Hard to find contracts?

[Fred Bloggs]

Caveat to the above, I do not think you can run a car (total cost of ownership) for 25p or 40p a mile. I suppose you could argue you already own it, but presently I'm doing about an extra 800 miles a week that I wasn't doing 4 months ago until I got this contract. I don't think 25p/40p a mile covers the extra fuel and wear and tear.

[eek]

Caveat to the above, I do not think you can run a car (total cost of ownership) for 25p or 40p a mile. I suppose you could argue you already own it, but presently I'm doing about an extra 800 miles a week that I wasn't doing 4 months ago until I got this contract. I don't think 25p/40p a mile covers the extra fuel and wear and tear.

What are you driving where £9000 (10,000 @ 40p a mile, 20,000 @ 25p a mile) does not cover the costs.

Personally when I've ended up in a situation like that I've minimised depreciation by purchasing a low mileage two - three year diesel upto say 30,000 miles ran it for 18 months and then repeated as required.

[ITContractorUK]

I applied for 4 contract positions yesterday and just had a phone interview for one of them.
A 6 month contract (with probably another 6 months extension) worth £550/day..
Physical interview early next week. Interesting!

[theroyale]

OK - here's my rough calculation. It has the following assumptions:

1) You are operating as a limited company.

2) You are outside IR35.

3) You do not have any travelling expenses (obviously not true but seeing as you gave no indication of your travelling this is what I have assumed).

4) You take a salary of around £6k and the rest in dividends.

5) You don't make any company contributions to your pension.

6) You take out all of the distributible profit which you make every year.

7) Probably others which I haven't thought of...


£300/day for 45 weeks a year (allowing for holidays / bank holidays / sickness)
=> £67.5k

Salary of 6k, 1k of PAYE and other expenses (such as insurance), 1.5k on accountancy fees
=>£8.5k

Profit = £67.5 - £8.5 => £59k

Corporation tax @21% = £12.4k

Distributible Profit = £59k - £12.4k = £46.6k

If you took dividends up to the 40% tax band you would be able to take a gross amount of roughly £43k - £6k salary = £37k. Which (given the 10% tax credit) would leave a net dividend amount of 90% of £37k = £33.3k

Remaining distributible profit = £46.6k - £33.3k => £13.3k

This could be taken out as a gross dividend of £13.3/0.9 => £14.8

Tax on the dividend would be an extra 22.5% (because you are in the 40% tax band) = £14.8 * 0.225 => £3.3 k. So the net dividend (after all taxes) would be £13.3 - £3.3 => £10k

So, your total income would be £6k salary + £33.3k dividend + £10k dividend
=> £49.3k

This is equivalent to £4.1k a month.

With a salary of 6k I would have thought you avoid PAYE altogether?

[Peter Loew]

With a salary of 6k I would have thought you avoid PAYE altogether?

Me too. You don't need to be on PAYE and you can stay within the lower dividend threshold for tax efficiency.

[oversteer]

re. PAYE - You should be making national insurance contributions so your entitlement to state pension, benefits continues - IIRC you have to be paid over £110/week and so pay 11% (employee) and 13% (employer) NI contributions

That puts you within the income tax allowance, but about £1300/yr in NICs.

[theroyale]

Me too. You don't need to be on PAYE and you can stay within the lower dividend threshold for tax efficiency.

Not in the above example I think - the lower dividend threshold as I understand it is 37400 pounds p.a.

[Stan.goodvibes]

I'm confused. I do it for the money. And the minimal tax. However I have multiple passports and am prepared to swap hemispheres for good pay (I would be in the UK now competing with you guys for roles except as commented on a different thread, rates are booming here in Oz, and with the pound so tulip it's more cost effective and enjoyable to be here).

Also I like to work my butt off for 8-12 months then bog off somewhere for a few months - bit hard to do that as a permie.

Also i like to turn up, do my best possible effort for 8 hours, then go home - no performance reviews, no wage freezes, no other permie/HR crappola. Being a permie sucks.

And running a company is a piece of p1ss , as long as you keep up to date with the paperwork.

So...

TAKE THE PLUNGE! Enjoy the challenge. Live a life thats different from the wages slaves. IF you want the big money then work hard, learn stuff, be agreeable and professional, and it will come to you one day.

Contracting rules!

[ITContractorUK]

Wow, that is exactly what someone who is thinking about contracting wants to hear!

[rsingh]

Wow, that is exactly what someone who is thinking about contracting wants to hear!

What you want to hear and reality are completely different things. However, the only way you will settle your mind is if you take the plunge. Just go for it.

Don't worry about not currently having a contract. Just hand your notice in. It will help you focus. Get used to being a few weeks away from being canned.

Don't worry about the large number of applicants per role. The majority of applicants are tulipe.

If you are any good, you will be fine. This way, you will find out if you are cut out for it or whether you are yet another legend in your lunch time.

Let us know how you get on once you have handed your notice in.