ir35 jitters

[MarillionFan]

dowh - thought my rate was big-time. My old formula was 2000 hrs = 1 year (which perhaps explains my ex-contractor status :-)) ... and now reading discouraging things about 'Brooksons' as well.

Oh well, I've still (better-rate) interviews lined-up for next week, and my only commitment sofa is paying for the LTD-Co, and agreeing to be called by HSBC on monday re: business account ... mmmm

Base on 42-44 weeks per year x 5 x day rate. Use a pareto range of 5% on each side.

I heard they only investigate for ir35 if there's some reason to. Therefore if I keep my head down its unlikely.

Investigation is going to be random. Expected percentage of a pull is considered to be 1 in every 5 to 7 years. The period they will pull you for is normally a quarter. If within that quarter something shows up they can do 7 years.

Basically, think of it as a form of gambling. If you're contract is in IR35, you could call it outside and take the chance or you could play it safe and always call a contract inside regardless.

[Old Greg]

Base on 42-44 weeks per year x 5 x day rate. Use a pareto range of 5% on each side.



Investigation is going to be random. Expected percentage of a pull is considered to be 1 in every 5 to 7 years. The period they will pull you for is normally a quarter. If within that quarter something shows up they can do 7 years.

Basically, think of it as a form of gambling. If you're contract is in IR35, you could call it outside and take the chance or you could play it safe and always call a contract inside regardless.

... and join PCG so you get some legal representation if you do get investigated, and make sure you have the money put by to pay back if you have to. There is a view that IR35 has been highly effective because of the number of contractors who have been scared away from the Ltd + minimum wage + dividends ( + income splitting with spouse) model, but not effective in terms of 'catching people'.

[normalbloke]

Permie v contract rate

"£43k pa is £43 an hour".... I must be missing something obvious here, but can someone take me through the mechanics of how this figure is calculated please? 37.5 hour week @ £43ph = £1612.5 pw . Say one works for 45 weeks a year, that grosses to £72,562.5...

[Old Greg]

"£43k pa is £43 an hour".... I must be missing something obvious here, but can someone take me through the mechanics of how this figure is calculated please? 37.5 hour week @ £43ph = £1612.5 pw . Say one works for 45 weeks a year, that grosses to £72,562.5...

I've never really bought this formula, but it is based on the assumption that you will not work 45 weeks per year. I worked 42 to 45 weeks for the 1st 3 years of my contracting career, but am heading for 25 weeks in my 4th because the recession has severely restricted demand for my services.

[malvolio]

"£43k pa is £43 an hour".... I must be missing something obvious here, but can someone take me through the mechanics of how this figure is calculated please? 37.5 hour week @ £43ph = £1612.5 pw . Say one works for 45 weeks a year, that grosses to £72,562.5...

What about holiday pay, travel allowances, statutory sick pay, long-term sick pay, possible car allowances, pensions funds, training expenses, desktop hardware, applications licences, assorted insurances, stationery, payroll advice, employers NICs....?

The formula holds if you are trying to compare what someone on £45k a year actually costs to employ and map that to what a freelance needs to hit the same net take-home with a comparable package.

[Wanderer]

People who have been in business for a while, have a decent war chest/skill set and understand the ups and downs of contracting may think it's a bit conservative but it kind of comes down to, "if you need to ask" then that is the formula.

[Fred Bloggs]

FWIW, I think that salary/1000 = hourly rate is a pretty fair benchmark. I work my finances out on a 44 week working year and that forumla always seems about right to me.

[normalbloke]

What about holiday pay, travel allowances, statutory sick pay, long-term sick pay, possible car allowances, pensions funds, training expenses, desktop hardware, applications licences, assorted insurances, stationery, payroll advice, employers NICs....?

I don't think that would cost me an additional 30K personally.

I can buy the 'on the bench weeks' factor,(but I have been lucky and have had the opportunity to work over 45 weeks per year for 13 years I have been in the contracting game). I'd much rather take contracts at 43ph than a permie job at 43K financially, but thats my view and I accept others have different ways of looking at it.