Contracting - how to be paid...

[whitewater]

Hi, this is my first post here, have found the forums through Google and lurked for a couple of days, decided to register to make the most of things here.

I have been offered contracting work - my first time contracting. The advertised rate is £17.50/h Ltd/Umbrella or £14.22 PAYE. I suspect that the £3.28 differential is not worth the loss of holiday/sick pay, hassle of setting up Ltd company, doing tax returns or paying umbrella company fees - indeed the holiday pay alone is going to increase the hourly rate by 12%.

Is there a ballpark ratio of what to expect as a permanent employee vs a contractor? Is there a minimum rate per hour that makes contracting worthwhile?

[northernladuk]

Have you tried Google?

Holiday pay from a brolly is taken out of your income by the way. Its not free.

[quackhandle]

Welcome to the Forum, there is a wealth of info in the first timer guides, go and read them. And then read them again. Repeat until you grasp it all.

Is there a ballpark ratio of what to expect as a permanent employee vs a contractor? Is there a minimum rate per hour that makes contracting worthwhile?

These questions are too vague as there are many "it depends" answers. Length of contract? Type of role (senior/mid/junior), is the agency trying to screw you? (probably). Is the role direct with the client?

What makes contracting worthwhile isn't just the daily/hourly rate (yes, it is a large factor but not 100%) take into account the workload, are your skills in demand? How much experience have you got? (This is a big one). What about the people you work with, location of client office, any days you can WFH? Lots of variables.

Good luck.

qh

[sal]

I have never done the exact math, but believe the point at which is financially worth while to go for a ltd. over umbrella is about £200pd / £25/h anything lower than that and the NI/Tax "saving" barely cover the accountancy fees.

There is no such number when comparing contract to perm/PAYE roles as you are comparing apples to oranges.

So in this case it's a toss between umbrella and PAYE. Check what the terms of the PAYE are, don't just assume it includes holiday/sick pay.

[whitewater]

Have you tried Google?

Holiday pay from a brolly is taken out of your income by the way. Its not free.

Hi, yes I know, I will need to take holiday pay from the £17.50 headline rate, what I meant was it will (effectively) increase the PAYE rate of £14.22 by 12% - agency has said that the £14.22 doesn't include the holiday pay they are required to give me under WTR rules)

[northernladuk]

I think we are making this more complex than it is, partly with the lack of info from the OP but.. This is a 25k a year job so that's LTD right out even if it was an option. It's just not worth it.

You'd also argue a 25k a year gig is temping and not really contracting.

Any decent brolly will give you exact break down of your situation if you ask them. They'll run the numbers and go through with you what you'll get. You should ask the PAYE people the same and you'll have both of them to compare.

I struggle to see contracting with no benefits for 25k is really worthwhile to be honest. I'd say take a perm gig that offers you some training to get out of work at this level.