Inside ir35 rate to permanent salary

[aeroeng]

Hello all,

How can I find out what would my permanent hourly rate inorder to compare if the offered permanent salary is close enough what I was earning in contracting inside ir35? What are the factors I need to deduct in order to find the paye rate.

Cheers,

[NowPermOutsideUK]

I have been trying to find out the answer to this most important question, with the help of the esteemed elders on this forum for the last few years with no success

I expect this thread to be quickly shut down because its "not important" or you are comparing apples to melons (whatever that means)

[malvolio]

No answer because it's simply not possible to state anything meaningful, there are far too many variables. For one thing, a contract is paid in line with a number of days worked, a salary is for a whole year. WE won't even go into variables like tax codes, holidays, sick pay, training, office support yada yada yada.

A very rough estimate is the best you can do, working from the assignment rate (i.e. what they pay you, not what the agency advertised) and deducting ErNICs, AL, agency margin and umbrella fees and running that number through one of the payroll calculators (which are rarely accurate anyway) and doing the same with the stated salary.

I fear NowPerm will continue to be frustrated by this answer to his "most important" question (it isn't, btw), but it's the best we can come up with.

[_V_]

Can't you use one of the various online calculators like this to get a rough idea?

[WTFH]

If you want to work out what the take home pay is for a permanent role, there are plenty of online calculators that will do that. If you want to know what hourly rate = what annual salary, there is no way of working that out. If someone suggests a figure on here, then NPOU and others will jump all over it explaining why it’s wrong.
So, the easiest thing to do is once you get the permanent offer in front of you, along with a list of all the benefits, put it in to a calculator and decide how that compares with how much you took home last year (or maybe the average of the last x years).
At that point you’re going to have two figures. One will be different to the other. Decide if you would be happy with the permanent salary compared to your contracting one.

Although that doesn’t answer any of the other questions about how the permanent job differs from your current contract, if the permanent job looks like it might have a career path, if the contract looks like it might have rate increases coming up, amount of travel, or other things such as family, etc.

It’s like comparing two houses in different parts of the country, but only looking at the price, not the number of bedrooms, amount of land, quality of life, etc.

[malvolio]

Can't you use one of the various online calculators like this to get a rough idea?

That one won't work for an inside gig....

[hobnob]

How can I find out what would my permanent hourly rate inorder to compare if the offered permanent salary is close enough what I was earning in contracting inside ir35? What are the factors I need to deduct in order to find the paye rate.

Permanent jobs would typically advertise an annual salary rather than an hourly rate. However, if you know how many days you'll be working (after bank holidays and annual leave) and how many hours you'll work per day then you can calculate the effective hourly rate.

Putting this in reverse, how long have you been doing inside IR35 contracts? In particular, have you done an entire financial year, e.g. Apr 2021 to Mar 2022? If so, look at the P60 from the umbrella company (or your final payslip of the year), and that will tell you the total PAYE salary for the year. You can then compare this to the salary for permanent roles.

Edit: In fact, that's the same advice I gave you back in March
https://forums.contractoruk.com/busi...ml#post2924045

[malvolio]

Permanent jobs would typically advertise an annual salary rather than an hourly rate. However, if you know how many days you'll be working (after bank holidays and annual leave) and how many hours you'll work per day then you can calculate the effective hourly rate.

Putting this in reverse, how long have you been doing inside IR35 contracts? In particular, have you done an entire financial year, e.g. Apr 2021 to Mar 2022? If so, look at the P60 from the umbrella company (or your final payslip of the year), and that will tell you the total PAYE salary for the year. You can then compare this to the salary for permanent roles.

Edit: In fact, that's the same advice I gave you back in March
https://forums.contractoruk.com/busi...ml#post2924045

Still a lot of variables there though. It would only ever be a rough comparison. I still think focussing on salary is too narrow, there are several other factors in play that are largely ignored.

To be honest, I think if you are comparing permanent to contract income, inside or outside, you are in the wrong job.

[NowPermOutsideUK]

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

I do not assign any benefit to perm roles given you can be fired quickly and I dont want to include sick days, bench time (which is a benefit because you have time off), medical health insurance, free tea and coffee.

25 days holiday is standard and 3% pension is standard. The question is take home after tax to make the numbers all equal - That means 227 days a year for comparison

Day Rate Inside Equivalent	Day Rate Outside	Perm Equivalent
	400
	500
	600
	700
	800

[sadkingbilly]

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

I do not assign any benefit to perm roles given you can be fired quickly and I dont want to include sick days, bench time (which is a benefit because you have time off), medical health insurance, free tea and coffee.

25 days holiday is standard and 3% pension is standard. The question is take home after tax to make the numbers all equal - That means 227 days a year for comparison

Day Rate Inside Equivalent	Day Rate Outside	Perm Equivalent
	400
	500
	600
	700
	800

just how many times are you going to ask the same question, LondonPM??