Flippity-Flop: Weighing up a Return to Contracting

[eek]

If you are spending your VAT then you are probably from the Robert Maxwell school of business management and can believe any numbers you want.

From memory Robert Maxwell also spent the pension and income tax money as well as the VAT.

Although I suspect a few umbrella firms play tricks with the income tax money to facilitate the payment terms they give to their agencies.

Should say Clarity doesn't do that but I can think of a fair few who do (and a fair few agencies who insist on it before an umbrella gets on their PSL).

[gables]

What is the formula people use for weighing up a permanent versus contractor salary?

Well what I did was to look at my permie net pay + total pension contribution (mine and the employer) and compared that to what the contract (inside IR35) would net after contributing the same to pension as permie and I found I've doubled my monthly net pay :-)

[malvolio]

Well what I did was to look at my permie net pay + total pension contribution (mine and the employer) and compared that to what the contract (inside IR35) would net after contributing the same to pension as permie and I found I've doubled my monthly net pay :-)

That's not exactly a formula, or even a usable comparison outside your individual situation. For one thing, which number did you use for your contract income, the headline rate advertised or the rate payable to you...?

[eek]

That's not exactly a formula, or even a usable comparison outside your individual situation. For one thing, which number did you use for your contract income, the headline rate advertised or the rate payable to you...?

Which part of monthly net pay (i.e. take home pay after PAYE has been deducted) doubling did you not grasp.

[gables]

That's not exactly a formula, or even a usable comparison outside your individual situation. For one thing, which number did you use for your contract income, the headline rate advertised or the rate payable to you...?

And that is my point :-)

[malvolio]

Which part of monthly net pay (i.e. take home pay after PAYE has been deducted) doubling did you not grasp.

He said net pay. He didn't say on what basis it was calculated. He did say "would pay"....

[eek]

He said net pay. He didn't say on what basis it was calculated. He did say "would pay"....

Net pay has a universal definition. The fact you don't understand it isn't our problem.....

[malvolio]

Net pay has a universal definition. The fact you don't understand it isn't our problem.....

Net is a function of gross. I understand the concept I just query the starting point of the calculation, else the statement "doubling," is meaningless.

AFAICS he's not using actuals for the contract net pay. Perhaps it's those years in accountancy prompting the question to establish how meaningful or relevant the post was to the original question.

[eek]

Net is a function of gross. I understand the concept I just query the starting point of the calculation, else the statement "doubling," is meaningless.

AFAICS he's not using actuals for the contract net pay. Perhaps it's those years in accountancy prompting the question to establish how meaningful or relevant the post was to the original question.

Oh I think it very much answers the question.

£650 a day even outside IR35 isn't going to double your money compared to a £90,000 permie job - especially given the new 26.5% rate for all profits above £50k.

[gables]

Well what I did was to look at my permie net pay + total pension contribution (mine and the employer) and compared that to what the contract (inside IR35) would net after contributing the same to pension as permie and I found I've doubled my monthly net pay :-)

So this ^^^^ is what I said

Net is a function of gross. I understand the concept I just query the starting point of the calculation, else the statement "doubling," is meaningless.

AFAICS he's not using actuals for the contract net pay. Perhaps it's those years in accountancy prompting the question to establish how meaningful or relevant the post was to the original question.

I'm using actuals, i.e. what ends up in my personal bank account.... so to be clear:

My Permie net pay = what actually went into my personal bank account
My Contract net pay = what actually goes into my personal bank account

My Contract net pay = 2 * Permie net pay and in both roles my pension received\receives the same amount.

What you don't know is what my permie salary was and what my contract rate is but the above is true regards money going in to my bank account and pension.

What I was trying to show is that to compare between permie and contracting is not possible in general because it is a personal thing, the above is what I used to determine whether to leave my permie role for this contract.

The OP asked what formula people used, this is mine yours might be different, hence it's not really possible to answer as it's so personal, which is what I was actually trying to show :-)