2 Offers - 1 Perm other Contract, what should I do?

[Diestl]

In fact, go read the sticky thread at the top of Legal and Accounting and get some real numbers to play with.

I quickly read the thread and it compares £50k pa as Limited Company (outside IR35) compared to £50k pa Employee and equates the take home pay as similar. However, I think the advantage of contracting is that you can earn more gross as your hourly rate is higher compared to permie. i.e. your hourly rate will double, also ive seen adverts of 85% net income can be claimed, no wonder theres confusion for newbies.

[confusednewbie]

No wonder I am still confused

I think Diestl hijacked my thread here Could you please tell your opinion in this matter? Are you saying that I can take home more net with £63/hour than with £63K annum? If yes, please dont show the calculators, also state what will be the real cost to me.

I understand that this is more of a lifestyle decision, especially if numbers are close. That is what I am trying to figure out. I will decide for the permy job if the REAL difference is like £500 a month. The calculators on the other hand shows a big difference, almost 75%more without IR35.

If I may ask the question slightly different, what is your cost annualy in contracting? Could you provide me a simple breakdown?

Cheers!

newbie

[Bagpuss]

Mal is right, BUT of course you will take home more as a contractor. The rate Vs sallary calculation is more relevant if you are the company paying the contractor or employee and need to make some justification for the spend. As a permie you won't be able to offset expenses against tax or tax plan to any reasonable extent. Ok you get sick pay and manybe a company car (which you are taxed to the hilt for) but you have to consider the real benefit of the 'benefits' rather than some percieved added value that you never see and would chose to spend elsewhere if you had the cash alternative.

[confusednewbie]

By the way I am SAP specialist in Retail industry with 8 years experience in big 5. I think somebody asked above.

[Pondlife]

By the way I am SAP specialist in Retail industry with 8 years experience in big 5. I think somebody asked above.

The best thing about being a contractor in the SAP environment is that you get gigs to do the actual implementation and not have to do all the pre-sales crap that comes with consultancy. Plus you tend to get longer contracts i.e If you know what stage the client is at and when go-live is, you know how long they need you for (regardless of the duration on your initial contract).

The downside is the cost of training.

[confusednewbie]

Yes I agree. In my perm job I have to do sales to promote and become a managing consultant. Guess what I don't like sales!

The contract I am talking about is 8-10 months and the first release of the project, I guess it will take about 2.5 years to complete. However, my skills are not 100% relevant for the 2nd and 3rd phases.

[Pondlife]

However, my skills are not 100% relevant for the 2nd and 3rd phases.

That's what you learn in the 1st stage

[BlasterBates]

The thing is these comparisons include benefits that don't end up in your bank account at the end of the month. The truth is with £500 a day between 70% and 80% of it will end up in your bank account, and you'll probably work 220 days so that is conservatively £77000 ...in your bank account. If you take the 70 grand a year you'll have about 45 K so basically after year you'll have 30 grand more in your account than you do if you take the perm job. The comparative calculations assume all sorts of benefits plus time out, expenditure on marketing, taking the client to lunch, putting in proposals, buying computers etc etc. If you don't have all that sh*t then that money is all yours.

[ASB]

Of course, you could for example skip the BUPA and SSP cover

I'd never been off ill etc in 20 odd year, never had any medical cover either. I crossed to the Dark Side last october, and got medical cover lumped in. Since then I've been diagnosed with an auto immune disease. This has so far cost >10k in consultants fees and is about to cost a weeks stay in hospital - and some very hefty bills. It's going to need lifetime monitoring and much reduced ability to work. I'd be a bit fsked if I was still contracting.

Some seemingly small benefits can be extremely important (sometimes).

[ChimpMaster]

ConfusedNewbie,

I was in a very similar predicament to you, some 2 years ago.

If you're young(-ish), in good health and strong in mind, go for the contract. You'll enjoy making your money a lot more and you'll probably have less stress to boot. I certainly did when I left my (well paid) consultancy job for a contract.

Financially speaking, what I found I enjoyed the most was being able to get the whole amount of earnings paid to me, enabling me to allocate it as I wish. When you work for a company they will tell you that £x is your salary, £x is your car allowance, 5% is pension, you'll have BUPA and have to pay tax on that etc etc.


£500 / day as a SAP contractor not a huge amount -- which is good news because after a year or so you can negiotiate upwards. Say you earn £100k a year with 10 months contracting... you can aim to save £70k of that, every year you're in work. To do that with a permie job you'll need to earn around £130k.