contractor79]

Yeah, was mad to begin with but like anything I got used to it and now I want more.

there's never enough is there

[Dow Jones]

Reality check

Contracting is more about a different way of life (more freedom to choose where you work, developing a business and improving your skills) and less about a glamorous lifestyle that some are craving.
I get the feeling that a few contractors here are like some first-time buyers, seeing only the good times, never the flip side. Remember to factor in your calculations that you will NOT be working throughout the years and that rates can go DOWN as well as up.