Permanent to Contracting

**stek** · 27 April 2011, 09:23

Originally posted by adminmaster View Post

hello all ,
I am working in company as permanent employee for a company . However as i wanted to resign and look for contracting jobs I am succesfull in negotiating with present company however they are asking me how much do i need as payed as contractor (in lines of my salary). I am getting 40k per annum as permanent employee.

My question is how should i ask them as day rate for contracting. Pls guide.

£40/hr or £300/day but bear in mind if you are going to be contracting at the same company doing the same job you'll be caught by IR35 for certain.

**adminmaster** · 27 April 2011, 10:02

Originally posted by stek View Post

£40/hr or £300/day but bear in mind if you are going to be contracting at the same company doing the same job you'll be caught by IR35 for certain.

Thank you for reply stek ,

1. pls can you let me know how did u conculde that i need to ask £40ph ? just curious to know.
2. I will be doing it as ltd company. I will take care of IR35.

**rsingh** · 27 April 2011, 10:13

[QUOTE=adminmaster;132086
2. I will be doing it as ltd company. I will take care of IR35.[/QUOTE]

Regardless of how you operate, you are within IR35. Your situation is exactly what it was designed to catch. If you wish to contract outside ir35, then get a contract with a new client.

If you are accepting that you will be within ir35 and paying full PAYE, then I may have misunderstood your response.

**DaveB** · 27 April 2011, 10:15

Originally posted by adminmaster View Post

Thank you for reply stek ,

1. pls can you let me know how did u conculde that i need to ask £40ph ? just curious to know.
2. I will be doing it as ltd company. I will take care of IR35.

1. As a rule of thumb your Hourly rate x 1000 = equivalent permie salary, so £40ph = £40,000 pa.

2. No you won't take care of IR35 by using a Ltd Co. Going from Permie on Friday to Contractor on Monday doing the same job for the same company is exactly the situation IR35 was intended to deal with and you *WILL* be caught if you do this.

**adminmaster** · 27 April 2011, 10:27

Originally posted by DaveB View Post

1. As a rule of thumb your Hourly rate x 1000 = equivalent permie salary, so £40ph = £40,000 pa.

2. No you won't take care of IR35 by using a Ltd Co. Going from Permie on Friday to Contractor on Monday doing the same job for the same company is exactly the situation IR35 was intended to deal with and you *WILL* be caught if you do this.

okie thank you very much for the replies , then i will search for new contracting job then.
Thank you once again for saving me.

**BlasterBates** · 27 April 2011, 11:01

£230 a day to get the same take home inside IR35

A conversion is given here:

IR35 Tax Calculator - IR35 Tax Calculators, Contracting News, Guides and Solutions for UK Contractors

You need though to add a bit for expenses and so on, but that gives you a rough guide. If you have travelling expenses I would say then you definitely need the 300+ but commutable from home then say £250-300. The main big expense is travelling expenses.

**NotAllThere** · 27 April 2011, 11:29

Originally posted by adminmaster View Post

okie thank you very much for the replies , then i will search for new contracting job then. ...

Why? If you work as a contractor for your current employer, at a higher take rate than as an employee (Say at 8x£40 = £320 a day, instead of the £230 BlasterBates calculate), you've benefitted rather nicely, even with IR35.

Can you get £320 a day from another client?

Permanent to Contracting