Reply to: New to contracting, please help

[Newbie1]

BTW my confusing and mathematically illiterate post got a thanks from the OP, so one of us understood it

Interesting conclusion...saying thanks does not mean they understood it.

[SueEllen]

One word of caution: career progression as a contractor is rather more difficult; most of us end up getting better and better at our core trade and so more in demand, but expanding your skillset can be tricky. While you can retrain, clients looking for contractors are only ever hiring experience. You have to drive the progression yourself.

^^^ This

If you want to get skilled up be prepared to go perm, or make sure the definitions on your checked contact are wide enough but not too wide for you to learn enough and deliver in that skillset.

The latter is really hard to do.

[northernladyuk]

So make that point clearly using words and explain to the OP what you think he is losing out on rather than writing a mathematical statement that doesn't make any sense with no explanation of why you've written it...

Heck I couldn't understand the point behind it and I've years of experience deciphering your posts. A new poster wouldn't have a chance....

Keep up - it's Maltractornomics 1.0.

[malvolio]

Thanks for taking the time to reply. Main issue is that if I stay in my current permie I might just keep going to work with no motivation and no desire to re-train. I suppose by taking a contract, despite being very risky, it might push/pressure me to re-train and aim to improve my career. I am suffering of lack of motivation at the moment. Gambling on our redundancy pot and stability of OH's jobs.

Fair enough, you have a rationale for making the move that makes sense. I am always worried by people who "go contracting" for the money and the easy life. Neither actually exist to the extent they imagine. A regular complaint on here (and elsewhere) is "Where did all the money go". If you are aware of the real world then, as I said, best of luck and I hope it works out.

One word of caution: career progression as a contractor is rather more difficult; most of us end up getting better and better at our core trade and so more in demand, but expanding your skillset can be tricky. While you can retrain, clients looking for contractors are only ever hiring experience. You have to drive the progression yourself.

[rb51]

Who has told you that you have to pay insurance?

Also, 50/50, what do they mean??

Typical split is 12-20% to the agent (usually 20-25% because most contractors don't know the score and get hit with the "first contract tax" - I suspect I did )

You're getting shafted if the agent is taking 50% - also, you need to look at 50% of what.

Basically client outsources IT to big consultancy, which is "hiring" me. Hiring manager said that client and consultancy would be splitting the hiring cost. Therefore I believe the consultancy will be billing the client for £150 + their margin.....which will probably pay me and give them some profit still.

malvolio
Since you're up and running it is a bit academic. All I was trying to say is that what looks like lots of money probably isn't by the time it gets to your bank account.

For one thing you don't get paid for days you don't work like bank holidays, no training, minimal pensions saving and so on. And you probably won't work all year either.

But you've made the leap. Best of luck with it!

Thanks for taking the time to reply. Main issue is that if I stay in my current permie I might just keep going to work with no motivation and no desire to re-train. I suppose by taking a contract, despite being very risky, it might push/pressure me to re-train and aim to improve my career. I am suffering of lack of motivation at the moment. Gambling on our redundancy pot and stability of OH's jobs.

[malvolio]

So make that point clearly using words and explain to the OP what you think he is losing out on rather than writing a mathematical statement that doesn't make any sense with no explanation of why you've written it...

Heck I couldn't understand the point behind it and I've years of experience deciphering your posts. A new poster wouldn't have a chance....

BTW my confusing and mathematically illiterate post got a thanks from the OP, so one of us understood it

[malvolio]

Since you're up and running it is a bit academic. All I was trying to say is that what looks like lots of money probably isn't by the time it gets to your bank account.

For one thing you don't get paid for days you don't work like bank holidays, no training, minimal pensions saving and so on. And you probably won't work all year either.

But you've made the leap. Best of luck with it!

[LondonManc]

I will read the PS threads....




During interview I was told that rate was being split 50/50 between agency and client. Does it mean that I will take the hit and be inside IR35?

For this initial contract of 2x months, would you guys recommend using Umbrella or to open LTD??

I understand that regardless of Umbrella/LTD, I will have to pay insurance: QDOS - PI(1mi) 159 + PL(1mi) 51 + EL(10mi) 48 = £258/y - Cover for 1 person - 50k-100K TO

Problem is that my currently permie (£44K) role is sooooooo boring and for 2x months I have developed/added nothing in terms of skills. Hence desperation to leave for anything really.

Who has told you that you have to pay insurance?

Also, 50/50, what do they mean??

Typical split is 12-20% to the agent (usually 20-25% because most contractors don't know the score and get hit with the "first contract tax" - I suspect I did )

You're getting shafted if the agent is taking 50% - also, you need to look at 50% of what.

[rb51]

guys, thank you for replying to the thread and giving me some guidance.

malvolio/eek: my currently salary (precisely £43.7K)is around £692/week/net/47weeks (5 weeks holiday - 23.5 days in fact). I've just signed up with Lucy-ContractorUmbrella. Salary £903/week/net. In terms of costs I will keep paying £13.20/day/train fare. I bring food everyday, so no "expenses as such". What will I have to pay that my employer takes care at the moment? 1% compulsory pension? Training (I would have to stay for 1x year otherwise repay the training in full to employer - better off using acloud.guru and linuxacademy from my pocket). So in figures £903 - £692 - £6.92(pension) = £204 (ok I forgot to add 5 days off-sick after first 3 days statutory - after probation period), so around 30% more per week. Worst case scenario is that I might be unemployed in 2x months time.

nothernladuk: Desperation = no development and "wasting time". In theory, from the interview, I will have to get involved with few things that I do not have much hands-on experience (fiber channel and a SIEM system). No income: 6x months redundancy pot, 100% offset on mortgage and OH's salary can take care of everything every month (stable jobs). Only drawback is that drip-feeding into SIPP will stop or be little every month. Out-of-work might put pressure so I can use time wisely to get Cloud/Linux certs; but I do understand your point.

cojak: thanks for the link, and you are absolutely right. I need to move away from this type of Infrastructure model as of yesterday. It is either Cloud or Security these days.

[eek]

No I don't. I'm talking about effective net take home after all the stuff you have to pay for yourself that an employer takes on as cost of employment. But thank you for destroying the basic argument, that £300 a day is not £44k a year.

Come to that, most expenses are not allowable through an umbrella regardless of IR35 (which doesn't apply to an umbrella anyway since you're an employee) so that's just another red herring.

But apart from that...

So make that point clearly using words and explain to the OP what you think he is losing out on rather than writing a mathematical statement that doesn't make any sense with no explanation of why you've written it...

Heck I couldn't understand the point behind it and I've years of experience deciphering your posts. A new poster wouldn't have a chance....

[malvolio]

£200x240=£48000 - not £24000 you need to check your maths...

No I don't. I'm talking about effective net take home after all the stuff you have to pay for yourself that an employer takes on as cost of employment. But thank you for destroying the basic argument, that £300 a day is not £44k a year.

Come to that, most expenses are not allowable through an umbrella regardless of IR35 (which doesn't apply to an umbrella anyway since you're an employee) so that's just another red herring.

But apart from that...

[northernladuk]

Hence desperation to leave for anything really.

IMO this is the wrong reason to go contracting. Go in unprepared and you'll be even more desperate when you are out-of work for a few months and no income.

[cojak]

Cloud - Azure or AWS is where it's at these days.

I'm afraid that infrastructure where you get your hands dirty building stuff is a dying trade these days (unless you get a job at one of the regional centres owned by a cloud provider).

I would advise reskilling on cloud; good cloud specialists are a bit rare at the moment. This will change but you're in at a good time to benefit I reckon.

See here https://www.microsoft.com/en-gb/lear...aspx?cid=20533

[eek]

It will be inside IR35, so your £300 a day will drop very quickly to somewhere around £200 with no allowable expenses. £200 a day in turn will return roughly the same net pay as a £24k a year salary if you manage to work 240 days or more.

Sure this is a good idea?

£200x240=£48000 - not £24000 you need to check your maths...

Umbrella Company PAYE Calculator | Contractor Umbrella states that £1500 a week returns £903.24 after tax and umbrella fees. and that is before expenses which you will not be able to claim as this is a public sector contract and therefore is most likely to be inside IR35 come April 6th..

Mind you £903.24*40 weeks is still £36k after tax a year which isn't to be sniffed at if train fair isn't too expensive...

[malvolio]

I will read the PS threads....




During interview I was told that rate was being split 50/50 between agency and client. Does it mean that I will take the hit and be inside IR35?

For this initial contract of 2x months, would you guys recommend using Umbrella or to open LTD??

I understand that regardless of Umbrella/LTD, I will have to pay insurance: QDOS - PI(1mi) 159 + PL(1mi) 51 + EL(10mi) 48 = £258/y - Cover for 1 person - 50k-100K TO

Problem is that my currently permie (£44K) role is sooooooo boring and for 2x months I have developed/added nothing in terms of skills. Hence desperation to leave for anything really.

It will be inside IR35, so your £300 a day will drop very quickly to somewhere around £200 with no allowable expenses. £200 a day in turn will return roughly the same net pay as a £24k a year salary if you manage to work 240 days or more.

Sure this is a good idea?