65k or £450 p/d

[sam14jan]

Hello folks,

I have been offered a salary of 65k by a company but I declined saying I would prefer a long term rolling contract on £500 p/d. The consultant came back that the maximum his client can offer is £450 p/d (this is after a lot of negotiations). So my first question is should I accept £450 or should I be considering 65k annual salary. This question is entirely based on financial aspects because if I use salary/1000 then I should be looking at £650 which is absolutely too much seeing the experience I have. I am an engineer working in oil industry, so there would be offshore work as well. Dont know exactly how much but it would be roughly 6-8 weeks a year minimum. That means £160 quid allowance per day on top of £450 p/d (£610 total), but with the 65k it would be somewhere in the range of approx £250-300p/d on top of salary.
Would appreciate if any one from the oil industry or someone with experience like to share their views on the situation.

What would you do if you were in this situation? Contract would likely be long term..years...

Also I have used a lot of different take home pay calculators which show approx £6k monthly take home (salary+div), but have talked to few accountants and requested them some rough numbers. Their take home pay is way less than £6k. Anyone on or around £450 here? Would appreciate if you can throw some numbers about the take home pay.

Cheers,
Sam

[MarillionFan]

Whoever told you salary/1000 needs a kick up the backside. It's stoopid calculation.

Day rate * 46 weeks as a LTD versus £65000 take home + all benefits.

Start from comparing at that level, and then adjust the weeks accordingly.

[Wanderer]

I'd leave a £65k permie job for £65/hour contracting but the same calculation doesn't necessarily work the other way - I'd probably want £85k to leave a £65/hour contract.

The decision depends very much the personal circumstances of the contractor. As a contractor there may be a good bit of scope for tax avoidance with income splitting etc though this depends on your attitude to risk. Then there is pension, health care, training and other permie benefits to consider.

Unless you want to tell us your life story (which we don't want to listen to anyway), there are so many variables to consider so we can't decide for you - hence the "stoopid calculation" of salary/1000 to give you a ball park hourly rate.

[Wanderer]

Also I have used a lot of different take home pay calculators which show approx £6k monthly take home (salary+div), but have talked to few accountants and requested them some rough numbers. Their take home pay is way less than £6k. Anyone on or around £450 here? Would appreciate if you can throw some numbers about the take home pay.

This Calculator throws up pretty reliable numbers for me.

Good luck!

[d000hg]

You don't want to be an employee but you do want to contract at the same company for many years? Sounds like an employee to me.

Even with company NI, isn't £450/day going to cost THEM a lot more? Or is company NI 50% of salary?!

[kingcook]

If they're giving you the option of perm or contract, that suggests they'll treat you like an employee even if you take the contract instead of employment.

You'll probably be inside IR35. Take that into account when doing your calculations.

[lukemg]

As others have said - depends on other stuff like:
benefits (can add up to a lot), whether you need security due to family etc, internal prospects for advancement (promotions can add a chunk on/give you extra or different skills over time), are you in a bulletproof technology niche that wont fall off a cliff ?
Take a 5 year view of all this to help decide.
I am on about that money and happy as dont think I could get 65k for my skills/area. BUT if it was offered with bens I would defo give it close consideration but would examine the role/client VERY closely to make sure it was right.
For contract I am not as bothered.

[northernladuk]

I cannot see for one minute how you can be anything but Inside IR35 as already mentioned. Even if you nail your contract outside IR35 your position has got to be indefensible surely. Enduring role, want a permie, will be treated like a permie including Direction and Control. If they want a permie they will treat whoever as one whatever the renumeration agreement. I don't see you have a choice IMO.

It's good money, get the benefits, get as much training and experience in new areas and then in a couple of years come back contracting with a good, uptodate skill base.

Contracting is not an option in your situation unless you want to be looking over your shoulder every day and have the potential of losing everything you own a few years down the line. It just isn't worth it.

[NorthWestPerm2Contr]

I cannot see for one minute how you can be anything but Inside IR35 as already mentioned. Even if you nail your contract outside IR35 your position has got to be indefensible surely. Enduring role, want a permie, will be treated like a permie including Direction and Control. If they want a permie they will treat whoever as one whatever the renumeration agreement. I don't see you have a choice IMO.

It's good money, get the benefits, get as much training and experience in new areas and then in a couple of years come back contracting with a good, uptodate skill base.

Contracting is not an option in your situation unless you want to be looking over your shoulder every day and have the potential of losing everything you own a few years down the line. It just isn't worth it.

Please explain. How is the tax man going to know that he was planning on staying at the company for years? If the contract is outside IR35 and his working conditions outside IR35 then he still has no employee rights - no holidays or sick pay, no redundancy, no exployee rights.

[northernladuk]

Please explain. How is the tax man going to know that he was planning on staying at the company for years? If the contract is outside IR35 and his working conditions outside IR35 then he still has no employee rights - no holidays or sick pay, no redundancy, no exployee rights.

HMRC asks the client what the role is and if he sees it as enduring. If the client they demonstrates this role is part of their heirarchy and strategy going forward it becomes obvious it isn't a short term role with deliverables, even if the the OP managed to word it as such, which he would have serious trouble doing.

The contract might be outside IR35 but his working practices cannot if the client sees the role as a normal vacancy. The client will expect that person to be a resource to the company and do as requested which would be D&C. It is the same role, the only difference will be how the OP is paid. If that can stand up in an IR35 investigation then HMRC have made a bigger balls up of IR35 than we thought.