Contractor rate vs. employer's permie overheads

[ruasonid]

Planning to return to contracting after a long break. Many companies these days seem to prefer FTC's as opposed to a straight B2B contact. What is the approximate overhead companies carry over the FTC 'rate' (which is often equivalent to a salary) to cover NI, pension, holidays, etc.? Previously I used 40% as a ballpark figure, but not sure how that stacks up in today's environment. Incidentally, I'm in IT senior project/programme management (medium to large enterprise) and want to use the figure to negotiate a daily rate.

[stek]

Planning to return to contracting after a long break. Many companies these days seem to prefer FTC's as opposed to a straight B2B contact. What is the approximate overhead companies carry over the FTC 'rate' (which is often equivalent to a salary) to cover NI, pension, holidays, etc.? Previously I used 40% as a ballpark figure, but not sure how that stacks up in today's environment. Incidentally, I'm in IT senior project/programme management (medium to large enterprise) and want to use the figure to negotiate a daily rate.

Stay where you are mate, seriously.

[malvolio]

FTC is employment, end of. It comes with a market average salary and taxes, no pension benefits, a guaranteed end of life and no redundancy option. So perhaps not the world's greatest idea...

Salary to day rate is simple: divide your current annual gross by 1000 to get an hourly rate that will, all things considered, give you about the same net at the end of the month, having sacrificed a large pile of benefits and incurred a whole lot of costs that you never see as a permie.

You no longer go contracting for the money (you shouldn't anyway, but now it's simply not there any more). Seriously, as a senior manager, you will get more as a permie than as a contractor unless you are very lucky. You're up against experienced contractors with a history and a network, you won't get top rates.

[ruasonid]

Stay where you are mate, seriously.

I would if I was in work, but looking for it is not a great place to stay! Appreciate your sentiments though.

[ruasonid]

FTC is employment, end of. It comes with a market average salary and taxes, no pension benefits, a guaranteed end of life and no redundancy option. So perhaps not the world's greatest idea...

Salary to day rate is simple: divide your current annual gross by 1000 to get an hourly rate that will, all things considered, give you about the same net at the end of the month, having sacrificed a large pile of benefits and incurred a whole lot of costs that you never see as a permie.

You no longer go contracting for the money (you shouldn't anyway, but now it's simply not there any more). Seriously, as a senior manager, you will get more as a permie than as a contractor unless you are very lucky. You're up against experienced contractors with a history and a network, you won't get top rates.

Thanks.

[MPwannadecentincome]

Salary to day rate is simple: divide your current annual gross by 1000 to get an hourly rate that will, all things considered, give you about the same net at the end of the month, having sacrificed a large pile of benefits and incurred a whole lot of costs that you never see as a permie.

You no longer go contracting for the money (you shouldn't anyway, but now it's simply not there any more). Seriously, as a senior manager, you will get more as a permie than as a contractor unless you are very lucky. You're up against experienced contractors with a history and a network, you won't get top rates.

Even then top rates for senior managers - how many roles are there at £90+ per hour? In my experience getting £60 per hour (through umbrella) netted me only slightly lower than a perm salary in the £80Ks when I switched from contracting to perm for a while - yes the perm had benefits on top but through Ltd Co the net would have been more equal potentially.

Does this divide by 1000 rule work at senior levels?

[malvolio]

Even then top rates for senior managers - how many roles are there at £90+ per hour? In my experience getting £60 per hour (through umbrella) netted me only slightly lower than a perm salary in the £80Ks when I switched from contracting to perm for a while - yes the perm had benefits on top but through Ltd Co the net would have been more equal potentially.

Does this divide by 1000 rule work at senior levels?

It will drift a bit because of the additional high value benefits like better cars and Health Care, and it's only ever going to be a rule of thumb anyway, but it's still a good indicator.

But a typical £90k senior permie salary is closer to £120k when you add in stuff like a proper motor, health, 10% bonus, share schemes and pension, and £120 an hour is £1000 a day territory. Very few advertised contract roles at that level, that's interim manager country.

[stek]

It will drift a bit because of the additional high value benefits like better cars and Health Care, and it's only ever going to be a rule of thumb anyway, but it's still a good indicator.

But a typical £90k senior permie salary is closer to £120k when you add in stuff like a proper motor, health, 10% bonus, share schemes and pension, and £120 an hour is £1000 a day territory. Very few advertised contract roles at that level, that's interim manager country.

...or SAS working from home...

[MPwannadecentincome]

It will drift a bit because of the additional high value benefits like better cars and Health Care, and it's only ever going to be a rule of thumb anyway, but it's still a good indicator.

But a typical £90k senior permie salary is closer to £120k when you add in stuff like a proper motor, health, 10% bonus, share schemes and pension, and £120 an hour is £1000 a day territory. Very few advertised contract roles at that level, that's interim manager country.

By the time you have paid BIK tax and over £100K you start to have your personal allowance removed then the comparison gets a bit screwy I think!

Yes you are right it is IM country at that rate - and you need a REALLY good network to get to know about those roles.