Inside IR35 vs Permanent Income

[oliverson]

Basically this ....


... AND this ...



I feel kind of unfortunate that I started perhaps late in contracting. Up here in Edinburgh the market is really dry and has been for a few months. My main reasons for switching to contracting were the nonsensical permie practices, meetings politics, appraisals etc. and for the first contract I had I decided I loved working, however, if there are no suitable contracts (be it due to brexit or IR35) I am beginning to feel there are little choices left

You can't just expect contract work on your doorstep or throw in the towel. You have to be mobile to be a contractor. In my 15 years I've had probably less than 5 years in my own locality with half of that being right at the outset and the second half currently. So, those local stints have sandwiched 10 years of living away from home mid-week mostly. You have to be prepared to do this as a contractor and in actual fact, it's not all bad. Opens your eyes to a bigger world.

[psychocandy]

Hello,

Wondering if anybody could shed some light on this. If you had to choose between an inside ir35 contract and a permanent position, what would you choose? I mean is it even worth considering a contract if it is within IR35? Whats the point? I am reading bits like for a contract within ir35 one could end up paying more tax than if they were permie.

Thanks.

Hmmm. Are you sure this is for you?

YES If you are inside IR35 you will probably pay a shedload of tax. So what?
I don't get it - If the bottom line works for you then its a goer surely? Its like saying I dont want to earn £500K a year because I'll pay too much tax. (Incidentally, you end up paying even more tax as a contractor because you have to pay employer NI too).

My situation. Government inside IR35. Permie salaries here are crap - £35-£40K. My coontract in inside IR35. It ALL goes through as PAYE and I get the fun of paying
Employers NI PLUS have to pay an umbrella company.

BUT, bottom line is I probably take home per month, 2.5 to 3 times what the permie sitting next to me does... Worth it - yes thanks.

[psychocandy]

I've never understood why IR35 is so terrifying? If the rate is good, and the extra tax means it's still good, why on earth would you not consider it?

EXACTLY.

[psychocandy]

You can't just expect contract work on your doorstep or throw in the towel. You have to be mobile to be a contractor. In my 15 years I've had probably less than 5 years in my own locality with half of that being right at the outset and the second half currently. So, those local stints have sandwiched 10 years of living away from home mid-week mostly. You have to be prepared to do this as a contractor and in actual fact, it's not all bad. Opens your eyes to a bigger world.

In 20+ years I've NEVER had a gig that forced me to stay away from home in the week. One or two borderline with either 75-90 mins drive or train where I occasionally stayed over.

And I live in wales (so my "range" included wales and the south west only - bristol, bath, gloucester, cheltenham etc)

[cojak]

Reading the article, the chap's heart wasn't into contracting, was it? If he had concerns about insecurity before he started, he was always a permie who enjoyed the extra cash. Once it started looking as if it was getting hard, he jumped back into permiedom.

No to diss the guy, but most posters here are dyed-in-the-wool contractors. If they go into permie jobs it's for clear-eyed reasons.

I went into permiedom to let the IR35 dust settle. I'm not saying that I won't go contracting again, I may even choose inside IR35 if it suits.

[OneManBand]

In 20+ years I've NEVER had a gig that forced me to stay away from home in the week. One or two borderline with either 75-90 mins drive or train where I occasionally stayed over.

And I live in wales (so my "range" included wales and the south west only - bristol, bath, gloucester, cheltenham etc)

My situation is the opposite. I am in a slightly niche area, and there is only one client within a 75 miles radius that needs my skills. So far I've managed to get most of my contracts with them, with short stop-gap gigs farther out. Before IR35 in private sector kicks in, I might have to move into a more generic area and market myself to other clients within a commutable distance. Hotels probably won't be viable then if the cost is coming out of your net pay.

[psychocandy]

Reading the article, the chap's heart wasn't into contracting, was it? If he had concerns about insecurity before he started, he was always a permie who enjoyed the extra cash. Once it started looking as if it was getting hard, he jumped back into permiedom.

No to diss the guy, but most posters here are dyed-in-the-wool contractors. If they go into permie jobs it's for clear-eyed reasons.

I went into permiedom to let the IR35 dust settle. I'm not saying that I won't go contracting again, I may even choose inside IR35 if it suits.

"I probably would have remained in permanent employment, as I enjoyed the stability, and wasn’t keen on the additional work that running a company entails"

Not a good start. Should never have left permieland.

[DSF70]

Hmmm. Are you sure this is for you?

YES If you are inside IR35 you will probably pay a shedload of tax. So what?
I don't get it - If the bottom line works for you then its a goer surely? Its like saying I dont want to earn £500K a year because I'll pay too much tax. (Incidentally, you end up paying even more tax as a contractor because you have to pay employer NI too).

My situation. Government inside IR35. Permie salaries here are crap - £35-£40K. My coontract in inside IR35. It ALL goes through as PAYE and I get the fun of paying
Employers NI PLUS have to pay an umbrella company.

BUT, bottom line is I probably take home per month, 2.5 to 3 times what the permie sitting next to me does... Worth it - yes thanks.

Yep, agree, if your day rate is significant in terms of the employee salary, then it’s still gonna be worth it. I wonder whether some people questioning whether to go permie are on rates that don’t work out that much more than the permie equivalent.

[OneManBand]

It will depend on one thing only: your overheads. You'll be paying for hotels and transport from your net pay. If you are lucky enough to be contracting locally, then its very likely to still make sense. If you are travelling, who knows?

We can rest assured that rates won't go up.

[Snarf]

I've never understood why IR35 is so terrifying? If the rate is good, and the extra tax means it's still good, why on earth would you not consider it?

I've said this before.. a contractors take home inside IR35 is still considerably more than I'd get doing a perm job in the north west... So I'm in full agreement.

* Unless something ridiculous has happened to perm salaries in the last few years?