Reply to: £50/hr compared to £52k salary... pension, holidays, etc

[Lance]

Brilliant!

Its a subjective law.

the law isn't subjective. It might be an ass, but it's not subjective.
It's just hard to interpret and hence appears to be subjective.
Judges, who make final decisions, make objective decisions based on the letter of the law, precedence and the facts of the case.

Lay persons' interpretations are likely to be very subjective though, and that includes HMRC inspectors, agencies and contractors themselves.

/pedant

As I read it it sounds like they want to capture people working in all but name as permanent.

pretty much.

If you're a genuine contractor and in a job less than 2 years, seems doubtful ir35 would apply, but I know literally nothing until few days ago.

If you know more, please enlighten everyone

yes if you're a genuine contractor.... but can you define precisely what that is? IR35 tries.
2 years is immaterial to whether you're a disguised employee or not. Although it could be an indicator that you have become a disguised employee along the way (known as becoming part and parcel)

[fatbadger]

I'd read up a bit more

Brilliant!

Its a subjective law. As I read it it sounds like they want to capture people working in all but name as permanent. If you're a genuine contractor and in a job less than 2 years, seems doubtful ir35 would apply, but I know literally nothing until few days ago.

If you know more, please enlighten everyone

[cojak]

Thanks very much the the feedback. I don't know what is meant be inside or out (not weather related lol?).
Having read a bit I don't imagine ir35 would affect me as i'd setup as Ltd and not use an umbrella company.

You really will have to look this up as I've heard that some of the major engineering companies ARE gearing up for IR35, and not in a good way for contractors (and that includes ALL contractors, be they Mechanical, Engineering or Software...).

[jk3838]

I don't know what is meant be inside or out (not weather related lol?).
Having read a bit I don't imagine ir35 would affect me as i'd setup as Ltd and not use an umbrella company.
Cheers

I'd read up a bit more

[Anonimouse]

Thanks very much the the feedback. I don't know what is meant be inside or out (not weather related lol?).
Having read a bit I don't imagine ir35 would affect me as i'd setup as Ltd and not use an umbrella company.
The headline 100k/yr (£50/hrx40hrsx52) sounds good, but once I factor in all the risks and expenses it really doesn't sound too good at all then!
I think £1000/day and I'd be there. Is that every paid?
Oh and no, I have no savings and a month with no pay (at the start) would bankrupt me though after a few months on that fee I'd then have a buffer. I am medical eng end of mechanical and the job is so ficussed on a tiny particular skill set, so I really don't think they'd have a massive pool of people to choose from... It was an agency who called me via linkedin and I know who theyre acting for: Is it bad form to just go direct to that person and ask them to hire me, cut out the middle man etc??

Cheers

Ir35 isn’t determined by whether you choose ltd or umbrella, if you are inside ltd will not be an option

[Freewill]

Hello
I've never contracted but I've been offered a 12 month contract on £50/hr so £400/day making = 40 h x £50 x 46 weeks (i.e. knock off 6 wks hols) = £92k
My current employer pays me £52k but they also pay in ~£10k into a pension and obviously I get 6 weeks paid holiday (about £6k), so that salary is more like £68k (is that right calculation??)

You have double counted the holiday pay here by only factoring in 46 weeks at contract rate. The comparison is £92k/year vs £62k/year. You may also pay less tax as a contractor depending on circumstances. It's easy to underestimate the difference between these incomes but if your overheads (rent, food etc) are say £25k/year then your disposable income will be 2 times what it is currently.

I would say it is worth it but depends on how much risk you are prepared to take. At the end of 12 months you are then an established contractor and should be able to command a higher rate.

Find out if the agency is on a fixed commission or not. It may be possible to negotiate the rate up, if you ask for £450 you might get £425.

[fatbadger]

Well, i believe the person above is right. 400pd is a bit low for any contractor. But that is the market in mechanical, they are looking for a temp resource on shorter leash.
Piggybacking on a way of engaging that was designed for other purpose and trying to enchant people with figures.
My opinion is that you should factor in all the risk, i haven’t commented on weather inside or outside because highly likely inside.
Meet a carpenter in a strip club once that said he wouldn’t raise out of bed for less than £300. Boiler engineers around london i don’t think they charge less than 400£pd.
Figure it out...

Thanks very much the the feedback. I don't know what is meant be inside or out (not weather related lol?).
Having read a bit I don't imagine ir35 would affect me as i'd setup as Ltd and not use an umbrella company.
The headline 100k/yr (£50/hrx40hrsx52) sounds good, but once I factor in all the risks and expenses it really doesn't sound too good at all then!
I think £1000/day and I'd be there. Is that every paid?
Oh and no, I have no savings and a month with no pay (at the start) would bankrupt me though after a few months on that fee I'd then have a buffer. I am medical eng end of mechanical and the job is so ficussed on a tiny particular skill set, so I really don't think they'd have a massive pool of people to choose from... It was an agency who called me via linkedin and I know who theyre acting for: Is it bad form to just go direct to that person and ask them to hire me, cut out the middle man etc??

Cheers

[GigiBronz]

Well, i believe the person above is right. 400pd is a bit low for any contractor. But that is the market in mechanical, they are looking for a temp resource on shorter leash.
Piggybacking on a way of engaging that was designed for other purpose and trying to enchant people with figures.
My opinion is that you should factor in all the risk, i haven’t commented on weather inside or outside because highly likely inside.
Meet a carpenter in a strip club once that said he wouldn’t raise out of bed for less than £300. Boiler engineers around london i don’t think they charge less than 400£pd.
Figure it out...

[Lance]

It's not a pissing contest so if you don't have any advice and/or any other sort of contribution, please go post these kind of posts in general

why bother to quote just half of my post to tell me I've not added anything?
Ironic seeing as you added **** all to the debate yourself.

My question still stands on whether it's inside or outside. If inside that £50 per hour is more like £40 per hour. At that point it's questionable whether it's better than £52k gross with a decent pension (it's not).
The point about £400 a day not being worthwhile is it's almost certainly just bum on seat contracting and likely to be inside come April.

[jk3838]

If you're going PAYE or LTD inside then take off the employers NI percentage from the total (the agent will tell you how much (20% ish)) but no IR35 worries

You can go through an umbrella company and if you chose the right one you can put money into SIPP

Again, read up in the guides and do forum searches on as much as you can

[jk3838]

£50 per hour is good for an engineer

Bear in mind other expenses (accountant if you're going ltd) and what you can claim against is changing

A lot of people are going the other way (into perm roles) due to changes coming to IR35 in April

If you aren't aware, then you need to read up in the guides to the right of the page

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[PCTNN]

Personally, I wouldn't get out of bed for £400 a day.

It's not a pissing contest so if you don't have any advice and/or any other sort of contribution, please go post these kind of posts in general

[Lance]

inside or outside?
Makes quite a difference. You do know the difference don't you?



Having said that, it's up to you.
Personally, I wouldn't get out of bed for £400 a day.

[GigiBronz]

Hello

I've never contracted but I've been offered a 12 month contract on £50/hr so £400/day making = 40 h x £50 x 46 weeks (i.e. knock off 6 wks hols) = £92k
For a newbie to all this that sounds a lot, but having read a few posts perhaps not?? I just want to check your thoughts? (I'm a mechanical engineer btw)
My current employer pays me £52k but they also pay in ~£10k into a pension and obviously I get 6 weeks paid holiday (about £6k), so that salary is more like £68k (is that right calculation??)

Still a big difference but is this normally enough to make someone take the plunge wit hall the risks and hassles that accompany contracting?

cheers
Fin

Depends, mostly on personal circumstances, if you have money saved, able to cover general expenses/mortgage 2-3m if you get benched. 12m contract is no guarantee that will last that much. Seen a guy shown out in 2w without getting the chance to actually do any work (he's wife just had another child and he took a few days off, flexible in-out and that rubbed a manager the wrong way). Mechanical engineer as well, automotive, midlands.
Take also in consideration brexit is looming and also a potential economic downturn - inverted yield curve and all that crap, manufacturing is a bit unstable in the uk... plenty of manufacturers might close doors and there might be a flood of engineers on market.
But if you've been enough around the block, are decent at your job, get a reasonable manager, will prosper and look at permies with disgust.

[Anonimouse]

You are also forgetting sickness and bank holidays