Reply to: Comparing contract to perm rate / salary

[DirtyDog]

By the way chaps....leaning heavily towards the stay in the perm role camp and push hard to get exposure to new things and take on more responsibility/seniority (exceptionally difficult where I am but not impossible).

At the post £650 rate of £450, taking into account bench time + the (potential) security and sick pay of a perm role that's located in a reasonable bit of the UK it just doesn't stack up and as was mentioned before it would be personal reasons that make me switch.

I think rather than walk away from problems as much as I have in the past I might tackle this one further. Especially if I can get an MSc out of them.

That's what I'd do in your situation.

[MyUserName]

Unless there is a pressing need to move I would stay where you are. If you are going to move send us the details of the vacancy you have left as it sounds quite sweet!

If you would like to specialise, perhaps you could contribute to an open source project in a field which interests you?

[psychocandy]

Why?

Cos of the rate I'm on at the mo.

[SpontaneousOrder]

That 1000x hourly rate has made me feel a bit sad..... :-(

Why?

[psychocandy]

That 1000x hourly rate has made me feel a bit sad..... :-(

[Olly]

By the way chaps....leaning heavily towards the stay in the perm role camp and push hard to get exposure to new things and take on more responsibility/seniority (exceptionally difficult where I am but not impossible).

At the post £650 rate of £450, taking into account bench time + the (potential) security and sick pay of a perm role that's located in a reasonable bit of the UK it just doesn't stack up and as was mentioned before it would be personal reasons that make me switch.

I think rather than walk away from problems as much as I have in the past I might tackle this one further. Especially if I can get an MSc out of them.

[Olly]

Bear in mind that whatever daily rate anyone is on, the funds are Ltd company funds and not yours, unless of course you pay the additional tax etc. So £80k = x /day daily rate of company funds and not personal disposable income.

Most people on here (bold assumption) draw out salary/dividends that keep within the minimal personal tax thresholds. These rest of the funds then remain in the company unless you want to pay additional personal and corporation tax to withdraw (or pay directly into pension etc).

I'm guessing plenty of people on here live it large and probably do stray into the 40% bracket actually but I don't. You forgot to mention the route I will go down to extract the remaining Ltd's funds which is members voluntary liquidation. There is the option of drawing down the money in retirement too with no further tax to pay unless you're particularly well off in retirement.

want to pay additional...corporation tax to withdraw

er....you're going to have to explain that one, there's no possible way I can think that you end up paying more CT if you want to increase how much you take from your Ltd.

[eek]

Bear in mind that whatever daily rate anyone is on, the funds are Ltd company funds and not yours, unless of course you pay the additional tax etc. So £80k = x /day daily rate of company funds and not personal disposable income.

Most people on here (bold assumption) draw out salary/dividends that keep within the minimal personal tax thresholds. These rest of the funds then remain in the company unless you want to pay additional personal and corporation tax to withdraw (or pay directly into pension etc).

or your wife doesn't work / earn much allowing another £20k or so to leave that away....

[kaiser78]

Bear in mind that whatever daily rate anyone is on, the funds are Ltd company funds and not yours, unless of course you pay the additional tax etc. So £80k = x /day daily rate of company funds and not personal disposable income.

Most people on here (bold assumption) draw out salary/dividends that keep within the minimal personal tax thresholds. These rest of the funds then remain in the company unless you want to pay additional personal and corporation tax to withdraw (or pay directly into pension etc).

[Bellona]

tbh from the sounds of it your permie role is ticking a significant number of boxes for you, my reaction is "it isn't busted, why fix it?".

Unless there's an overriding strong reason to change (which will be personal) then I'd vote stay where you are.

WHS
Your arguments for staying where you are seem to be ticking more boxes for you than a move

[Olly]

malvolio, does the 50K limit not apply to company directors then..,genuine question. There's no max on the level of AVCs I can asked be deducted from salary.

[ASB]

Olly, you said you were chucking a lot into the pension and also that with the 40k cap next year you would hit that.

be cautious. With that level of contribution the lifetime cap could be a real risk. Exceed it and the tax consequences are fairly costly. More so than taking the hit at 40%. So it may be better to take the hit on a portion and isa it.

All depends on your exact overall position.

[malvolio]

As I mentioned earlier, I've contracted in IT for large blue chips for 9 years and was perm before and now after that.
I'll paste from above and comment in turn - note this is my personal experience but I do wonder, how accurately it applies to contractors I've worked with too. Quite a lot I'd imagine.

"I don't like being controlled by managers who know less than me"
I've found this happens frequently in contracting, of course we can have the standard discussion what's meant by "control", but I tend to get parachuted into projects when it's already gone a bit squirrelly, usually the fault of the manager.
The difference as a permy is, if, and it's a big if, you want to stay with the same company, then you have to work your way through, around or over your out of their depth manager whereas in contracting you just need to wait for your contract to expire, though then it's often a case of out of the frying pan....

No. I'm there to tell them what needs to be done from a position of authority. (And these days I'm often doing that at Board level...). I wouldn't have that authority as a subordinate, no matter how good I was, if the manager is not that good. Most aren't, sadly.

"because I want to manage what I do with all my income"

I suppose we all do, the financial upside of contracting is well understood by most. Personally I'm not too unhappy with the arrangement I have as I can max out my pension contributions, something I'd seriously neglected prior.

QED. Being a contractor is my job. Knowing the fincials is part of it.

because I want to be able to take time off as needed by me, not them

When it comes to "normal" holiday, it's much of a muchness, if I took time off at a critical point in a project as a contractor there'd be implications and as a result I wouldn't. I can't see a big difference here. For me, a big sacrifice of turning perm is not being able to take big chunks of time off to travel between contracts.
What I tended to find as a contractor is that I adopted a make hay while the sun shines attitude and barely took a day off (including when ill). I do like having paid holiday and 31 days isn't shabby. Bench time, unless voluntary, seldom felt like a holiday and through needing to be available for interviews meant I couldn't really go away.

OK, not a biggie of itself. FWIW I haven't had a holiday since the second week in January last year up to Christmas.

because I want better options for pensions saving

I can't really comment on this as I'm not sure what's implied, I'm crap at that stuff, I'm kind of thankful my employer gives me few options and even as an employee you only loose the NI if you want to do it your way rather than through AVCs (if I understand things correctly).

No. You have a maximum you can put in your fund. So have I, but as a director it's a lot more.

because I gave up on valuing career plans, company car schemes, personnel assessments

Company car is just a form of income and therefore gets lumped in the financial perm/contract comparison. As far as career plans and the like, I think you'll find most employees feel they have little relevance too.

Perhaps the world has moved on. However, I still hear the permies on my team bitching about differences in grade and car allowances, for example.

and bonus schemes years ago

Luckily, and maybe this isn't the norm, as long as you do your job well, you get an on target bonus relevant to your grade (13%), yes you might be able to up that a little but not a lot. There's certainly no big bucks lottery to worry about and as such I lump this into the financial perm/contract comparison pot.

Last two clients - both major companies - have bonus schemes. Neither has paid out for at least three years. MyCo is rather more generous and consistently rewards high performance....

because I get bored to tears after two years in the same office

ermmm......you got me there...at least you're not the "new boy" every two years and have the (possibly false) sense of job security conducive to sorting out accommodation within a short commute.

because I only want to work for a company that I own.
I like many (most?) use a Ltd company because that's "the way it's done". One day I'd love to have a boutique consultancy with some select employees and partners and deal direct with end-clients. That day isn't realistic any time soon.

You miss the point. I'm in total charge of my destiny and things like expenses and income. Permies aren't.

And just for the record, I think those contractors that have been able to insulate themselves from office politics and "corporate culture 5hite..." are lucky and I strongly suspect, a small minority.

I can't do what I do without being politically capable. That's not the same thing as having to impress people who aren't actually worth impressing in order to keep the promotions coming.

[TykeMerc]

tbh from the sounds of it your permie role is ticking a significant number of boxes for you, my reaction is "it isn't busted, why fix it?".

Unless there's an overriding strong reason to change (which will be personal) then I'd vote stay where you are.

[Olly]

As I mentioned earlier, I've contracted in IT for large blue chips for 9 years and was perm before and now after that.
I'll paste from above and comment in turn - note this is my personal experience but I do wonder, how accurately it applies to contractors I've worked with too. Quite a lot I'd imagine.

"I don't like being controlled by managers who know less than me"
I've found this happens frequently in contracting, of course we can have the standard discussion what's meant by "control", but I tend to get parachuted into projects when it's already gone a bit squirrelly, usually the fault of the manager.
The difference as a permy is, if, and it's a big if, you want to stay with the same company, then you have to work your way through, around or over your out of their depth manager whereas in contracting you just need to wait for your contract to expire, though then it's often a case of out of the frying pan....

"because I want to manage what I do with all my income"
I suppose we all do, the financial upside of contracting is well understood by most. Personally I'm not too unhappy with the arrangement I have as I can max out my pension contributions, something I'd seriously neglected prior.

because I want to be able to take time off as needed by me, not them
When it comes to "normal" holiday, it's much of a muchness, if I took time off at a critical point in a project as a contractor there'd be implications and as a result I wouldn't. I can't see a big difference here. For me, a big sacrifice of turning perm is not being able to take big chunks of time off to travel between contracts.
What I tended to find as a contractor is that I adopted a make hay while the sun shines attitude and barely took a day off (including when ill). I do like having paid holiday and 31 days isn't shabby. Bench time, unless voluntary, seldom felt like a holiday and through needing to be available for interviews meant I couldn't really go away.

because I want better options for pensions saving
I can't really comment on this as I'm not sure what's implied, I'm crap at that stuff, I'm kind of thankful my employer gives me few options and even as an employee you only loose the NI if you want to do it your way rather than through AVCs (if I understand things correctly).

because I gave up on valuing career plans, company car schemes, personnel assessments
Company car is just a form of income and therefore gets lumped in the financial perm/contract comparison. As far as career plans and the like, I think you'll find most employees feel they have little relevance too.

and bonus schemes years ago
Luckily, and maybe this isn't the norm, as long as you do your job well, you get an on target bonus relevant to your grade (13%), yes you might be able to up that a little but not a lot. There's certainly no big bucks lottery to worry about and as such I lump this into the financial perm/contract comparison pot.

because I get bored to tears after two years in the same office
ermmm......you got me there...at least you're not the "new boy" every two years and have the (possibly false) sense of job security conducive to sorting out accommodation within a short commute.

because I only want to work for a company that I own.
I like many (most?) use a Ltd company because that's "the way it's done". One day I'd love to have a boutique consultancy with some select employees and partners and deal direct with end-clients. That day isn't realistic any time soon.

And just for the record, I think those contractors that have been able to insulate themselves from office politics and "corporate culture 5hite..." are lucky and I strongly suspect, a small minority.