what am i worth

[IronMan]

If you're on £65k then you need to be looking at 520+ a day to break even really.

How did you calculate this figure?
On this rate he should get 65k after 7 months of work.

[max]

How did you calculate this figure?
On this rate he should get 65k after 7 months of work.

Out of interest, How did you calculate this figure?

[tay]

If you're on £65k then you need to be looking at 520+ a day to break even really.

Bulltulip

[Lewis]

If you're on £65k then you need to be looking at 520+ a day to break even really.

Hmmm ... £520 per day * 5 days per week * 45 weeks per year
= £117,000 (that gives 7 weeks holiday and sick leave)

Take home roughly 75% via Limited Company = £87,750 after tax

You'd need a permanent salary of roughly £140,000 to get the same money after tax see here

Ok factor in pensions, bonuses etc.. but I would chose £520 p/day every time

[Euro-commuter]

Hmmm ... £520 per day * 5 days per week * 45 weeks per year
= £117,000 (that gives 7 weeks holiday and sick leave)

Take home roughly 75% via Limited Company = £87,750 after tax

You'd need a permanent salary of roughly £140,000 to get the same money after tax see here

Ok factor in pensions, bonuses etc.. but I would chose £520 p/day every time

£520 per day * 5 days per week * 42 weeks per year
= £109,200 (that gives 4 weeks holiday, 1 week sick leave, 3 weeks bench, 10 days public holiday.)

£103,740 after 5% umbrella fees, equivalent to almost £92,000 after Employer's NIC.

Just one way of looking at a near equivalent. Of course if your contract situation is very different from the permie situation, the arithmentic will be different. E.g if you do some or all of these:
1. find a way of not having your employer pay Employer's NICs on some of your income
2. not have any bench time
3. not have as much holiday as a permie
4. do your own admin (try budgeting it at £520.00 per day!).

[Lewis]

£520 per day * 5 days per week * 42 weeks per year
= £109,200 (that gives 4 weeks holiday, 1 week sick leave, 3 weeks bench, 10 days public holiday.)

£103,740 after 5% umbrella fees, equivalent to almost £92,000 after Employer's NIC.

With 42 weeks instead of 45 a Ltd is equivalent to roughtly £130K permanent salary (ignoring bonus, pension, health care etc..).

If an umbrella is equiv to £92K I can't understand why anyone would go umbrella - give up £38K just to save a small amount of admin.

You could get a lovely brand new top quality car for £38K ....

[max]

Bulltulip

that was the description I was looking for!

[Euro-commuter]

With 42 weeks instead of 45 a Ltd is equivalent to roughtly £130K permanent salary (ignoring bonus, pension, health care etc..).

If an umbrella is equiv to £92K I can't understand why anyone would go umbrella - give up £38K just to save a small amount of admin.

You could get a lovely brand new top quality car for £38K ....

The difference is primarily not whether you go umbrella or Ltd, but whether you pay Employer's National Insurance on your income.

I gave an example that showed what the calculation would look like, comparing like for like. I was not suggesting any particular way of working, merely showing an apples-for-apples comparison.

In that context, it is reasonable to suppose that the contractor pays someone to do the admin that he would not have to do as a permie. Note please that I do not suggest that the contractor should do this, only that he should calculate on that basis in order to make a better comparison.

If the contractor then wants to do the admin himself, and trouser the notional cost, well and good (I do), but that is in effect doing overtime as an accounting & payroll assistant. It skews the calculation. Do it by all means but don't count it in the default calculation.

Likewise, if you compare a salary on which National Insurance is paid on all income, you should for the purposes of the initial comparison look at a contractor paying the same. This is not characteristinc of umbrella vs Ltd, it is characteristic of paying NICs or not.

If you then decide that this is something that you don't want to pay, and you think that running a Ltd Co allows you not to pay them, that is up to you. But that is another case of the contractor situation being different. First do the apples-for-apples comparison, so that you have a firm basis for then seeing how the situation might differ.

[TheFaQQer]

How did you calculate this figure?
On this rate he should get 65k after 7 months of work.

I based it on Malvolio's calculation (and others) in a number of threads, such as this one. Take your annual salary, divide by 1000 and that's a rough calculation of an hourly rate. I assumed an 8 hour day, but I guess it could be as low as 7.5 hours and therefore a daily rate of approx £487.50

Where did you get yours from?

[TheFaQQer]

Bulltulip

Well argued, reasonable point.

And helpful to the OP too...