Originally posted by WTFH
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Reply to: Inside ir35 rate to permanent salary
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Previously on "Inside ir35 rate to permanent salary"
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Originally posted by dl8860 View PostOP, for a very quick and dirty way to do it, I think you can compare (hourly rate as contractor) x 1000 with the salary PA.
i.e if your day rate is 480 for an 8 hour day, that's 60 quid an hour. Comparable to a 60k salaried perm role.
Don't overlook the fact that the only person willing to give you an actual numerical example has 11 posts though...
The OP is talking about inside.
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OP, for a very quick and dirty way to do it, I think you can compare (hourly rate as contractor) x 1000 with the salary PA.
i.e if your day rate is 480 for an 8 hour day, that's 60 quid an hour. Comparable to a 60k salaried perm role.
Don't overlook the fact that the only person willing to give you an actual numerical example has 11 posts though...
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Originally posted by Smartie View Post
Sure, but everyone's circumstances are different and that wasn't the question as far as I can tell.
It was 'how do I know what permanent salary is equivalent to my inside IR35 umbrella contract role income'.
Doesn't matter if he's living at home or spending everything he earns, if he's got enough now and he gets the same permanent then he'll be fine. If it's £30k less after tax then he'd need to work out if that's possible, or desirable.
Snag is, all else isn't equal. As we have tried to explain.
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Originally posted by WTFH View Post
There are other issues on the matter, which is why it's not something that can go into a grid.
If we have two contractors on the same day rate, one who has a mortgage of £2k a month, has kids at a private school (another £2k), council tax, gas, water, electric, etc, then they need to take home let's say £6k a month.
If the second contractor lives with his parents, then all those bills vanish. He might contribute a little to running the house, but it's nowhere near the same amount. He might have a property investment or two that gives him some income. So, for his contract, he might pump as much as he can into a pension.
If we then compare the amount of take-home + pension, the one who puts less into his pension pays more tax.
...and that's before we talk about Ltd companies, family members as shareholders or employees, etc
So, when someone says "compare this daily rate to that salary", the only way to make it meaningful is to set the standards for the comparison and go from there.
A generic response is going to be wrong most of the time, as the Americans would put it YMMV.
It was 'how do I know what permanent salary is equivalent to my inside IR35 umbrella contract role income'.
Doesn't matter if he's living at home or spending everything he earns, if he's got enough now and he gets the same permanent then he'll be fine. If it's £30k less after tax then he'd need to work out if that's possible, or desirable.
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Originally posted by gables View PostPresuming you're talking company contribution... my last perm role (just finished April this year) did start at 3% and then rose as you contributed more up to a max of 10% with employee contribution being 8%
That's within the medical industry for IT roles.
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Originally posted by SueEllen View Post
So you are trying to compare two different lifestyles by just money?
Remember not all contractors work 227 days per year.
Originally posted by WTFH View Post
And not many perm roles have pensions less than 10%, but if he’s only worth 3%, then that says more about him than it does about contractors.
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Originally posted by Lance View Post
I don't know a single outside IR35 contractor who takes all their money out.
Every one of them takes c. £50k (£100k for their spouse, or maybe less, depending on what the spouse does), and leaves the rest in the company. Initially as a war chest.
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Originally posted by Lance View Post
I don't know a single outside IR35 contractor who takes all their money out.
Every one of them takes c. £50k (£100k for their spouse, or maybe less, depending on what the spouse does), and leaves the rest in the company. Initially as a war chest..
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Originally posted by Smartie View PostI can give you a fairly concrete example as I've been offered a perm role at exactly the same remuneration as contract - thanks for that :-)
Use a website like https://listentotaxman.com/
Assuming you know the number of working days in a year for the perm role - say 227 then get one of your umbrella invoices for 19 days which should be fairly common, take the figures for take home pay and pension contributions and play with the website figures until they match. That's how you can work out the equivalent perm salary.
Of course there are other differences like benefits, annual manager reviews, holiday approval requirements, getting paid while 'on the bench' and so on, but you can work out the figures quite easily.
Every one of them takes c. £50k (£100k for their spouse, or maybe less, depending on what the spouse does), and leaves the rest in the company. Initially as a war chest.
The comparison of available take home is meaningless at this stage. A £75k salary has equivalent take home to £1000+ a day outside if tax efficiency is sought.
An inside IR35 contract of the same day rate that I do outside is more take home as well...
So again. Difficult to compare without full information on age, exit plan, marital status, pension status, health, skill longevity, desires, aims and objectives.
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Originally posted by Smartie View PostAssuming you know the number of working days in a year for the perm role - say 227 then get one of your umbrella invoices for 19 days which should be fairly common, take the figures for take home pay and pension contributions and play with the website figures until they match. That's how you can work out the equivalent perm salary.
Of course there are other differences like benefits, annual manager reviews, holiday approval requirements, getting paid while 'on the bench' and so on, but you can work out the figures quite easily.
If we have two contractors on the same day rate, one who has a mortgage of £2k a month, has kids at a private school (another £2k), council tax, gas, water, electric, etc, then they need to take home let's say £6k a month.
If the second contractor lives with his parents, then all those bills vanish. He might contribute a little to running the house, but it's nowhere near the same amount. He might have a property investment or two that gives him some income. So, for his contract, he might pump as much as he can into a pension.
If we then compare the amount of take-home + pension, the one who puts less into his pension pays more tax.
...and that's before we talk about Ltd companies, family members as shareholders or employees, etc
So, when someone says "compare this daily rate to that salary", the only way to make it meaningful is to set the standards for the comparison and go from there.
A generic response is going to be wrong most of the time, as the Americans would put it YMMV.
Leave a comment:
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I can give you a fairly concrete example as I've been offered a perm role at exactly the same remuneration as contract - thanks for that :-)
Use a website like https://listentotaxman.com/
Assuming you know the number of working days in a year for the perm role - say 227 then get one of your umbrella invoices for 19 days which should be fairly common, take the figures for take home pay and pension contributions and play with the website figures until they match. That's how you can work out the equivalent perm salary.
Of course there are other differences like benefits, annual manager reviews, holiday approval requirements, getting paid while 'on the bench' and so on, but you can work out the figures quite easily.
Leave a comment:
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Originally posted by NowPermOutsideUK View PostThis is a topic that I think about many times a day and the answers and explanations that have been put forward never actually provide any numbers
Surely when people are comparing roles this question is the first and foremost item they consider - It is for me which is why I tried to ask the question clearly and again
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Originally posted by hobnob View Post
Please note that the OP is asking about inside rates. You are asking about outside rates, so this would be better on a separate thread rather than going off on a tangent from the original discussion.
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Originally posted by NowPermOutsideUK View PostI would be most interested if someone could provide some numbers for the following matrix - I promise to bookmark it and review it frequently and it would help many others including myself
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