Inside ir35 rate to permanent salary

[NowPermOutsideUK]

This is a topic that I think about many times a day and the answers and explanations that have been put forward never actually provide any numbers

Surely when people are comparing roles this question is the first and foremost item they consider - It is for me which is why I tried to ask the question clearly and again

[malvolio]

This is a topic that I think about many times a day and the answers and explanations that have been put forward never actually provide any numbers

Surely when people are comparing roles this question is the first and foremost item they consider - It is for me which is why I tried to ask the question clearly and again

Well there you go. In 25 years of being a contractor I have never contemplated taking a perm role, nor have I been presented with the choice between perm and contract so this particular question has never crossed my mind.

But the basic really rough totally unprovable answer is that you get to keep around 45% of your salary at the sort of numbers we look at as opposed to about 45% of your gross inside IR35. All you have to do is work out your actual gross from the fuzzy numbers bandied around by the agencies and the clients for inside gigs and what the actual salary is for the perm role, since it is very rarely what they advertise. And of course, find a contract that works a guaranteed 230 days a year.

Thats's as close to numbers as I can get - and they are probably wrong.

[SueEllen]

This is a topic that I think about many times a day and the answers and explanations that have been put forward never actually provide any numbers

Surely when people are comparing roles this question is the first and foremost item they consider - It is for me which is why I tried to ask the question clearly and again

So you are trying to compare two different lifestyles by just money?

Remember not all contractors work 227 days per year.

[WTFH]

So you are trying to compare two different lifestyles by just money?

Remember not all contractors work 227 days per year.

And not many perm roles have pensions less than 10%, but if he’s only worth 3%, then that says more about him than it does about contractors.

[hobnob]

I would be most interested if someone could provide some numbers for the following matrix - I promise to bookmark it and review it frequently and it would help many others including myself

Please note that the OP is asking about inside rates. You are asking about outside rates, so this would be better on a separate thread rather than going off on a tangent from the original discussion.

[jamesbrown]

Please note that the OP is asking about inside rates. You are asking about outside rates, so this would be better on a separate thread rather than going off on a tangent from the original discussion.

A separate thread from LPM1 on outside to permie rate equivalents?

[WTFH]

This is a topic that I think about many times a day and the answers and explanations that have been put forward never actually provide any numbers

Surely when people are comparing roles this question is the first and foremost item they consider - It is for me which is why I tried to ask the question clearly and again

Please start a new thread on it, rather than polluting other threads with the same thing. This thread was about INSIDE IR35. You are obsessed with something else - start a new thread, or find a forum that wants to talk about it many times a day.

[Smartie]

I can give you a fairly concrete example as I've been offered a perm role at exactly the same remuneration as contract - thanks for that :-)

Use a website like https://listentotaxman.com/

Assuming you know the number of working days in a year for the perm role - say 227 then get one of your umbrella invoices for 19 days which should be fairly common, take the figures for take home pay and pension contributions and play with the website figures until they match. That's how you can work out the equivalent perm salary.

Of course there are other differences like benefits, annual manager reviews, holiday approval requirements, getting paid while 'on the bench' and so on, but you can work out the figures quite easily.

[WTFH]

Assuming you know the number of working days in a year for the perm role - say 227 then get one of your umbrella invoices for 19 days which should be fairly common, take the figures for take home pay and pension contributions and play with the website figures until they match. That's how you can work out the equivalent perm salary.

Of course there are other differences like benefits, annual manager reviews, holiday approval requirements, getting paid while 'on the bench' and so on, but you can work out the figures quite easily.

There are other issues on the matter, which is why it's not something that can go into a grid.
If we have two contractors on the same day rate, one who has a mortgage of £2k a month, has kids at a private school (another £2k), council tax, gas, water, electric, etc, then they need to take home let's say £6k a month.
If the second contractor lives with his parents, then all those bills vanish. He might contribute a little to running the house, but it's nowhere near the same amount. He might have a property investment or two that gives him some income. So, for his contract, he might pump as much as he can into a pension.
If we then compare the amount of take-home + pension, the one who puts less into his pension pays more tax.

...and that's before we talk about Ltd companies, family members as shareholders or employees, etc

So, when someone says "compare this daily rate to that salary", the only way to make it meaningful is to set the standards for the comparison and go from there.
A generic response is going to be wrong most of the time, as the Americans would put it YMMV.

[Lance]

I can give you a fairly concrete example as I've been offered a perm role at exactly the same remuneration as contract - thanks for that :-)

Use a website like https://listentotaxman.com/

Assuming you know the number of working days in a year for the perm role - say 227 then get one of your umbrella invoices for 19 days which should be fairly common, take the figures for take home pay and pension contributions and play with the website figures until they match. That's how you can work out the equivalent perm salary.

Of course there are other differences like benefits, annual manager reviews, holiday approval requirements, getting paid while 'on the bench' and so on, but you can work out the figures quite easily.

I don't know a single outside IR35 contractor who takes all their money out.
Every one of them takes c. £50k (£100k for their spouse, or maybe less, depending on what the spouse does), and leaves the rest in the company. Initially as a war chest.

The comparison of available take home is meaningless at this stage. A £75k salary has equivalent take home to £1000+ a day outside if tax efficiency is sought.
An inside IR35 contract of the same day rate that I do outside is more take home as well...

So again. Difficult to compare without full information on age, exit plan, marital status, pension status, health, skill longevity, desires, aims and objectives.