Keep itching to get into Contracting

[TechJinx]

No, you are. Sorry, but if you don't know that, how on earth are you running a company properly and ensuring everything is properly covered off, even if you aren't actually liable for them...? YourCo's income and expenditure is your responsibility, nobody else's.

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I have insurance and the accountants cover off what I need to pay in terms of national insurance.

I just didn't know your acronynms - so thanks perfect storm for a more constructive answer .

I was looking to move house at the time and, having only been contracting for 15 months, felt I would struggle to get a mortgage. The company I contracted for were keen to keep me so they offered a decent perm salary (granted less than I was getting as a contractor, but still better than my previous perm role) so I made the switch back.

I moved 4 months after I started contracting - used a specialist broker who got me a good rate with a high street lender on my contract rate - didn't need any accounts etc. It's the only time I've had to send a CV to get a mortgage though!

[uk contractor]

I'd dispute the figures being bandied around here - I left a £78k job (admittedly with some pretty good perks like non contributory pension making it a job worth ~£100k with no bens


moved onto £500/520 p/d contract and according to my figures after a year of contracting (exactly matching the financial year which has been handy for accounting...) and I reckon I've made £107k net this year - which equates to £183k as a permie salary using a reverse calculator.
(assumptions are that I've "made" the money in my war chest and pension but haven't drawn them yet - used the same calls on my non bens salary above so its on equal footing)

Now that includes having one of the best set ups where my wife has half the shares and I did have quite a large amount of expenses travelling into London daily from Z6 but still - thats not too different to the figures the OP was quoting and is a substantial increase.

Just my 2 pence worth from the other side of the fence.....

But as several have alluded to thats a full year billing 224.5 days (gotta love a detailed invoice tracker spreadsheet)...... so depends how in demand your skill set is.

Well done for earning that but sorry there is no way will you legally get to keep the £107k. If you can get away with £85k net I would be amazed quite frankly & I presume you do your own online personal tax returns every year............... Saying you leave it up to the accountant tells me you do not even understand the tax liability implications even giving your wife half the shares has implications for her she will now need to complete a HMRC tax assessment every year & give full financial details etc etc unless you pay your accountant to do it all for both of you which would be costly!

As a very rough guideline you need to earn gross about 1.25 times a perm salary to make them equal but as you lose the other perm benefits & may not work over 200 days per year its hard to give an exact number.

[unixman]

>70k ? 90% home based ? And the only downside of your job is boredom ?

No, obviously you should not go contracting. Stay in the job for as long as possible, and enjoy life. Your only problem is probably not having enough holiday to enjoy your money. Wait until such time as you are made redundant, or forced to leave in some other way, then consider contracting.

At 450 pd (or maybe even 350), you would probably improve on 70k, even with the hazards of contracting. However you would have to work quite hard for your money, and travel a lot, and sometimes stay away from home. And sometimes be bored in the contract work, and sometimes be bored at home looking for contracts.

[TechJinx]

Well done for earning that but sorry there is no way will you legally get to keep the £107k. If you can get away with £85k net I would be amazed quite frankly & I presume you do your own online personal tax returns every year............... Saying you leave it up to the accountant tells me you do not even understand the tax liability implications even giving your wife half the shares has implications for her she will now need to complete a HMRC tax assessment every year & give full financial details etc etc unless you pay your accountant to do it all for both of you which would be costly!

As a very rough guideline you need to earn gross about 1.25 times a perm salary to make them equal but as you lose the other perm benefits & may not work over 200 days per year its hard to give an exact number.

Not at all - remember I'm including £2k a month into a pension, and her shares keep her below the higher rate so yes we need to do a tax return but it's such a simple one it takes 15/20 minutes.

The accountants prepare the figures and join all the HRMC dots and I keep my own. Note that I'm including EVERYTHING in my net figure - expenses, wife income, what I'm keeping in retained that I class as part of my net worth in the same way I do my pension pot, the lot as its money I'm getting now that I wasn't before. Yes I have a very tax efficient position but thats half the point of being a contractor - gross figures mean nothing - it's all about the net surely.

It seems to be a fashion on this forum to immediately say someone does not understand or is clearly missing something when you know very little about their position. I have taken everything into account and spent a very long time working and scenario planning out what I can do to maximise Net income. I then run this past the accountant - not the other way around, so I'm in control. (I even secretly quite enjoy buggering around with the spreadsheet each month)

I even got my business insurance via quid FFS so I got £120 cashback - thats how detailed I end up going.

Also you'll note I wasn't the one asking the question, just sharing how you can make the system work, within the rules to show there is another side than the "you don't understand it, don't do it, if you have to ask you don't belong" brigade.

[TheFaQQer]

moved onto £500/520 p/d contract and according to my figures after a year of contracting (exactly matching the financial year which has been handy for accounting...) and I reckon I've made £107k net this year

...

But as several have alluded to thats a full year billing 224.5 days (gotta love a detailed invoice tracker spreadsheet)...... so depends how in demand your skill set is.

224.5 days @ £520 per day = £116740 gross (being generous, since some of your time was on £500 a day, but let's ignore that)

So how do you get from that figure to £107k net - that gives you a 91.6% return.

[TechJinx]

224.5 days @ £520 per day = £116740 gross (being generous, since some of your time was on £500 a day, but let's ignore that)

So how do you get from that figure to £107k net - that gives you a 91.6% return.

ahh

doh - I included my wife £15k odd from her job before she quit - whoops, my spreadsheet is a joint net thing and I'd forgotten that.

but I am on the first year of the flat rate scheme which pulled in a few k extra.

Revised it looks more like a £150k equivalent permie salary - not quite as high but my point still stands. mostly

[uk contractor]

ahh

doh - I included my wife £15k odd from her job before she quit - whoops, my spreadsheet is a joint net thing and I'd forgotten that.

but I am on the first year of the flat rate scheme which pulled in a few k extra.

Revised it looks more like a £150k equivalent permie salary - not quite as high but my point still stands. mostly

Good luck & everything but I stand by my original point your not going to net £107k. £80-85k max depending on whether or not the HMRC decide to investigate further & or IR35 complications arising from that

I think the max legally using onshore accountants is around 80-84% take home anything higher is usually not worth using regardless of what others tell you be happy with 80-84% & no legal complications

This all comes back to you need to earn at least 1.25 your perm salary to even come close to matching it & thats assuming your going to get a full years work which in itself is becoming tougher when high contractor salaries are usually the first thing which gets canned when companies trim costs/downsize!

[permidom]

Do you have a niche/in demand skill set or standard BTW?

Skill set is standard. I'm a Windows C++ programmer first and second ASP.NET developer.

[TheFaQQer]

Revised it looks more like a £150k equivalent permie salary - not quite as high but my point still stands. mostly

Since you're day rate is somewhere between £50 and £70 a day more than the OP is targetting, you're talking about an additional £11k to £15k a year.

If I was only looking at my current rate and my previous year, I'd be saying "oh yes, you can make much more than you're on" - 242 days on more than the OP is talking about, with next to no expenses because I was working from home.

However, I don't believe that's a sustainable level, so I don't suggest that it's one upon which to take advice. Don't get me wrong - I wish that it was, but I know from the lean years that it absolutely isn't something that you can rely on, which is where the caution comes into the calculations.

[PerfectStorm]

Seems its luck of the draw. Many of the contractors I've gotten to know just get renewed year after year and people only get their marching orders if they're bad. For them, its very reliable (and about as much as a 'permanent' job)