salary vs contracting rate comparison

[expat]

...
It's a rule of thumb to provide a rough equivalent so you can make a quick comparison. The quetion get asked every week, usually by people who can't be arsed to do some basic arithmetic.

If you want a precise answer for any given role, do it yourself with the real numbers.

and post your working here, please.

[mace]

The rule of thumb formula is a bit out

Looking at old.jobstats.co.uk, you can do the following comparison:-

Range Permie Annual Wage Contractor Hourly rate Formula discrepency
>10% 88900 70 27%
>25% 63600 58 9.6%
>50% 47800 40 19.5%
>75% 35400 28 26.4%

Permie salary/1200 would be more accurate nowadays. If you include the benefits that you get as a permie i.e. holidays, pensions (sometimes non-contributary), sometimes a car allowance, sometimes a subsidised gym, sometimes training, not having to pay employer NI (in comparison with those caught by IR35), not having to pay employer liability insurance etc. then permiedom gets increasingly attractive. In some circumstances, the rule of thumb could be permie package/1500.

Other problems with using a formula is that it works for bog standard things e.g. if you're a .net developer. If you've got a niche set of skills, however, the market can be much more volatile.

One of the reasons why I recommend going back to permie work when you get over 35 is that you'll want a senior level position then. Contracting's about making money and the best way of making money is were the demand is at the base of the pyramid. Further up, the opportunities become less, so although you may get a high rate, there'll be longer gaps between obtaining work.

[malvolio]

Which bit of "rough rule of thumb" did you not understand? And if someone is dim enough not to be able to do five minutes basic research and a few sums, are they better off dividing 5 digit numbers by 1200 or 1000?

Jeez, can we get on with something more realistic.

As for "permie work over 35" - which planet are you on? I out-earn my contemporaries by around 50% and have done for years. That's the problem with generalisations, some smartarse always has a reason why they're wrong...

[BlasterBates]

This rule of thumb x 1000, is the most complete nonsense I have ever heard.
Misleading gobbledy gook, that presumes you have hotel expenses, marketing that you take clients out to lunch, run a rather plush company car, take 2 weeks sick leave etc etc

If you can work from home you earn a lot more.

[RichardCranium]

Which bit of "rough rule of thumb" did you not understand?

But the OP didn't want a rule of thumb. He asked for a rule of thumb but he actually meant "Can you work it out for me? And if there's any questions, can you find the answers too? I can't think for myself and need someone to do it for me. It's too hard."

It's either a child or a thickie or a passer-through.

Can you imagine them trying to do their own LtdCo paperwork?

[AlfredJPruffock]

One of the reasons why I recommend going back to permie work when you get over 35 is that you'll want a senior level position then.

Contracting's about making money and the best way of making money is were the demand is at the base of the pyramid. Further up, the opportunities become less, so although you may get a high rate, there'll be longer gaps between obtaining work.

He's good - isn't he ?

Excellent analysis once again by mace - who could disagree with the above ?

[malvolio]

Ok, accurate answers - assuming no hidden bonuses or other interesting perks and a full working year, no tax-saving expenses or other imaginative variations, in order to return the same net pay the gross salaries are

£400 a day = £87,639
£500 a day = £108,433
£800 a day = £170,490.

Happy now?

And no, I'm not going to show my workings. I leave that as an exercise for the less capable.

BTW, going on those numbers it looks like hourly * 1700 is a the new rule of thumb, not that I ever GAS anyway

[MickeyP]

Ok, accurate answers - assuming no hidden bonuses or other interesting perks and a full working year, no tax-saving expenses or other imaginative variations, in order to return the same net pay the gross salaries are

£400 a day = £87,639
£500 a day = £108,433
£800 a day = £170,490.

Happy now?

And no, I'm not going to show my workings. I leave that as an exercise for the less capable.

BTW, going on those numbers it looks like hourly * 1700 is a the new rule of thumb, not that I ever GAS anyway

Much better Mal. Well done. Now I can negotiate that permie wage with a much clearer view. (BTW you've taken income shifting into account here surely)

[Mr.Whippy]

Happy now?

No, not entirely... could you work it out for £625/day please?

[malvolio]

No, not entirely... could you work it out for £625/day please?

£134,251.