First contract - caught by IR35?

[escapeUK]

Firstly, I'd treat yourself as IR35 caught, plain and simple. You have too many important negative indicators going against you.

There's a general rule of 1000/1, which means a permie rate of £43K p.a equates to £43 p/h (or £344pd on an 8 hour day).

I have never heard of this general rule till now. But if you work on working 48 weeks a year (not unreasonable) then £344 x 5 x 48 = £82,560 how does that anywhere near equate to £43k permie salary?

[malvolio]

Yuck, I'm agreeing with MF and I feel all dirty now.

But this 1/1000 is nonsense. I went from a 50k permie job into a £500 pd contract, which I decided was outside IR35. Guess what? In two years I had saved 60k. Just get on with it.

Ermm... £50k is £50 an hour is £400 a day. You bucked the ratio by 25%. Your point is?

And it's not a hard and fast rule anyway, it's just an indicator to try and correlate a permie salary with a contractor gross rate, since every newbie asks the same damn pointless question. Your rate - and how much of it you can afford to keep - is what you can get, it bears no realtionship to a permanent salary

BTW I've saved £40k in 9 months on a roughly similar day rate, so perhaps you're not that clever.

[Old Greg]

Ermm... £50k is £50 an hour is £400 a day. You bucked the ratio by 25%. Your point is?

And it's not a hard and fast rule anyway, it's just an indicator to try and correlate a permie salary with a contractor gross rate, since every newbie asks the same damn pointless question. Your rate - and how much of it you can afford to keep - is what you can get, it bears no realtionship to a permanent salary

BTW I've saved £40k in 9 months on a roughly similar day rate, so perhaps you're not that clever.

My point is that £50k p.a is not 50 pound per hour and is not £400 per day - do the math. I see now where your formula comes from.

Newbies may ask the sam damn pointless question but that's no reason to give the same damn pointless answer. Try saving £40k in 9 months on £50k or £ 60k per year.

[malvolio]

My point is that £50k p.a is not 50 pound per hour and is not £400 per day - do the math. I see now where your formula comes from.

Newbies may ask the sam damn pointless question but that's no reason to give the same damn pointless answer. Try saving £40k in 9 months on £50k or £ 60k per year.

FFS try thinking before you post. The comparison is betwen the earning power of a permanent salary working 365 days a year and the average contract working 230 days a year allowing for holidays and all the other days (like weekends) you don't get paid for, plus assorted fixed overheads like ErNIC adn accountants. Everyone does better than that to some extent, it's just a fscking baseline, i.e take on a contract at less than that proportion of your perm salary and you're losing out.

[Scrag Meister]

My immediate reaction is that you would be inside IR35, but that is not guaranteed. If your working practices don't change then definitely inside. Check the contract re MOO, Substitution etc...

All I would say is that it is HIGHLY unlikely that you will be worse off contracting than perm even inside IR35, this gives you your first contract and invaluable experience running a business. Build a warchest giving you something to fall back on. 6 months living costs after tax seems to be minuimum recommended amount.

Do some calcs, add incresed pension payments, fiddle around with parameters, compare perm v contract etc...

GL, a switch from perm to contract is a good start IMHO.

[Wanderer]

Newbies may ask the sam damn pointless question but that's no reason to give the same damn pointless answer. Try saving £40k in 9 months on £50k or £ 60k per year.

There are loads of calculators out there where people can put in their own numbers but people feel the need to come on here and ask, thinking that a bunch of strangers can read a two line summary of their circumstances and make a judgement. We all know the formula is wrong, but there is no "right" answer so if people have to ask then that's what we will say.

I went from a 50k permie job into a £500 pd contract

So you think the formula should be permie salary / 1250 then?

[MickeyP]

Jesus christ

I will condense it for you...








There are useful words inbetween but that is a little summary which I think answers your questions.

NL you strike me as the sort of person who would drive an inch off the bumper of a learner driver.

[northernladuk]

NL you strike me as the sort of person who would drive an inch off the bumper of a learner driver.

The fact they even let drivers on the road pisses me off, and WTF is that stupid green P plate for? but anyway, lets not get started on that hey

That aside, there is a difference between a learner driver and someone that can't be bothered to read or understand advice that is been given to them. The answer to (another) of the OP's simplistic question was in the advice that MF kindly spent time composing.

[heyya99]

I negotiated a rate of 400 pd in return for a notice period of just a week. My boss told me he will give me a head's up alot earlier so I agreed.

Rang another invoicing company. They advised me to go LTD even if I am caught by IR35. I think I will go for a LTD. The company I called said there is not much work for me to do bar an hour or 2 per month.

[northernladuk]

I negotiated a rate of 400 pd in return for a notice period of just a week. My boss told me he will give me a head's up alot earlier so I agreed.

Rang another invoicing company. They advised me to go LTD even if I am caught by IR35. I think I will go for a LTD. The company I called said there is not much work for me to do bar an hour or 2 per month.

Have I missed something here? When you were perm your boss said he would pay you that day rate in return for leaving earlier than your notice?? Really? This sounds more like they are going to bin you on the cheap to me. I would be worried with this arrangement unless there is more to it than you have put here.