Reply to: 625 a day outside ir35 or 110k a yr perm

[ladymuck]

It's not just the money (although I wouldn't turn up my nose at it!). Just seems to be too good an opportunity to just turn down. Considering I live up north and am a lowly dev this is London money with no commute and way above what I would be able to get if not for this crazy Job market we seem to be in. Going to keep the Ltd open and give it 6 months. If it pans out all well and good if not then its back to contracting.

I think that's a reasonable approach.

Just keep an eye on LtdCo drawings to make sure you don't end up paying a lot more tax than you may have planned for. I'd go so far as to suggest repaying anything not taken as salary or expenses if you can and stop paying yourself a salary (you can submit nil returns to indicate nothing paid).

[Inception]

It's not just the money (although I wouldn't turn up my nose at it!). Just seems to be too good an opportunity to just turn down. Considering I live up north and am a lowly dev this is London money with no commute and way above what I would be able to get if not for this crazy Job market we seem to be in. Going to keep the Ltd open and give it 6 months. If it pans out all well and good if not then its back to contracting.

[d000hg]

Hello

Been made a perm offer (interesting role, fully remote etc) of 115k a yr which means pension, holidays, health care etc on top vs carrying on as a contractor on 625 a day (outside ir35) - in these choppy waters (NI + dividend whammy not long ago plus more to come), what would you do?

Is money the only thing that matters to you? If not I don't really see what advice we can offer since we aren't you, don't know your situation or preferences, etc.

I will say that a well-paid, fully remote perm-based job is in many ways something I'd jump at personally. Day to day I could still retain a lot of freedom assuming they're a decent company, without the faff of accountants, the uncertainty around searching for gigs, and the potential stress over IR35 and potential future tax crack-downs.
On the other hand, I don't really like doing the same thing for a long time so it would have to be a job where that's not the case.
Commuting is one the reasons I got into contracting in the first place.

[northernladuk]

625/day blows 110k permie salary out of the water. When I was on a rate close to that I calculated that I needed a salary of at least 170k to match it.

Correct but a contract is not likely to last the year and then there is bench time and the next gig which is likely to be inside etc etc. You can't compare the two as simplistically as this.

[cannon999]

625/day blows 110k permie salary out of the water. When I was on a rate close to that I calculated that I needed a salary of at least 170k to match it.

[vwdan]

Remember who you’re dealing with here.
He’s not interested in anything you’ve stated above, but firmly believes that through various tax dodges (company cars for family members, running a business through his parent’s house, paying them rent and paying them as employees, putting 40% of rate into a pension, with free accommodation, etc). It’s also worth factoring in free equipment/phone/training - all of which a contractor can do as tax write-offs, but it still comes out of the company funds.
One correction I would make - you mention “employee” pension contribution - surely you mean “employer” - which can be >10% of the gross salary.

Whoops, good spot - yep, I meant employer contribution. One of the companies I'm chatting to does something ridiculous like 8 or 9% contribution with zero employee contribution - so straight away, that's an extra £8k+ to consider

[ladymuck]

Lots of people here advocating for perm, puzzling.

Current events require more flexible thinking and sometimes perm is the right way to go. I don't think anyone is truly advocating it but rather highlighting that it is a viable option, depending on an individual's circumstances.

It's not always about the financials, as you allude to, with both there is a wider package to consider.

[WTFH]

To be clear, if you're confident you can continue to earn 625 *outside* then I would stick with that, but if we presume outside roles are somewhat difficult now:

£625p/d gets you somewhere in the world of £1750 a week through a brolly, so if we knock off your 30 days holiday and a week sick that's (52-7) = take home of £78,750

£115k perm gets you £72,340.00 take home, plus an employee pension contribution and probably some other benefits however average. There's no expenses inside IR35, so effectively the only advantage is you could choose to work more over the year. But it's only gonna take a few weeks between contracts to totally erode any advantage.

Also, for example, one of the companies I'm speaking to has a particularly generous pension scheme - and I found once I started factoring that in the actual money which eventually comes to me isn't all that much different, even if the headline figure changes.

I would personally chose the £115,000 at the minute. For two reasons - 1 I could almost certainly swing it as 100% WFH, whereas contract has the risk of needing to work away and accrue expenses. Secondly, I probably wouldn't be able to get those kinds of rates outside IR35 on a long term basis - I actually earn similar to it right now, but inside.

Don't get me wrong, I'm a contractor at heart - there's far more to choosing between the two than just cash or even the stuff above. But, personally, WFH is making a compelling argument.

Remember who you’re dealing with here.
He’s not interested in anything you’ve stated above, but firmly believes that through various tax dodges (company cars for family members, running a business through his parent’s house, paying them rent and paying them as employees, putting 40% of rate into a pension, with free accommodation, etc). It’s also worth factoring in free equipment/phone/training - all of which a contractor can do as tax write-offs, but it still comes out of the company funds.
One correction I would make - you mention “employee” pension contribution - surely you mean “employer” - which can be >10% of the gross salary.

[ladymuck]

There's also the opportunity with a permie role to take on training in areas you may lack certification or experience in, and more tolerance of sideways moves too. A true contractor would see a two year permanent stint as a long gig, get all those extras banked and then look to move on when the market has stabilised.

[vwdan]

Very interesting post. Can you actually comment on 625 vs 115 perm and which you would choose?

also I hear you about looking at perm given contracts are now inside. Can you indicate the perm to inside rate you are seeing or thinking of?!

To be clear, if you're confident you can continue to earn 625 *outside* then I would stick with that, but if we presume outside roles are somewhat difficult now:

£625p/d gets you somewhere in the world of £1750 a week through a brolly, so if we knock off your 30 days holiday and a week sick that's (52-7) = take home of £78,750

£115k perm gets you £72,340.00 take home, plus an employee pension contribution and probably some other benefits however average. There's no expenses inside IR35, so effectively the only advantage is you could choose to work more over the year. But it's only gonna take a few weeks between contracts to totally erode any advantage.

Also, for example, one of the companies I'm speaking to has a particularly generous pension scheme - and I found once I started factoring that in the actual money which eventually comes to me isn't all that much different, even if the headline figure changes.

I would personally chose the £115,000 at the minute. For two reasons - 1 I could almost certainly swing it as 100% WFH, whereas contract has the risk of needing to work away and accrue expenses. Secondly, I probably wouldn't be able to get those kinds of rates outside IR35 on a long term basis - I actually earn similar to it right now, but inside.

Don't get me wrong, I'm a contractor at heart - there's far more to choosing between the two than just cash or even the stuff above. But, personally, WFH is making a compelling argument.

[GigiBronz]

- both roles won't have any employment rights in the first two years (and also if they are a bit rogue and don't want any tax liability they will fire you before the 2y term from the perm role as well)
- there is a chance the company culture is not for you / politics are through the roof - contract role does not raise any questions later on if you leave
- take home is 25% more, 5.8k vs 7.2k more for contract + expenses.
- you work on only what the project entails, you do not have to get your hands dirty with what problems the client co might have.
- if you are good enough to be offered both, you are good enough to keep them down(unless the unpredictable happens... which could be the same for both perm and contract)

- perm roles put you in the wrong mindset, that you are taken care of, a community, some might say even family. But it is nonsense and the only think that matters is: skills, delivery and money in the bank.
Don't let yourself get fooled in that trap.

depends on your other circumstances but I usually make no use of the benefits (seldom been to the doctor and for emergencies you end up with NHS as well, so no need for private health insurance), dental is not included with most packages, I don't believe in pensions - and as we can see the real inflation is probably 20% for the prev 5 years, and we are still not there yet. Transitory might mean permanent. Show me a pension that has returned that.

I would still take a perm role for the right opportunity to learn new things and learn a new field. But if you are already there... can't see the point.

Lots of people here advocating for perm, puzzling.

[eek]

Very interesting post. Can you actually comment on 625 vs 115 perm and which you would choose?

also I hear you about looking at perm given contracts are now inside. Can you indiciate the perm to inside rate you are seeing or thinking of?!

Why?

Can't you make your own mind up and your own decision. Everyone is different and has different circumstances (for instance few of us have £50,000 in BTL income that they wish to avoid paying tax on).

[NowPermOutsideUK]

It's a risk assessment isn't it - it's more likely that a contract role ends in the short term, and it's probably less likely you'd find that kind of perm role. While permie roles aren't hugely protected, companies tend not to treat them as disposable.

*Personally*, I've been looking at a perm role as even on higher day rates once you get stuffed inside (Which is hard to avoid now large companies are blanket banning Ltd Co contracting) there's actually not huge amounts between it, especially if you use it to top up your pension.

Very interesting post. Can you actually comment on 625 vs 115 perm and which you would choose?

also I hear you about looking at perm given contracts are now inside. Can you indiciate the perm to inside rate you are seeing or thinking of?!

[vwdan]

Just to add balance. I would snap up the 625 outside role. I’d even prefer the 625 a day to 150k perm.

the previous poster said what happens in six months time and you could be on 400 a day?!

well what happens if your perm 115k blows up?! Perms are not safer than the contractors so for me the tax position on outside income is far superior

It's a risk assessment isn't it - it's more likely that a contract role ends in the short term, and it's probably less likely you'd find that kind of perm role. While permie roles aren't hugely protected, companies tend not to treat them as disposable.

*Personally*, I've been looking at a perm role as even on higher day rates once you get stuffed inside (Which is hard to avoid now large companies are blanket banning Ltd Co contracting) there's actually not huge amounts between it, especially if you use it to top up your pension.

[NowPermOutsideUK]

Just to add balance. I would snap up the 625 outside role. I’d even prefer the 625 a day to 150k perm.

the previous poster said what happens in six months time and you could be on 400 a day?!

well what happens if your perm 115k blows up?! Perms are not safer than the contractors so for me the tax position on outside income is far superior