65k + 25 Days Holiday + 10% Pension + Health + Potentional 20% Bonus Vs Contract

[PhilAtBFCA]

perm or Contract

SteveMcadden1

You could use this calculator spreadsheet ( video instructions too !) to compare.

You would need to do two scenarios, one with your proposed contracting offer and one with paye employee, the spreadsheet compares, umbrella, Limited, agency payroll, paye employee,partnership and sole traders.

I should give you enough information to make agood decision for your circumstances.

Phil

[SteveMcadden1]

1) A company does not have a CGT allowance.
2) Loans to directors are iffy unless < 5k

Good point - I see what you mean

[Archangel]

Why cant you invest in the stock market using your companys money?? You do not need to take it out at all.

I think you might even be able to classify it as a 'loan' to your self from the company

1) A company does not have a CGT allowance.
2) Loans to directors are iffy unless < 5k

[SteveMcadden1]

I calculated on 220 days. If you work 240 days you'll become very pale...and weedy through lack of exercise.

Then of course it is more but ....with all your costs and doobries that is a realistic take home.

Are you going to leave the money in forever?? at some point you need to take it out, and then you'll get lumbered with a higher tax rate, unless you are planning time out, and that is up and above the corp tax rate that you'll pay on your profits.

No use the prudent comparison I gave you. Certainly worth considering in consultation with an accountant leaving a war chest in the company. My money comes out and goes straight into the stock market.

But I'd still go contracting.

Why cant you invest in the stock market using your companys money?? You do not need to take it out at all.

I think you might even be able to classify it as a 'loan' to your self from the company

[BlasterBates]

I am pretty strong at calculus but cannot make this add up...

Can you breakdown your working here?

390 * 240 = 93 600

Taken out as 22% tax - I have a lot of savings so do not need to take any money out from company and can wind the company down using entreprenurial tax rul and pay 10% tax.

I cannot see how the other package is better AFTER tax.

The contract I have is firmly outside IR35

I calculated on 220 days. If you work 240 days you'll become very pale...and weedy through lack of exercise.

Then of course it is more but ....with all your costs and doobries that is a realistic take home.

Are you going to leave the money in forever?? at some point you need to take it out, and then you'll get lumbered with a higher tax rate, unless you are planning time out, and that is up and above the corp tax rate that you'll pay on your profits.

No use the prudent comparison I gave you. Certainly worth considering in consultation with an accountant leaving a war chest in the company. My money comes out and goes straight into the stock market.

But I'd still go contracting.

[BrilloPad]

I would take the contract. I dont care which way you get paid more : as a permie IBs treat you like dirt. As a contractor you get a tiny bit of respect.

[SteveMcadden1]

Well duh. Of course that package is better if you don't actually take it out of the company. You omitted to mention that particular little gem!

Really? I d even go as far as saying its worth borrowing money from the bank paying interest secured on the company assets then take the cash out...

Seriously, how else would people take money out of the company?

[deckster]

I am pretty strong at calculus but cannot make this add up...

Can you breakdown your working here?

390 * 240 = 93 600

Taken out as 22% tax - I have a lot of savings so do not need to take any money out from company and can wind the company down using entreprenurial tax rul and pay 10% tax.

I cannot see how the other package is better AFTER tax.

The contract I have is firmly outside IR35

Well duh. Of course that package is better if you don't actually take it out of the company. You omitted to mention that particular little gem!

[moorfield]

Potentional 20% Bonus

In my book this means zero, but then again I'm a bitter twisted cynical long-in-the-tooth contractor.

[SteveMcadden1]

Your take home for 390 after all costs will 54k, and that inicludes 20 days holiday. Everything is factored in that, and assumes outside IR35.

Your take home for 60K will be about 37K and then 6 K into a pension scheme and then 7K bonus.
50K

Virtually no difference

I would still take the contractor route as after a few months you could easily get 500.

I am pretty strong at calculus but cannot make this add up...

Can you breakdown your working here?

390 * 240 = 93 600

Taken out as 22% tax - I have a lot of savings so do not need to take any money out from company and can wind the company down using entreprenurial tax rul and pay 10% tax.

I cannot see how the other package is better AFTER tax.

The contract I have is firmly outside IR35

[BlasterBates]

Your take home for 390 after all costs will 54k, and that inicludes 20 days holiday. Everything is factored in that, and assumes outside IR35.

Your take home for 60K will be about 37K and then 6 K into a pension scheme and then 7K bonus.
50K

Virtually no difference

I would still take the contractor route as after a few months you could easily get 500.

[deckster]

Absolute no-brainer. £390 as a contract rate is nowhere near that permie package.

Mind you, both sound on the low side for IB work.

[DaveB]

That permie package is pretty much what I took when I went to the dark side in January.

£390 sounds like a lot as a day rate but I'd still take the permie package on that one.

If you can bump the rate to £500 then go for it.

Don't count on working all year, you could get canned after 3 months.

[ChimpMaster]

Personally I wouldn't take £390/day over the permie package you detail. It's your first contract so you're probably getting rogered by the agent over the rate. The agent is probably creaming off anywhere from £150 to £200 on top of the £390 so they have flexibility to pay you more, assuming the client really wants you.

Contact the agent and tell them that you have another offer in hand (boost it up more if they ask you for details). Ask for £500/day. Then it would be worthwhile over the permie package.

Negotiate hard over the contract - after all you have the solid permie offer to fall back on, and you wouldn't want to be having second thoughts if you did accept the contract.

[SteveMcadden1]

This has been asked before I know and I m thinking I d be better off on a contract.

Basically I ve been offered two roles - One as above at an Investment Bank A permie, the other at investment bank B paying 390 pounds a day.

Now I now people say that contractors have to factor in bench time, but I now myself and I would work throughout the year and not take any time off.

I would then use time in between contracts as my holiday allowance...

Can someone please spell out what considerations need to be made here? As you can tell I am new to contracting so appreciate some guidance