Reply to: Contractor or Perm?

[Oakleaf]

Remember that a day rate is only a day rate when you actually work that day.
Salary gets paid every month (or equivalent) even if you sit around doing nothing.

What happens in 6 months when you need a new gig and there is nothing nearby or at the same rate ... or just nothing?
Will your personal circumstances allow these regular and irregular changes? Mine didn't. My commute would have gone from 30 minutes to almost 2 hours and getting my kids to school and wife to work was suddenly a nightmare and it might have changed in 6 months time when everyone had got used to it.

This is why I left contracting and became a perm employee.

Fixed commute of 45 minutes each way everyday. The money is less but is more reliable and things are far less stressful. I don't have to keep up with latest developments from HMRC and the goverment's war on contractors, I don't need to duke it out with agents or HMRC etc. It is alll either irrelevant or taken care of for me by the payroll department.

All of these things cannot be computed by a money comparison tool but that does not matter because money is the wrong thing to be balancing. Look at how the lifestyle suits you, not how much money it looks like you can make. Some employers are reluctant to hire ex contractors as they (often correctly) assume you are just sheltering there until you can land a new contract so trying your hand at contracting is not a no brainer.

It is not a money thing, it is a life style change. If you have to ask then I would advise you to go perm.

Thank you so much. These words truly are from bottom of the heart.
I have followed my heart.

[MyUserName]

Remember that a day rate is only a day rate when you actually work that day.
Salary gets paid every month (or equivalent) even if you sit around doing nothing.

What happens in 6 months when you need a new gig and there is nothing nearby or at the same rate ... or just nothing?
Will your personal circumstances allow these regular and irregular changes? Mine didn't. My commute would have gone from 30 minutes to almost 2 hours and getting my kids to school and wife to work was suddenly a nightmare and it might have changed in 6 months time when everyone had got used to it.

This is why I left contracting and became a perm employee.

Fixed commute of 45 minutes each way everyday. The money is less but is more reliable and things are far less stressful. I don't have to keep up with latest developments from HMRC and the goverment's war on contractors, I don't need to duke it out with agents or HMRC etc. It is alll either irrelevant or taken care of for me by the payroll department.

All of these things cannot be computed by a money comparison tool but that does not matter because money is the wrong thing to be balancing. Look at how the lifestyle suits you, not how much money it looks like you can make. Some employers are reluctant to hire ex contractors as they (often correctly) assume you are just sheltering there until you can land a new contract so trying your hand at contracting is not a no brainer.

It is not a money thing, it is a life style change. If you have to ask then I would advise you to go perm.

[LondonManc]

I think I will/should go for perm.

48 weeks is ambitious for a contract.

8 public holidays a year, you'll no doubt want time off, equivalent to 25 dayish , that brings you down to 46 weeks. Thrown in a bit of sickness and that's 45. Then the unexpected stuff like budget issues, furlough and other items and it all leads to a lot lower starting figure, closer to 44 weeks, approx. 62k. It also depends what development you need as the company will provide training if you're perm and the countless other employee benefits that you'll get.

[doconline]

That would be daily contract rate?

Hourly rate x 1000. This is only a very rough guide and depends on the position / skill set / industry

[ruasonid]

There is a rough calculation of contract rate x 1000 to work out what salary the employer should be paying. Obviously in some cases this isn't true due to other factors, but someone offered a 50K perm salary shouldn't be on a contract rate of £280 a day.

That would be daily contract rate?

[dmo]

Hi,
This website has got one. Didn't you see it? But don't know how accurate it is?

Was more curious to know which you used. I assume you therefore used the CUK calculator

[Oakleaf]

I think I will/should go for perm.

[Oakleaf]

Out of curiosity what online calculator did you use? I've been informed by my accountant that even calculators offered by some of the biggest accountants in the contracting space are just pure wrong and out of date - have been struggling to find a reliable one myself...

Hi,
This website has got one. Didn't you see it? But don't know how accurate it is?

[SueEllen]

And you probably won't. It's so complex I doubt any of them, however uptodate will give a figure that truly reflects your situation. Much of it is dependant on where you gig is, chances of end yo end, expenses and so on.

WHS

There is no calculator that will accurately explain your situation. All calculators will give the maximum you can take home if your expenses were a particular figure.

In reality the amount you will extract from your company depends on your contract rate, company expenses, minimal living expenses, where you want to save your warchest, and whether you have a partner who is co-director/company secretary or what they earn plus where the higher rate tax band is.

[northernladuk]

And you probably won't. It's so complex I doubt any of them, however uptodate will give a figure that truly reflects your situation. Much of it is dependant on where you gig is, chances of end yo end, expenses and so on.

[dmo]

Calculator...

Out of curiosity what online calculator did you use? I've been informed by my accountant that even calculators offered by some of the biggest accountants in the contracting space are just pure wrong and out of date - have been struggling to find a reliable one myself...

[SueEllen]

Thank you Sue.
It helps a lot.

There is a rough calculation of contract rate x 1000 to work out what salary the employer should be paying. Obviously in some cases this isn't true due to other factors, but someone offered a 50K perm salary shouldn't be on a contract rate of £280 a day.

[Oakleaf]

Note I said "equivalent".

Equivalent is not just about the money in your pocket it's the other things like pension contributions, training, sick pay, holiday pay, employers NI and other things that you don't get as a contractor.

As NLUK and Stek pointed out if you have a choice of taking the job as a permanent position then you are inside IR35. So find an umbrella calculator, I think Contractor Umbrella has one on their site, and see how much you will take home.

In your £250 per day you have to pay umbrella fees, training, employers NI, pension contributions, sick pay, holiday pay and training. Plus you won't get bonuses and things like cheap gym membership and company car plus the random other employee discounts you can get. They can also stick you in a position where you have no chance to improve your skills.

Also if the job is only short term and you take it as a permanent role they should pay you off when they want to make you redundant.

Thank you Sue.
It helps a lot.

[SueEllen]

One of us can't add up, even working 48 weeks It doesn't make 25k

Note I said "equivalent".

Equivalent is not just about the money in your pocket it's the other things like pension contributions, training, sick pay, holiday pay, employers NI and other things that you don't get as a contractor.

As NLUK and Stek pointed out if you have a choice of taking the job as a permanent position then you are inside IR35. So find an umbrella calculator, I think Contractor Umbrella has one on their site, and see how much you will take home.

In your £250 per day you have to pay umbrella fees, training, employers NI, pension contributions, sick pay, holiday pay and training. Plus you won't get bonuses and things like cheap gym membership and company car plus the random other employee discounts you can get. They can also stick you in a position where you have no chance to improve your skills.

Also if the job is only short term and you take it as a permanent role they should pay you off when they want to make you redundant.

[stek]

Outside IR35.

Inside, without question..