Stay Permie at 55K p.a or take 100K contract?

[whits1]

Thanks for all the comments and advice .... will probably decide to stay put for the time being .. too risky with the kids and no other income coming in. Contracting for the time being has been put on the back burner!!

[Diestl]

If you dont take some risks in life you'll get nowhere, also anyone can be made redundant with only a months notice, no such thing as a safe job. If theres plently of contracts for you're skillset go for it.

[cojak]

Diescum - probably.

But for the OP:

I am 40 years old this year and my thoughts are to go contracting for 2-3 years, pay off the mortgage and then get back into a permie role .... should i take the plunge or keep with my safe, near to home permie job?

...is simply not a good enough reason on it's own unless

a) He has a good enough skillset to ensure continuous employment for 3 years, and
b) He's researched it thoroughly and is confident enough not to ask us cynics for any dubious advice.

I repeat - if you don't get end-to-end contracts over those 3 years you'll be eating into any extra money you've earned - it may not make it as far as the mortgage pay off.

And remember the side issue of your marriage - when financial worries become realities, will she stand by you or blame you for ditching that 'safe, near to home permie job'?

Many contributors can share their experiences with you...

[DieScum]

I'm considering contracting for the following reasons

- more money, probably about 40k over a year (tax to be deducted). Even if I pay a full 40% tax that is a lot of extra saved money.

- the longest I have ever stayed in a permie job is 2 years so ideas of stability and permie security are largely moot

- I already live a suitcase lifestyle for my job, albeit all on generous company expenses involving enjoyable exotic travel

[cojak]

Why exactly do you guys want to be contractors? The next contract doesn't always start the moment the last contract ends. You can be out on your ear for no other reason than the Boss's boss doesn't like you. And you might have to live in a hotel for 4 days a week.

If you believe the contractor's motto 'Something will turn up in the end' and view the above situations as a challenge, then consider it.

If it's just money you're after think long and hard before giving up a cushy permie job (particularly if you have a young family). The 1st contract is easy - it's the 2nd that's the hard one.

[DieScum]

I'm looking at a similar situation to you at the moment.

If I was 40 with 2 young kids I would be very inclined to stay where I was. How secure is your job? Do you enjoy it?

The extra cash for you would be 40k over a year but some of that will be lost to tax. Could you think of other ways to make some more money staying as you are?

[tim123]

If this is just about the money, stick with the perm job.

You really have to consider the long term opportunities of staying perm or going contract. There are risks in contracting to match the extra money. There are often less opportunities (some technological areas may differ to mine).

If you are happy in your perm job, I would recommend staying there.

tim

[whits1]

Thanks for the replies ... my permie job is probably nearer 60k with a whole load of benefits - final salary pension with 8% company contribution - 30 days hols - extended sick pay and 20 mins drive from home. Looking at your points to consider :

- How long is the contract likely to last? 6 months with possible extensions .. agent sasy some guys have been there 18 months
- Will you always be able to earn that amount as a contractor? possibly not .. this is a top rate for the role in my opinion
- Can you hack the lifestyle, for e.g. the need to live out of a suitcase if need be? could be difficult .. 2 young kids (3 and 1) and site about three hours drive from home.
- Can you be bothered to run your Ltd Co, keep accounts etc? dont mind
- Could you actually return to a permie job after a few years? this is a big unknown .. and definetly dont think i'd get the same amount as i'm on now .. based in Sheffield
- How will your skillset suffer/improve with contracting? dont think this is too much of an issue.

Got to have a long hard think and possibly speak to an accountant.

[ChimpMaster]

It all depends on your personal financial circumstances, but to me it doesn't seem worthwhile giving up a 55k job, with final salary pension, for a 100k contract.

£150k contract - yes - but £100k - no.

You have to think about factors such as:
- How long is the contract likely to last?
- Will you always be able to earn that amount as a contractor?
- Can you hack the lifestyle, for e.g. the need to live out of a suitcase if need be?
- Can you be bothered to run your Ltd Co, keep accounts etc?
- Could you actually return to a permie job after a few years?
- How will your skillset suffer/improve with contracting?
.
.
.etc

[VectraMan]

Calculator:

http://www.contractoruk.com/money/ir35_calculator.html

(I think that assumes you work 10 months a year and 37.5 hours per week, and the expenses field is for the whole year).

If you're IR35 caught, then you may as well go with an umbrella. If not, go Ltd. The way to get 80% ish is to pay yourself £38K per year and leave the rest in the company for a couple of years, then shut it down and you get taper relief on the remainder. Ask an accountant.

Remember that you have to pay the employers NI, so if you are IR35 caught your actual salary will be more like £80K ish, and with expenses, staying away, loss of pension and lack of security you may consider it isn't worth it.

[whits1]

Advice required please from you experienced contractors. I'm currently a permie earning around 55k p.a. with a final salary pension. Have been offered a contract which equates to 100k p.a. The contract involves working 14-16 shifts per month (days and nights) and would require 14-16 overnights stays (thinking of budgeting 30 quid per night for a b&b).

Am not sure whether the contract is inside or outside IR35?

What kind of figures are we talking of for real take home pay for the 12 months? .... have seen figures of 80% of contract banded about on this forum ... is this legaly possible?

What is the best option ... ltd or umbrella?

I am 40 years old this year and my thoughts are to go contracting for 2-3 years, pay off the mortgage and then get back into a permie role .... should i take the plunge or keep with my safe, near to home permie job?