£65k perm salary , £350 daily rate - Worth moving into contracting ?

[xenopus123]

I know this topic has been beaten to death, and I have tried the calculators, factoring in vacation, time on bench, bonuses, pension etc but may I seek real life inputs please , if you were in my boat ? (single, mortgaged, some savings)

[BrilloPad]

What else is included in the package? What sort of pension contribution do they make?

[xenopus123]

What else is included in the package? What sort of pension contribution do they make?

6% employer pension. No other benefits

Cheers

[TheCyclingProgrammer]

Very rough calculation, assuming you maintain contract for whole year (5 days week * 48 weeks to allow for some time off), gross of £84000. Ignoring expenses and flat-rate VAT surplus to keep it simple, £10k basic salary, corporation tax on remaining £84k of 20% leaves £59k. Dividends up to higher rate, of just under £32k, gives you post-tax take-home of £42k and leaves £27k of retained profit in the company account - almost 9 months war chest.

That's obviously a very basic outline and ignores expenses which would reduce your corporation tax bill (but also retained profit, obviously), possible pension contributions and other possible means of extracting profit from the company should you wish to do so (or need to, if approx. £3500 a month isn't enough for you to live on).

Compared with £65k salary assuming full personal allowance, net take home of £44k or approx. £3700 a month plus your pension and other possible benefits. £2k more take-home but you are forced to pay higher rate tax and obviously aren't left with another £27k sitting in the company reserves.

So on the face of it, contracting is clearly the better deal *but*, and it's a big but, all of the above assumes you work for most of the year. If you're benched or can't find regular gigs, the picture is a lot different! Ultimately I'd say it isn't really about numbers...contracting will almost always be the winner financially even on a lowish rate of £350/day - its about how confident you are of finding work and coping with the lack of security.

[northernladuk]

I would definitely be working those numbers on a 10 month year. Possibly even less for a newbie.

Contracting is a no brainer if you are looking at pure numbers but there is a lot more to it. For example your location? It's more than likely you will have to do some gigs away from home which brings down your income considerably plus it isn't for everyone being away from home all week. Even factoring this and a 10 month year the figures quoted are a very best situation. At least the permie one can't change. As many posts show on here the contracting one could end up very different indeed.

You can't ignore the risks of periods of being off work through illness and injury. Easy to discount it but an unlucky situation could leave you in some very dire situations.

£65k is a good rate for a permie if your single as well. I am assuming your not that old so factor in the fact this could be increased through going to another employer and career progression if you are of that mindset.

I wouldn't be too eager to leave a £65k role in your situation.

[malvolio]

For the same NET take home, all things considered, 65k salary is roughly 65 pounds an hour or a shade under 500 a day...

That's your starting point.

[northernladuk]

If you are looking for better money I would also be looking closely at my permie position and asking how you could maximise that. There is so little information in your post to work with it's almost impossible to give you any real advice but if you have been with a company awhile then it would most certainly benefit you to think about jumping ship. The new people in often get quite a bit more than the ones that have had to work through the chain. If this is true it shouldn't be too difficult to add a nice chunk on to that along with extras like bonus, car, share options and so on.

[Wanderer]

I know this topic has been beaten to death, and I have tried the calculators, factoring in vacation, time on bench, bonuses, pension etc but may I seek real life inputs please , if you were in my boat ? (single, mortgaged, reasonable savings)

No. Not anywhere where near enough. Hold out for 450-500 per day or sit tight in your permie role. See point 13 in this post.

[vwdan]

No chance in cash terms - I'm averaging 350, but came from a 40k job so I'm taking home vastly more than I was. 60 - 70k is what'd I'd be looking for if I was to gracefully exit contracting by choice. I certainly wouldn't have taken the gamble if I was on that already.

Depends on your work, but I'm taking home around 3800 a month so far if that helps.

I do love the buzz, though - which I guess is different. Surprised you're only looking at 350 p/d roles from that salary, though. !y roles have been roughly equivalent to my old job, or is this a worse case analysis?

[SpontaneousOrder]

I'm averaging 350,
...
Depends on your work, but I'm taking home around 3800 a month so far if that helps.

It that with quite a lot of expenses? I'm currently on £400 a day and after (not very much) mileage & taxes I'm taking home nearer £6500. Going to London obviously would put me at £450 to £500, but I'd spend most of that on trains & hotels.

At 350 I'd expect you to take home something closer to 5500 a month.