General advice about switching

[DallasDad]

OP
If I read your self description correctly the type of work you currently do, which in turn is I hope, what you are most experienced in doing and hence is the type of work you should be looking to do as a contractor, will involve a fair amount of SDC and hence will most likely be inside IR35.

I have yet to work with a Systems Admin/Engineer who is/was not subject to often considerable process, documentation, supervision and direction even if not immediately obvious.

So when playing with the calculators use the ones based on Umbrella incomes which now T&S is no longer available should simply calculate full PAYE based on hourly or day rate.
That is your comparison to use against your permie rate minus potential bench time between contracts, loss of paid sick pay, paid holidays, employers pension etc.

It is then an entirely separate exercise to decide if running a LTD still while still paying full Paye is worth while, there are still benefits to be had going Ltd. such as the VAT FRS scheme even inside IR35.

[SueEllen]

Hi all,

I've read the first timers guide and plenty of other sources about switching from perm to contract. I'll give my current situation, then I have a few questions.

I'm currently a 25 year old Systems Engineer in Oxfordshire, earning circa £35k before tax, I mainly work with Linux, general Sys Admin tasks, etc, some networking skills. Due to the nature of my employers work (a massive estate, we're an ISP with lots of services), I'm not much of an expert in one thing, but fairly skilled in many things. I have a Uni degree (BSc) and this year, I'll be coming up to 4 years experience.

blah blah

blah blah

The rest of my concerns are largely ones I need to make personally. For example although my job is mundane and not the best pay, it's extremely easy (a bad thing too, as there's no challenge), it's right next to my house which means I can spend lunch at home walking my dog and I can turn up whenever I want (flexi-time) in jeans and a t-shirt. Contracting means much longer hours, commuting and lots of challenges (and wearing a suit, my pet hate), but it seems the only way to start earning real money.

Cheers,
SysEng.

Get another permanent job.

There are decently paid permanent jobs out there but you have to be willing to commute to do them. This means you won't be able to go home and walk your dog at lunch time.

Once you have done that job for a year and can cope with not going home being able to go home at lunch time then look into contracting.

In London good permanent linux systems admins can earn 70K and that's the roles that are advertised on job boards.

And I only wear a suit to interviews - but then I'm female. Most people in IT don't wear suits unless they are management and client facing.

[stek]

Hi all,

I've read the first timers guide and plenty of other sources about switching from perm to contract. I'll give my current situation, then I have a few questions.

I'm currently a 25 year old Systems Engineer in Oxfordshire, earning circa £35k before tax, I mainly work with Linux, general Sys Admin tasks, etc, some networking skills. Due to the nature of my employers work (a massive estate, we're an ISP with lots of services), I'm not much of an expert in one thing, but fairly skilled in many things. I have a Uni degree (BSc) and this year, I'll be coming up to 4 years experience.

For many reasons - including extremely boring work, work that's not even related to my job but I have to do, no career progression etc - I'm thinking of leaving. It won't be for a year yet, as I need to buy a house and get some more emergency savings together first.

Jobs like Linux Systems Engineer seem within my reach and skillset. Although my skills are thin in some of the areas, due to lack of exposure, I'm a fast learner and can quickly pick up a lot in a weekend of reading.

1. One of my worries after a lot of reading is IR35, my primary reason for wanting to switch to contracting is to earn a fair bit more money, IR35 could ruin this. From what I've read, am I right in thinking that shorter (i.e. 3/6 month) contracts are better, and 'project contracts' are better for IR35 avoidance than ongoing work contracts 'with possible option to extend' etc - which are more likely to be deemed 'employed' than 'self employed'?

2. Using contractor calculators, it looks like registering as an LTD can net you a lot more money - but there must be a reason that lots of people don't do this?

3. How much headaches do agencies save you? I hate the idea of giving away a good chunk of money to someone who simply searches for jobs for me, but are they worth it?

4. I know this is difficult to judge, but how much (roughly) would you expect to earn on a £300 or £400 daily contract in an IT related job? Using Parasol's calculator, they return £5,258.39 on their ClearSky limited plan - that seems far too high for me? Some other calculators give much lower estimations.

If anyone could nudge me in the right direction with the above, it'd be appreciated.

The rest of my concerns are largely ones I need to make personally. For example although my job is mundane and not the best pay, it's extremely easy (a bad thing too, as there's no challenge), it's right next to my house which means I can spend lunch at home walking my dog and I can turn up whenever I want (flexi-time) in jeans and a t-shirt. Contracting means much longer hours, commuting and lots of challenges (and wearing a suit, my pet hate), but it seems the only way to start earning real money.

Cheers,
SysEng.

1. IR35 doesn't depend on contract length, it's more disguised employee or not.

2. Yes, bit more hassle and some responsibility. Some people prefer an easier life where don't have to worry about it.

3. If you go direct you might make a bit more - but you might have to call 300 clients only to be told you not on the PSL. Plus getting money off end clients is no easy task - budget some time for chasing payments.

4. To stay tax efficient and build up your war chest best to only take approx 3k a month, leave the rest in the company or pay 40% tax on it, and war chest, war chest, war chest. The parasol figures assume working a full year, we generally budget 8/9 months a year, the rest looking for roles, going on hols.

Things you haven't considered are;

1. Commuting. The contractors ethic is flexibility, since 2006 I've only had one local contract, the rest I had to stay away all week. So it's either that or budget plenty of bench time. And if you work away what you do with the dog? Better have it put down, it's dog eat dog out there!

2. Bench Time. You can be canned on day on, a 12 months contract is only worth one day, and stretches between contracts can last nearly a year, as some on here will have experienced. I had 7 months once and shat myself. Hence the need for a decent war chest.

3. War Chest. Save as much as you can as quickly as you can so you have at least a years worth in the pot. If you can't find another role in a year you might as well go back perm.


Being a fast learner, reading about it won't cut it, you need to hit the ground running, I well remember being asked to setup an AIX HACMP cluster for the first, read the Red Book over the weekend, seemed in my range, monday morning started it and what I'd read made no sense whatsoever. Only with several attempts and restarts and taking advice did it work, I can do in my sleep now, but I learnt that reading a book on it and nowhere near enough.

Can you use vi?

[TheFaQQer]

It won't be for a year yet, as I need to buy a house and get some more emergency savings together first.

That sounds promising - at least you are taking the time to research what to do, and are saving already for those times when you can't find work.

Jobs like Linux Systems Engineer seem within my reach and skillset. Although my skills are thin in some of the areas, due to lack of exposure, I'm a fast learner and can quickly pick up a lot in a weekend of reading.

Excellent - go for those jobs then.

1. One of my worries after a lot of reading is IR35, my primary reason for wanting to switch to contracting is to earn a fair bit more money, IR35 could ruin this. From what I've read, am I right in thinking that shorter (i.e. 3/6 month) contracts are better, and 'project contracts' are better for IR35 avoidance than ongoing work contracts 'with possible option to extend' etc - which are more likely to be deemed 'employed' than 'self employed'?

Oh. This is where the post falls apart.

Contract length has no bearing on IR35, although if the contract is incredibly short then there is little to no benefit in pursuing you because there is so little as stake. I'm also wary of thinking "jump into contracting and you'll make loads more money" - do the sums properly, factoring in the right taxes and downtime and see how they compare. Don't multiply day rate by 365 and think you'll be quids in for the rest of your life - you won't be.

2. Using contractor calculators, it looks like registering as an LTD can net you a lot more money - but there must be a reason that lots of people don't do this?

Yes, you're right.

3. How much headaches do agencies save you? I hate the idea of giving away a good chunk of money to someone who simply searches for jobs for me, but are they worth it?

They don't save headaches at all. If you can find clients where there is no agency in the chain, then they are generally better - but be prepared to face longer payment terms (one of my contracts is direct, invoice at the end of the month on 60 day terms).

4. I know this is difficult to judge, but how much (roughly) would you expect to earn on a £300 or £400 daily contract in an IT related job?

Somewhere between (£400 * number of days worked in a year - expenses - national insurance - any income taxes - corporation tax - any personal taxes not already accounted for) and (£300 * number of days worked in a year - expenses - national insurance - any income taxes - corporation tax - any personal taxes not already accounted for)

The rest of my concerns are largely ones I need to make personally. For example although my job is mundane and not the best pay, it's extremely easy (a bad thing too, as there's no challenge), it's right next to my house which means I can spend lunch at home walking my dog and I can turn up whenever I want (flexi-time) in jeans and a t-shirt. Contracting means much longer hours, commuting and lots of challenges (and wearing a suit, my pet hate), but it seems the only way to start earning real money.

Not necessarily, but it depends on the client. I haven't worn a suit to work for years. I haven't worn a suit to work on a daily basis in at least ten.

But maybe I don't earn real money.

[northernladuk]

Stuff.

Made I laugh... Very good.

[VectraMan]

Oxfordshire's dead. No hope for anyone but the dole queue.

It won't be for a year yet, as I need to buy a house

Only one? Clearly you're not cut out to be a contractor.

2. Using contractor calculators, it looks like registering as an LTD can net you a lot more money - but there must be a reason that lots of people don't do this?

It's illegal. Sort of.

3. How much headaches do agencies save you? I hate the idea of giving away a good chunk of money to someone who simply searches for jobs for me, but are they worth it?

Agencies are the cause of 99% of headaches.

4. I know this is difficult to judge, but how much (roughly) would you expect to earn on a £300 or £400 daily contract in an IT related job?

I would say £300 or £400 a day. Roughly.

HTH.

[barrydidit]

I thought this might be a FLC sockie asking about gender realignment

[MrMarkyMark]

FTFY

So long as you've bled the Gladiators first, then don't worry.

[suityou01]

OK this isn't a good start.



I'm done at this point. Too much to read but it's can't go well if you are too young and are underskilled. Why would anyone take you on over people with 10 -15 years and are highly skilled/experts in your field? They won't. Period.

As a contractor you are selling your skills to a client. Those skills include your tech skills, your ability to hit the ground from day one, the ability to add value from other work you've carried out in the past that is the same as the clients and so on. In not being mean but I'll bet you've got next to zero of most of these.

Every gig You See you have to be able to nail. Not 'I think I could do that's or 'with a bit of reading'. If you don't have a long history of delivering exactly what is in the spec you are done as there will be someone else.

Stay perm, get a gig with a different employer, be the best you can I'm your chosen field and then come back contracting when you have something to sell.

How skilled do you have to be to be a Linux knob twiddler though?

[suityou01]

So long as you've bled the radiators first, then don't worry.

[northernladuk]

Hi all,

I've read the first timers guide and plenty of other sources about switching from perm to contract. I'll give my current situation, then I have a few questions.

I'm currently a 25 year old

OK this isn't a good start.

Systems Engineer in Oxfordshire, earning circa £35k before tax, I mainly work with Linux, general Sys Admin tasks, etc, some networking skills. Due to the nature of my employers work (a massive estate, we're an ISP with lots of services), I'm not much of an expert in one thing, but fairly skilled in many things.

I'm done at this point. Too much to read but it's can't go well if you are too young and are underskilled. Why would anyone take you on over people with 10 -15 years and are highly skilled/experts in your field? They won't. Period.

As a contractor you are selling your skills to a client. Those skills include your tech skills, your ability to hit the ground from day one, the ability to add value from other work you've carried out in the past that is the same as the clients and so on. In not being mean but I'll bet you've got next to zero of most of these.

Every gig You See you have to be able to nail. Not 'I think I could do that's or 'with a bit of reading'. If you don't have a long history of delivering exactly what is in the spec you are done as there will be someone else.

Stay perm, get a gig with a different employer, be the best you can I'm your chosen field and then come back contracting when you have something to sell.

[SystemsEngineer]

Hi all,

I've read the first timers guide and plenty of other sources about switching from perm to contract. I'll give my current situation, then I have a few questions.

I'm currently a 25 year old Systems Engineer in Oxfordshire, earning circa £35k before tax, I mainly work with Linux, general Sys Admin tasks, etc, some networking skills. Due to the nature of my employers work (a massive estate, we're an ISP with lots of services), I'm not much of an expert in one thing, but fairly skilled in many things. I have a Uni degree (BSc) and this year, I'll be coming up to 4 years experience.

For many reasons - including extremely boring work, work that's not even related to my job but I have to do, no career progression etc - I'm thinking of leaving. It won't be for a year yet, as I need to buy a house and get some more emergency savings together first.

Jobs like Linux Systems Engineer seem within my reach and skillset. Although my skills are thin in some of the areas, due to lack of exposure, I'm a fast learner and can quickly pick up a lot in a weekend of reading.

1. One of my worries after a lot of reading is IR35, my primary reason for wanting to switch to contracting is to earn a fair bit more money, IR35 could ruin this. From what I've read, am I right in thinking that shorter (i.e. 3/6 month) contracts are better, and 'project contracts' are better for IR35 avoidance than ongoing work contracts 'with possible option to extend' etc - which are more likely to be deemed 'employed' than 'self employed'?

2. Using contractor calculators, it looks like registering as an LTD can net you a lot more money - but there must be a reason that lots of people don't do this?

3. How much headaches do agencies save you? I hate the idea of giving away a good chunk of money to someone who simply searches for jobs for me, but are they worth it?

4. I know this is difficult to judge, but how much (roughly) would you expect to earn on a £300 or £400 daily contract in an IT related job? Using Parasol's calculator, they return £5,258.39 on their ClearSky limited plan - that seems far too high for me? Some other calculators give much lower estimations.

If anyone could nudge me in the right direction with the above, it'd be appreciated.

The rest of my concerns are largely ones I need to make personally. For example although my job is mundane and not the best pay, it's extremely easy (a bad thing too, as there's no challenge), it's right next to my house which means I can spend lunch at home walking my dog and I can turn up whenever I want (flexi-time) in jeans and a t-shirt. Contracting means much longer hours, commuting and lots of challenges (and wearing a suit, my pet hate), but it seems the only way to start earning real money.

Cheers,
SysEng.