Reply to: is contracting viable on these figures?

[Churchill]

Yes. For every 100 quid MyLtd invoices for I will eventually get 80 odd quid of it. But in order to get that percentage in any financial year I am not drawing more than 36k (post deductions) from my Ltd to my personal account.

My preference is to take months off between contracts. During these periods Im still drawing the same per financial year. For me it's all about the effort/income ratio.

By operating in this way a more valid permie to contract comparison for me would be a permie role paying a salary of 52k with 6 months paid holiday a year. I don't turn down an extension after 6 months, but you get the idea.

I consider drawing more than 36k to have a cost, so I tend not to do it. I'd rather have the full amount later than less now.

Marvellous, when that bus hits you, can I have access to your bank account?

[shoes]

Or waiting until retirement, or for a rainy day.

Yes. For every 100 quid MyLtd invoices for I will eventually get 80 odd quid of it. But in order to get that percentage in any financial year I am not drawing more than 36k (post deductions) from my Ltd to my personal account.

My preference is to take months off between contracts. During these periods Im still drawing the same per financial year. For me it's all about the effort/income ratio.

By operating in this way a more valid permie to contract comparison for me would be a permie role paying a salary of 52k with 6 months paid holiday a year. I don't turn down an extension after 6 months, but you get the idea.

I consider drawing more than 36k to have a cost, so I tend not to do it. I'd rather have the full amount later than less now.

[Spacecadet]

What He Said...

WHS

[Archangel]

Sorry but I can't see how you can get an 80% return. How are you working out a percentage return if you are only drawing money to keep you below higher rate? How are you accounting for the money that isn't withdrawn in the return rate?

Or waiting until retirement, or for a rainy day.

[Moscow Mule]

Sorry but I can't see how you can get an 80% return. How are you working out a percentage return if you are only drawing money to keep you below higher rate? How are you accounting for the money that isn't withdrawn in the return rate?

Probably something to do with exploiting the Entrepreneurs Relief on CGT?

[slackbloke]

My experience has been inside is 60%, outside is 80%. This is assuming that if outside you are drawing an amount from your company to remain below the higher rate in any financial year. 36k per finanical year drawn from company account to personal account (so after deductions) is what I do.

Sorry but I can't see how you can get an 80% return. How are you working out a percentage return if you are only drawing money to keep you below higher rate? How are you accounting for the money that isn't withdrawn in the return rate?

[Manic]

Malvolio's suggestion is a standard one, and will give you a good handle on what it actually feels like.

Yes, you could do the arithmetic differently, compare permie with benefits vs contracting every day of the year with none; apples and oranges.

You may indeed prefer to be a contractor because you don't want or use all the permie benefits, in which case you will vary the basic calc to suit yourself; but Mal's rule of thumb is as good a place to start as you will find.

Fair enough.

[expat]

Would have thought 40ph was well over, or are you assuming benefits such as PHI and Pensions?

Malvolio's suggestion is a standard one, and will give you a good handle on what it actually feels like.

Yes, you could do the arithmetic differently, compare permie with benefits vs contracting every day of the year with none; apples and oranges.

You may indeed prefer to be a contractor because you don't want or use all the permie benefits, in which case you will vary the basic calc to suit yourself; but Mal's rule of thumb is as good a place to start as you will find.

[malvolio]

Would have thought 40ph was well over, or are you assuming benefits such as PHI and Pensions?

I'm assuming not working 365 days a year, not having paid holidays, SSP, sick leave, overtime, health care, bank holidays, expenses, training and pensions, among other things...

[shoes]

Very doubtful you would get near 80% return outside IR35. More like 70-75 %.
Inside IR35 something like 65 %.

My experience has been inside is 60%, outside is 80%. This is assuming that if outside you are drawing an amount from your company to remain below the higher rate in any financial year. 36k per finanical year drawn from company account to personal account (so after deductions) is what I do.

[s2budd]

Hi,,

quick questions from a newbie,

based on a rate of 320 per day, likely that the contract will be inside IR35 what is the likely net pay per month/week?

what do i need to deduct from this pot to be a realist, would i expect 70% to be what will remain after taxes?

based on the calculator it won't be worth it being inside ir35! outside yes!

do people typically get their contracts tuned so that they can work outside ir35? obviously on case by case basis

apologies as still in permie land! whilst money is not the be and end all not much point if my current permie salary is much the same as contractor for more hassle, just pondering this!

any info or some pointers, rules of thumb most welcome.

thanks

After 15 years contracting I would say:

If near home then yes for a short term but if away from home then no, definetly not.

[Manic]

You have to ask, why inside IR35? You need to do some research.

Also £40 an hour is the same net earning power as £40k pa. if you want to do a realistic comparison.

Would have thought 40ph was well over, or are you assuming benefits such as PHI and Pensions?

[DiscoStu]

Wonder what WHS stands for ?

What He Said...

[synoniv]

Wonder what WHS stands for ?

WHS.

[LittlestHobbo]

You have to ask, why inside IR35? You need to do some research.

Also £40 an hour is the same net earning power as £40k pa. if you want to do a realistic comparison.

£40k per annum sallary the same as £40 per hour contract rate? How do you work that out?