Anyone who has 'went perm', how has it been?

[jayn200]

I hate to say this, but it's really not. Run the numbers properly ( i.e. the whole permanent package including a number of "sick days") compared to the annualised contractor's day rate including holidays, sickness, and down time. You'll find the the difference isn't really that big and that it mostly comes down to slightly better tax efficiency.

I thought that all contractors knew this?

(52*5)-25-8 = 227 working days for a perm gig a year. Sick day policies are so different place to place with some only giving ssp. But let's just be generous and say an extra 7 and go with 220 days (happens to be same 44 weeks most contract calculators use).

You really don't get much in terms of other benefits with a monetary value besides a usual 3 or 4% pension contribution. Rest of the benefits are fluff that employers don't pay for. Let's just give a generous monetary value of 3k for these fringe benefits you likely won't use.

So let's say 4% pension contribution on 55k salary.

That's an extra 2200 a year.

So that's 60200 for 220 days a year.

At 500 a day inside ir35 you need to pay employer ni let's call that 13%. So gross income of 435 a day.

435 x 220 = 95,700

95700/60200 = 1.59 or 159% of the equivalent perm salary.

That's being quite generous.

That 59% increase in pay is your compensation for the risk of taking short term contract work. People in multi year permicontract work are getting paid a premium they don't deserve and are milking the system.

I've covered this in a few different threads but a lot of people here still say the same garbage about perm equivalency and they are misunderstanding what they are reading or hearing.

Employers have several additional costs with perm employees such as training and onboarding costs..

These are not costs or benefits to an employee so when making an assessment for you as an employee or contractor you should ignore these things. They are only for an employer/client to consider not you.

[LondonPM1]

(52*5)-25-8 = 227 working days for a perm gig a year. Sick day policies are so different place to place with some only giving ssp. But let's just be generous and say an extra 7 and go with 220 days (happens to be same 44 weeks most contract calculators use).

You really don't get much in terms of other benefits with a monetary value besides a usual 3 or 4% pension contribution. Rest of the benefits are fluff that employers don't pay for. Let's just give a generous monetary value of 3k for these fringe benefits you likely won't use.

So let's say 4% pension contribution on 55k salary.

That's an extra 2200 a year.

So that's 60200 for 220 days a year.

At 500 a day inside ir35 you need to pay employer ni let's call that 13%. So gross income of 435 a day.

435 x 220 = 95,700

95700/60200 = 1.59 or 159% of the equivalent perm salary.

That's being quite generous.

That 59% increase in pay is your compensation for the risk of taking short term contract work. People in multi year permicontract work are getting paid a premium they don't deserve and are milking the system.

I've covered this in a few different threads but a lot of people here still say the same garbage about perm equivalency and they are misunderstanding what they are reading or hearing.

Employers have several additional costs with perm employees such as training and onboarding costs..

These are not costs or benefits to an employee so when making an assessment for you as an employee or contractor you should ignore these things. They are only for an employer/client to consider not you.

Very very helpful - This debunks the myths that 500 per day (which is good) is anywhere near 55K (which is terrible)

I have had some contracts at 600 a day and I always wonder if 120K perm was similar - This is finance PM in London

[Old Greg]

(52*5)-25-8 = 227 working days for a perm gig a year. Sick day policies are so different place to place with some only giving ssp. But let's just be generous and say an extra 7 and go with 220 days (happens to be same 44 weeks most contract calculators use).

You really don't get much in terms of other benefits with a monetary value besides a usual 3 or 4% pension contribution. Rest of the benefits are fluff that employers don't pay for. Let's just give a generous monetary value of 3k for these fringe benefits you likely won't use.

So let's say 4% pension contribution on 55k salary.

That's an extra 2200 a year.

So that's 60200 for 220 days a year.

At 500 a day inside ir35 you need to pay employer ni let's call that 13%. So gross income of 435 a day.

435 x 220 = 95,700

95700/60200 = 1.59 or 159% of the equivalent perm salary.

That's being quite generous.

That 59% increase in pay is your compensation for the risk of taking short term contract work. People in multi year permicontract work are getting paid a premium they don't deserve and are milking the system.

I've covered this in a few different threads but a lot of people here still say the same garbage about perm equivalency and they are misunderstanding what they are reading or hearing.

Employers have several additional costs with perm employees such as training and onboarding costs..

These are not costs or benefits to an employee so when making an assessment for you as an employee or contractor you should ignore these things. They are only for an employer/client to consider not you.

The other factor that is often ignored is your baseline living costs vs disposable income.

If your income is 55k, making some reasonable assumptions, your monthly take home pay is £3,379. Your monthly living costs (mortgage, utilities, food, car depreciation and insurance etc., the money you budget for annual holiday) is likely to be in the region of 2 to 3k. My increasing your income by a multiple of 1.6, well you do the math... when I started contracting I literally moved from 55k per year to 500 pd, hardly adjusted my lifestyle and was saving huge amounts of money.

In terms of permitractor, I've never been one before this contract, but here I am 4 years on and I guess that's what I am. The client pays me the market rate for my niche skillset, because they can't recruit on the salary bands they pay for permanent staff. Overall, it probably saves them money to have a hard and fast rule to keep permie salaries within strict bands and pay a premium for contractors, rather than start to make exceptions on the permie salary bands and open the floodgates to everyone claiming to be an exception.

[LondonPM1]

The other factor that is often ignored is your baseline living costs vs disposable income.

If your income is 55k, making some reasonable assumptions, your monthly take home pay is £3,379. Your monthly living costs (mortgage, utilities, food, car depreciation and insurance etc., the money you budget for annual holiday) is likely to be in the region of 2 to 3k. My increasing your income by a multiple of 1.6, well you do the math... when I started contracting I literally moved from 55k per year to 500 pd, hardly adjusted my lifestyle and was saving huge amounts of money.

In terms of permitractor, I've never been one before this contract, but here I am 4 years on and I guess that's what I am. The client pays me the market rate for my niche skillset, because they can't recruit on the salary bands they pay for permanent staff. Overall, it probably saves them money to have a hard and fast rule to keep permie salaries within strict bands and pay a premium for contractors, rather than start to make exceptions on the permie salary bands and open the floodgates to everyone claiming to be an exception.

So you are saying what I am saying which is 500 pd is much much more then 55K - Correct?

Thats why I asked for real life examples of contractor to perm salaries

I must be the only one here who thinks that 500 pd == 100k perm and 650 per day should be 140K perm

Thats comparing 220 days a year and net take home home with wife on payroll and dividend of course outside ir35

[Old Greg]

So you are saying what I am saying which is 500 pd is much much more then 55K - Correct?

Thats why I asked for real life examples of contractor to perm salaries

I must be the only one here who thinks that 500 pd == 100k perm and 650 per day should be 140K perm

Thats comparing 220 days a year and net take home home with wife on payroll and dividend of course outside ir35

I think 500 pd is worth more than 55k, but less that 100k.

[Lance]

I think 500 pd is worth more than 55k, but less that 100k.

Each to their own but I’d value £500pd at around £100k.
That is of course mostly subjective.

[Old Greg]

Each to their own but I’d value £500pd at around £100k.
That is of course mostly subjective.

Absolutely it is. I reckon it would take 175 x daily rate for me to seriously consider a perm job.

[cont123]

Wanted to know how is move from contracting to perm will impact mortgage any live example or suggestion is appreciated

[northernladuk]

Wanted to know how is move from contracting to perm will impact mortgage any live example or suggestion is appreciated

How about get a spreadsheet out and work on some numbers. No way we can give you information about your income affecting your mortgage. Get a grip of your own finances.

[jayn200]

So you are saying what I am saying which is 500 pd is much much more then 55K - Correct?

Thats why I asked for real life examples of contractor to perm salaries

I must be the only one here who thinks that 500 pd == 100k perm and 650 per day should be 140K perm

Thats comparing 220 days a year and net take home home with wife on payroll and dividend of course outside ir35

Depends what you mean by equals? Equal take home pay? I don't know if it is but probably close to something like that. I don't feel like doing the calculation for outside ir35 right now.

You should be getting compensated for your risk in a contract.

So a 100k a year perm job shouldn't try to find a contractor for 500 day. There is no compensation for the short duration of the role.

The take home pay should always increase as the length of the work decreases. For example if someone wants you to do a 1 off project with them that's 1 week long and you normally bill 500 per day I would suggest trying to bill them 1000 a day, or at least start from there and see what you can get.

Still.. I wouldn't take anything less than 100k to go perm and no one out there wants to pay me more than 65-70k so I won't be going perm anytime soon.