Conversion to the dark side / perm salary calculations

[BlueSharp]

Hi guys - really appreciate the valuable insights. It's easy to get a skewed view of the world after a successful run in contracting.

To be clear I've been at this particular client for 1.5 years in a change capacity and this is a BAU role to run what I delivered. So appreciate the IR35 slam dunk comments but that's not really my worry .

I particularly appreciate the comments on greed. I believe this is the main issue and I can't say it's a bad offer. There's pension and benefits, while I don't love the BAU component it could provide some good experience to talk about when I jump back into the warm embraces of invoices.

I've decided I'll take it but keep the LTD dormant, I'll keep a close eye on how the market settles next year with a view to jump back into contracting once the family is settled.

Seems like a sensible approach. If there is a war chest in the company it might be worth looking into closing it down and getting the cash out and paying only capital gains on the distribution. HMRC does not appear to have reopened a closed company for IR35 tax action but YMMY.

[northernladuk]

They want to pay you 100k to work in a BAU change capacity. F*** me.

If you are planning to keep your company open then I do think IR35 should be a worry.

When you say dormant. I don't think you mean that. You mean just not trading. It's different. Just being a pedant there.

Rest of it seems like a plan.

[kryten22uk]

Wow, £620pd going to £101k salary is an incredibly good conversion IMO! Got to wonder why you aren't already permie, as youre almost taking a hit being a contractor.

If using 220 days as the annualisation factor, then my permie-to-contract income hit would be 50%, rather than the 80% suggested above.

[WordIsBond]

Good luck with it. Without knowing all the specifics of your situation, I'd lean heavily toward closing the Ltd, which once done almost certainly closes off any historical IR35 liability.

[simes]

Hi All

I didn't want to find myself in this situation but with a kid on the way we've decided it's best to take the bird in the hand for now at least for the better part of next year.

How does one go about calculating a reasonable figure from a contract rate (620£ per day for the last 4 years in my case ) to an acceptable figure on the salary side ?

The client is trying to push me to £101k salary but I can't help feel this is a huge cut to the knees. However I have got no arbitrary way of calculating what is fair. Does anyone have advice of what points to make when considering the circumstances around a perm off coming from a contract role ? I'm looking for some benchmarks to apply but falling short.

Apples and oranges.

There is a fair market rate for contractors and there is a fair market rate for permanents. I don't think one has anything to do with the other. If 'fair' was your consideration, I'd look at market permanent rates for what you do in your industry.

Erm, and that's it really.

[edison]

Apples and oranges.

There is a fair market rate for contractors and there is a fair market rate for permanents. I don't think one has anything to do with the other. If 'fair' was your consideration, I'd look at market permanent rates for what you do in your industry.

Erm, and that's it really.

You're right, it is a market and some roles may have more demand for contractors than perm or vice versa. However, there is a correlation. Let's say a BA contract rate was £400-500/day, it might vary up and down. A perm role is going to be in the £45-60k or so salary range. Again it will flex but no one will pay £80k for a perm or £700 for a BA (I'm excluding financial services here as it's typically an outlier.)