Just Left 60K Permie Job To Contract At 400 Per Day - Am I mad

[AlfredJPruffock]

This is what I do not understand - To be a good contractor you need to be better then the rest (and thats why a company will pay you more).

Its not as simple as that - Ive met some competent contractors and some complete chancers in my time = ditto for perm folk too

[joey122]

I take home about £5k a month and I put £1000 a month into my SIPP. That is about 2 x what I could hope for as a permatozoa doing the same job.

The most important statistic you forgot to mention was your daily rate

Is this on 400 per day?

[malvolio]

Assuming zero days absence (which is what I do) and a 5% pension, are you sure that 60K is really better???

Do the maths - 45 weeks is the same as perm with all holidays inclusive. So 45 *2K a week = 90K

Bad assumption. You will need some time off. Also what about Christmas, BAnk Holidays...?

The correct calculation is no more than 240 chargeable days a year at £400 a day which gives £96k. Take out some working expenses and professional fees, say £5k a year. Allow something for health care, SSP cover, PEI, PI and pension planning - say another £1k a month minimum. Take off PAYE and NICs, an absolute minimum of £5800, rather more if your pay more than the mimimum salary or get into higher rate. So your £96k is now £79k. Pay 21% CT on that leaves you with £62k. Bearing in mind you now have to fund a heap of minor things you get for free as an employee, you're not that much better off, are you? Then they cancel the contract and you're on the bench for two months...

[joey122]

Bad assumption. You will need some time off. Also what about Christmas, BAnk Holidays...?

The correct calculation is no more than 240 chargeable days a year at £400 a day which gives £96k. Take out some working expenses and professional fees, say £5k a year. Allow something for health care, SSP cover, PEI, PI and pension planning - say another £1k a month minimum. Take off PAYE and NICs, an absolute minimum of £5800, rather more if your pay more than the mimimum salary or get into higher rate. So your £96k is now £79k. Pay 21% CT on that leaves you with £62k. Bearing in mind you now have to fund a heap of minor things you get for free as an employee, you're not that much better off, are you? Then they cancel the contract and you're on the bench for two months...

1K a month???

Also your figure of 62K is post tax - Right?

As a perm you are likely to get about 35K after tax take home pay

Have I misunderstood you??

[malvolio]

Check your PMs. Like I said, there's a lot you don't know you don't know!

[GreenerGrass]

Hmm, at the moment I'm on about 400 a day and spookily enough yesterday I worked out that 60k would be the minimum basic salary I'd go permie for, with a decent pension and possibility of bonuses on top.
70k would be nicer but not realistic at the moment, 50k more realistic but a financial struggle.

Contracting wise best case without any holiday at all and not 1 day off sick you would invoice for about 50 weeks a year due to bank holidays and Christmas (assuming your client won't let you come in for bank holidays).
In the last three years I have managed to invoice for 49, 50 and 48 weeks respectively - which is bloody good, but completely unrealistic to think the next three years will be like that . Plus you'd probably go nuts if they were (and the 50 weeker could have ended in divorce...)

In my opinion you are better off as a 400 a day contractor, but only if you can get the continuity and only time will tell on that.
On pension you could and should be able to afford to pay in £1000 a month into a SIPP, whereas in a 60k job even if you had 10% company contribution pension thats only 6k a year going into it vs 12k as a contractor.
If you can regularly pull work in 40+ weeks a year it will prove to have been the right decision.

But I can see why most people will think you are mad for leaving a 60k job in the current climate.
Now I'm contracting already I'd probably still take a £400 a day (certainly £500 a day) 6 month+ contract over a 60k permie role, but if I was in a 60k permie role I wouldn't leave to go contracting unless the rates were even higher and it was a real in demand niche that Bob Shawaddywaddi couldn't **** up for everyone. If that makes sense.

[stillooking]

Have I misunderstood you??[/QUOTE]


I think I misunderstood you though...

[BrilloPad]

Bad assumption. You will need some time off. Also what about Christmas, BAnk Holidays...?

The correct calculation is no more than 240 chargeable days a year at £400 a day which gives £96k. Take out some working expenses and professional fees, say £5k a year. Allow something for health care, SSP cover, PEI, PI and pension planning - say another £1k a month minimum. Take off PAYE and NICs, an absolute minimum of £5800, rather more if your pay more than the mimimum salary or get into higher rate. So your £96k is now £79k. Pay 21% CT on that leaves you with £62k. Bearing in mind you now have to fund a heap of minor things you get for free as an employee, you're not that much better off, are you? Then they cancel the contract and you're on the bench for two months...

Good maths : but given same take home pay I would much rather be contract than permie. IBs treat permies far worse than contractors.....

[GreenerGrass]

Good maths : but given same take home pay I would much rather be contract than permie. IBs treat permies far worse than contractors.....

Yes, that would be another concern about a nice "safe" 60-70k perm job at an investment bank, compared to earning 90k+ through contracting with less stress, grief and hours.

[swamp]

I love contracting. Always wanted to be a contractor, and I'm glad I'm one now.

Well done to the OP!

£400 per day is a very good start, even if you have just jacked in a 60K perm job. I know I'd rather be on the 400pd contract. Regardless of all the BS calculations here, 400pd is still more money.



And while I'm at it...