Salary / 1000 gives an hourly rate. (Does it?)

[VectraMan]

It's a nonsense really. Yes bench time, but you can also end up unemployed if you have a permanent job. There's other issues, like redundancy, training, sickness, pensions and other perks, but the permie jobs I've had didn't come with training or other perks, and redundancy can be the statutory minimum which isn't much.

So I'm with Mr Bunny, this often bandied about /1000 figure is way wide of reality in terms of what you earn. In terms of what you're worth in perm vs. contract, I'm finding it's about right. The greater issue is whether you can find enough contract work.

[Angrybunny]

Why are they a ?

I thought it was a smiley face of someone biting his nails haha. I had better change it

[northernladuk]

I thought it was a smiley face of someone biting his nails haha. I had better change it

You are not cut out for smilies.. Stick to text only.

[mudskipper]

You are not cut out for smilies.. Stick to text only.

And I'd thought she'd got general's number.

[VectraMan]

you miss expenses.

As an employed consultant I could be working anywhere in the country but would pocket mileage and have hotels and meals paid for.

As a contractor you usually get a daily or hourly fixed rate from which you have to pay your own expenses unless you either live in London and work locally or hit luck and always have local contracts.

Well that's cobblers. As a contractor you wouldn't normally get expenses on top of your rate to travel to the normal client site, but you would be able to pay the expenses yourself and get the tax relief. As a permie, you pay 100% of the cost of your normal commute to work. And in both cases, if you're working away from the normal site, the client/employer will pay expenses.

[Paddy]

I've read you can get a 'rough' comparison of perm to contract with Salary / 1000.

So if someone was earning about 50 k a year.
Their equivalent daily rate would work out at £400 a day (based on a 8 hour day).

When I compare the net incomes I get a very different result though.


Perm
Yearly Gross £50,000
Yearly Net £35,963
Pension £2,500
bonus £2,000
Healthcare £1,000
Net Year £41,463.36


Contracting:
Day £400.00
Days Per Year 220
Yearly Gross £88,000.00
Gross Month £7,333.33

Net Month £5,500 (based on 75% take home - working outside of IR35)
Net Year £66,000

So this 'rough' calculation looks miles out, with nearly a 25 k difference.
Am I missing something?

If you are having to calculate what’s best comparing salary vs contract daily rate then contracting is not for you, the risk factor in contracting is too great. If money is your goal then you need to pick a contract with at least double your salary. If you are looking to escape the corporate bull, then the money aspect will not matter.

In contracting, I never rely on more than a week ahead. Cameron has lubricated his arse for the Indian IT industry so unless you have a truly niche skills, your days are numbered

[Angrybunny]

Accountancy fees?
Insurances?

Hadn't included that thanks.

I would say 220 days or 44 weeks a year in contract is pushing it, yes its possible to get long term contracts, and a few people do seem to jump from one gig to another with little or no down time but these don't seem to be newbies.
Also how do you arrive at 75% take home, does this mean you are going brolly??

I'm planning on setting up a limited company with sjdaccountancy after reading positive comments on here.
I've also read 75% take home is a conservative estimate, is it not?

you miss expenses.
As an employed consultant I could be working anywhere in the country but would pocket mileage and have hotels and meals paid for.
As a contractor you usually get a daily or hourly fixed rate from which you have to pay your own expenses unless you either live in London and work locally or hit luck and always have local contracts.
And 45p mileage doesn't look so good when you realise all you are saving is the 9p in corporation tax your company would otherwise pay.

I'll live and work in London, so not so much of an issue but thanks.

You are not cut out for smilies.. Stick to text only.

It would appear that way.

[eek]

Well that's cobblers. As a contractor you wouldn't normally get expenses on top of your rate to travel to the normal client site, but you would be able to pay the expenses yourself and get the tax relief. As a permie, you pay 100% of the cost of your normal commute to work. And in both cases, if you're working away from the normal site, the client/employer will pay expenses.

If you don't want to make a fool of yourself don't make an argue that is identical to the line you removed from the quote.

snip

And 45p mileage doesn't look so good when you realise all you are saving is the 9p in corporation tax your company would otherwise pay.

But I'll be clearer if you want. As an employed consultant I used to work away from home and the local office all the time so claimed mileage (at 45p a mile), hotel bills (better than the ones I now stay in) and evening meals (likewise). Most consultancies work in this way you work on a client site and rarely visit any company office.

As a contractor working in the same(ish) location I have to cover those costs myself and yes I can deduct them as expenses but

1) those costs are coming out of my daily rate
2) I really only save the corporation tax on those payments. The £50 hotel bill from last night is £50 off the companies income from yesterday. So assuming my daily rate is £400 working from home I would pocket £320 (£400-20% corporation tax) in the eventual dividend payment, working away I pocket £280 ((£400-£50 hotel bill)-20% corporation tax).

[Bunk]

I'll live and work in London, so not so much of an issue but thanks.

You won't have many expenses in that case, which will lower the take home percentage. (Although you should actually be better off because you won't need to pay the expenses in the first place).

[mudskipper]

You won't have many expenses in that case, which will lower the take home percentage. (Although you should actually be better off because you won't need to pay the expenses in the first place).

And handy for London drinkies