Reply to: 135K FTE or 710 Umbrella Rate?

[WTFH]

Just to clarify it was 425 inside and a salary (nothing to do with outside) - And for completness the salary expected was 90K vs 425 inside (not 70 my mistake). Thank you eek for those figures above

That doesn’t make them equivalent - it just makes then what someone says they would want to jump from contracting - or, as I have done many times - is a way of telling an agent, or company, that I wouldn’t want to work for them permanently. Because if your friend who told you that was being serious, they would have also mentioned the benefits package and pension they’d want.

[NowPermOutsideUK]

That makes absolutely no sense - what does 70k outside mean - outside would usually be a day rate so £400 or so.

If you mean £425 inside or a £70k salary - well £425 @230 days gives you a PAYE salary (after Employer NI and pension deductions) of about £81500 so that's probably at the point the contract makes sense.

£710 however gives you a PAYE "salary" of £137,750 under those calculations so the FTE rate is way better.

Just to clarify it was 425 inside and a salary (nothing to do with outside) - And for completness the salary expected was 90K vs 425 inside (not 70 my mistake). Thank you eek for those figures above

[ConsultingTechArchitect]

Assuming you can genuinely source those *Outside* IR35 contracts; and to quote Rudyard Kipling, in his Barrack-room ballads, 1892: "Oh, East is East, and West is West, and never the twain shall meet."

I'm working two outside right now with another one just landing in my Linkedin inbox (I won't take a third).

There are still some around.

[rocktronAMP]

I turned down 140k FTE with one of large consulting firms (big 4). For that much salary, they will want to own every aspect of your life.

I can work two outside IR35 contracts and make much more without the need to give my life to the partners/owners of the firm.

Assuming you can genuinely source those *Outside* IR35 contracts; and to quote Rudyard Kipling, in his Barrack-room ballads, 1892: "Oh, East is East, and West is West, and never the twain shall meet."

[ConsultingTechArchitect]

I turned down 140k FTE with one of large consulting firms (big 4). For that much salary, they will want to own every aspect of your life.

I can work two outside IR35 contracts and make much more without the need to give my life to the partners/owners of the firm.

[rocktronAMP]

230 days - (you lose 30 days holiday)

£710* 230= £163,300

and then I took off employee NI at 15.55%.

thag gives me £141,000 or so, so it also includes a full employer pension contribution at 3%

With that £141,000 you are well above £100K of personal allowance. So the whole is fully taxed. My brain hurts, I don't remember the calculation working out.

[eek]

Dont think £710 day rate will give £137750 PAYE salary.. how did you calculate that?

230 days - (you lose 30 days holiday)

£710* 230= £163,300

and then I took off employee NI at 15.55%.

thag gives me £141,000 or so, so it also includes a full employer pension contribution at 3%

[chinnaab]

That makes absolutely no sense - what does 70k outside mean - outside would usually be a day rate so £400 or so.

If you mean £425 inside or a £70k salary - well £425 @230 days gives you a PAYE salary (after Employer NI and pension deductions) of about £81500 so that's probably at the point the contract makes sense.

£710 however gives you a PAYE "salary" of £137,750 under those calculations so the FTE rate is way better.

Dont think £710 day rate will give £137750 PAYE salary.. how did you calculate that?

[eek]

For inside I have not run the numbers - However I am hiring and today I saw someone asking for 425 per day inside or 70K outside

That makes absolutely no sense - what does 70k outside mean - outside would usually be a day rate so £400 or so.

If you mean £425 inside or a £70k salary - well £425 @230 days gives you a PAYE salary (after Employer NI and pension deductions) of about £81500 so that's probably at the point the contract makes sense.

£710 however gives you a PAYE "salary" of £137,750 under those calculations so the FTE rate is way better.

[northernladuk]

What are you talking about, tax dodges and dividends? The Tax dodges available to FTE or Umbrella are very limited.

I thought that was a pretty good post by NowPermOutsideUK

My only issue was him saying 6.5K might be a bit tight. Only in a worst case scenario. 6.5K is quite tight for a single earner trying to support a recently bought home and family. But if the partner works the household income could be over 10K a month. Or if the house was bought a decade or more ago then the numbers are not so bad either.

Which bit was good?
Sentence 1 was a waste of internet space
Sentence 2 & 3 are so simple it's beyond useless
Sentence 4 is utter bollocks
Sentence 5 is just a question
Sentence 6 you destroyed his argument by pointing out the obvious

Not much pretty good left to comment on.

[Fraidycat]

What about if they live with their parents, have the dog as a shareholder and use more tax dodges than Sunak? Your ideas of what is equivalent is based on a series of false/dodgy assumptions. If you’d care to show your workings and taxes, that would make very interesting readings. Your “simple arithmetic” is based on dividend taxes, etc, all being linear.
Please stay out of the professional forums if you’re not a professional.

What are you talking about, tax dodges and dividends? The Tax dodges available to FTE or Umbrella are very limited.

I thought that was a pretty good post by NowPermOutsideUK

My only issue was him saying 6.5K might be a bit tight. Only in a worst case scenario. 6.5K is quite tight for a single earner trying to support a recently bought home and family. But if the partner works the household income could be over 10K a month. Or if the house was bought a decade or more ago then the numbers are not so bad either.

[WTFH]

Very interesting problem to have - If 710 was outside I would have no hesitation to recommend the outside contract role

For inside I have not run the numbers - However I am hiring and today I saw someone asking for 425 per day inside or 70K outside

This would mean by simple arithmetic that 850 = 140K?...

Personally I think contracting is over - i had a good run and i would take the perm 135 on numbers only

I m not far off your perm number salary and would be curious to know what you do in what industry - I guess programme manager in finance

Just be aware that is 6.5K after tax a month - Assume your housing is 3K and thats 100 a day for everything else - Not that much sadly

What about if they live with their parents, have the dog as a shareholder and use more tax dodges than Sunak? Your ideas of what is equivalent is based on a series of false/dodgy assumptions. If you’d care to show your workings and taxes, that would make very interesting readings. Your “simple arithmetic” is based on dividend taxes, etc, all being linear.
Please stay out of the professional forums if you’re not a professional.

[NowPermOutsideUK]

Very interesting problem to have - If 710 was outside I would have no hesitation to recommend the outside contract role

For inside I have not run the numbers - However I am hiring and today I saw someone asking for 425 per day inside or 70K outside

This would mean by simple arithmetic that 850 = 140K?...

Personally I think contracting is over - i had a good run and i would take the perm 135 on numbers only

I m not far off your perm number salary and would be curious to know what you do in what industry - I guess programme manager in finance

Just be aware that is 6.5K after tax a month - Assume your housing is 3K and thats 100 a day for everything else - Not that much sadly

[chinnaab]

Is the 10% the Employee and Employers added together?

Hi
10% is employer contribution alone.

[chinnaab]

In reality only you can decide.

However, given the current climate and the fact that contract (and permie) pay is going to come under severe downward pressure with the incoming trade deal with India and freedom of movement for workers from that continent, I'd bite their hand off for a £135k salary with £15k bonus. On the pension side, you don't mention matching contributions which I would expect any employer would do if they're paying that sort of salary.

Thank you for your comments. Employers contribution is 10% of 135k. They match a max of 2% on employee contributions