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

[MarillionFan]

Point taken but the calculation still looks miles out.
if I was on the beach for two months (which I'd say is pretty unlikely in my field of work) the difference between the figures would still be £15,000.

You are correct. The /1000 calculation is one of the dumbest pieces of advice that keeps getting discussed.

Use the calculator you have but work on 38 or 40 weeks to do the calculation and include / exclude expenses.

[Bunk]

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?

It's nothing to do with ending up with the same net income. The rule of thumb is that if you would be on a permanent salary of £x,000 a year, you should be aiming for contracts that pay £x per hour. If your contract rate only gets you the same net as your permanent salary then it's not worth it, ditch the contract and go permanent. For most people however, they can earn more by contracting. The rewards are higher but the risks are greater.

[Angrybunny]

It's nothing to do with ending up with the same net income. The rule of thumb is that if you would be on a permanent salary of £x,000 a year, you should be aiming for contracts that pay £x per hour...

That was the 'something' I was missing. Thanks.

[malvolio]

FFS, chaps...

It's not meant to be a standard answer, it's basically an simple indicator for dumb permies to get an idea of the appropriate rate to aim for to get the same net pay as their permie role at the end of the month, allowing for the long list of variables that permies don't have to pay for. It's only a starting point, of course it's not going to give yuo an accurate answer.

That list includes but is not limited to:
Corporation Tax
Paid holidays
Bank Holidays
SSP
Employers NICs
Pension funding
Training
Accountancy/Umbrella
PI/PLI/ELI Insurance
PCG memberhsip or equivalent insurances
Contract reviews
Bench time
Travel and accomodation expenses
Notice periods
Redundancy pay
etc....

IF you want an accurate answer then do the sums yourself. If you want an initial guesstimate, use the rule. And of course we earn more, we're very good at what we do or we wouldn't succeed as contractors in the first place.

[DimPrawn]

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

WHS on this.

Camoron = Indian arse licking