Inside ir35 rate to permanent salary

[northernladuk]

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..

I've seen a few and I remember one in particular who thought he was absolutely rolling in it and got all the bling associated with high income. Long contract spanning a few years and then it go cut short with two week notice. He was literally in tears in the office as he had next to nothing saved for the impending bench time.

[gables]

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.

Well, interestingly, I worked with a guy who took all his money as PAYE and this was prior to IR35 even being a thing. He reasoned that there was no way he could afford his flat in chelsea on the low salary most were taking and didn't want to risk any kind of investigation.

[gables]

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

Remember not all contractors work 227 days per year.

Indeed I always work with 220 days per year in any calculation

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.

Presuming you're talking company contribution... my last perm role (just finished April this year) did start at 3% and then rose as you contributed more up to a max of 10% with employee contribution being 8%

[WTFH]

Presuming you're talking company contribution... my last perm role (just finished April this year) did start at 3% and then rose as you contributed more up to a max of 10% with employee contribution being 8%

Yes, company contribution, based on the last couple of perm offers I have had has been 10-15% from the company and a minimum of 3% from the employee.
That's within the medical industry for IT roles.

[Smartie]

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.

Sure, but everyone's circumstances are different and that wasn't the question as far as I can tell.
It was 'how do I know what permanent salary is equivalent to my inside IR35 umbrella contract role income'.

Doesn't matter if he's living at home or spending everything he earns, if he's got enough now and he gets the same permanent then he'll be fine. If it's £30k less after tax then he'd need to work out if that's possible, or desirable.

[malvolio]

Sure, but everyone's circumstances are different and that wasn't the question as far as I can tell.
It was 'how do I know what permanent salary is equivalent to my inside IR35 umbrella contract role income'.

Doesn't matter if he's living at home or spending everything he earns, if he's got enough now and he gets the same permanent then he'll be fine. If it's £30k less after tax then he'd need to work out if that's possible, or desirable.

That's simple. All else being equal, they will be the same. After all they have the same taxation and expenses rules in play.

Snag is, all else isn't equal. As we have tried to explain.

[dl8860]

OP, for a very quick and dirty way to do it, I think you can compare (hourly rate as contractor) x 1000 with the salary PA.

i.e if your day rate is 480 for an 8 hour day, that's 60 quid an hour. Comparable to a 60k salaried perm role.

Don't overlook the fact that the only person willing to give you an actual numerical example has 11 posts though...

[WTFH]

OP, for a very quick and dirty way to do it, I think you can compare (hourly rate as contractor) x 1000 with the salary PA.

i.e if your day rate is 480 for an 8 hour day, that's 60 quid an hour. Comparable to a 60k salaried perm role.

Don't overlook the fact that the only person willing to give you an actual numerical example has 11 posts though...

That used to be a rule of thumb for outside IR35.

The OP is talking about inside.

[eek]

That used to be a rule of thumb for outside IR35.

The OP is talking about inside.

I suspect it's something like 800 times hourly rate for an inside Contract - but that will depend on how much of a premium an inside contract is paying compared to outside.