Reply to: Boomed 900,000

[d000hg]

What? £8k + 80% of £80k = £72k.

[barrydidit]

Leaves £88k... take 8k salary and pay 20% CT on £80k = £72k you take from the company

Err...

Interestingly, I had a play with a permie pay calculator a while back, I seem to remember £42k takehome being the equivalent of £65k salary. Obv no other benefits in that, but I was quite happy.

[d000hg]

£400 a day is roughly £50k salary with the usual package, assuming you work close to the full year.

It is? What are you getting in the permie package?

£50k gives you £36k take home. And on the basis you work say 44 full weeks, you have:

Gross: £+88k
FRS profit @2.6%: £+2300k
Accountancy: £-1300
Other fees (PCG, PI): £-1000

Leaves £88k... take 8k salary and pay 20% CT on £80k = £72k you take from the company

No personal tax on the first £42k then you pay about £8k on the rest, ending up with take-home of £64k, getting on for double your £50k salary take-home of £36k.

Obviously this is approximated and misses things like claiming mileage and expenses. The big thing you miss is a matched pension, however even as a Ltd you get some extra benefit from paying into your own pension (I don't know how those figures add up).

And because the contractor is only paying higher tax on everything above £42k, they can work a lot less and still get £42k take-home, which might be roughly what we value a £50k+package at?

[Ignis Fatuus]

£400 a day is roughly £50k salary with the usual package, assuming you work close to the full year. Not a bad screw, but pretty much par for any competent technical or business expert with ten years under their belt these days.

I look at it the other way. I know what I need to live on, and how much it costs to do the gig. Add on the various taxes and that's the minimum rate. All else is bonus.

I agree that it's not bad but it's not off-the-wall as rewards for success.

As for working all year, I'm still tending to think as if I do, although it has only been true in 1 of the last 5 years. Seven months out of 12 is more like it. And all in other countries, so £2k/month expenses.

Of course YMMV. You may stay in work most of the time. You may feel able to take money from the company by means of dividends. You may find work nearer home, or be able to stay away rather than maintain a home in the UK and return to it every weekend. Then your calculation woiuld be different.

[Scrag Meister]

"Quite simply, facing hundreds of thousands of unfilled vacancies, we cannot continue as we were; and we must all do our bit."

They can start by sacking all the internal recruitment people who spend their entire time sitting behind voicemail and convincing the management that the skills "are not there"

Internal recruitment got me my current role.

When does the gravy train depart? Hopefully us IT folks can get on board for a short trip.

[Paddy]

Paddy Leaks (from an un-named outsource company.)

On-site support technician degree level.
Bob cost on ICT £70 pd
UK Contractor cost to agent £289 pd
Cost to end client £850 pd

On-site specialist degree level.
Bob cost on ICT £150 pd
UK Contractor cost to agent £520 pd
Cost to end client £1800 pd

In house ICT C# Bob £50 pd + shared sleeping accommodation with four others

[vetran]

I think a comparison with Accountants, Surveyors and Architects should provide a reasonable benchmark for a coder / tester / PM.

£50K to the person that tends the ERP system your £X million business lives on seems reasonable.

[centurian]

Spot on - a skills shortage is when you don't have enough people with the required skills at any price - there simply are not enough people with those skills around to do the job.

What big business is moaning about is that there are not enough people the skills they want prepared to work for peanuts. It hurts their profit line.

[d000hg]

You mean there is a shortage of politicians, bankers and chief executives? How will we cope?

I'm sure DA will be along to explain capitalism to you shortly.

[doodab]

If you have to pay £400/day to get good people, there is a shortage.

You mean there is a shortage of politicians, bankers and chief executives? How will we cope?

[Paddy]

They have the same skills shortage in the US too, noted by Paul Krugman:

My nephew is in LA, he has just finished his Phd in computer systems. It cost ‘dad’ over $500,000 in fees and support. It took three months to get a job and his pay is $20 per hour. Humm, a shortage? No, most work goes offshore for cheapness.

[d000hg]

ah, we're doing different arithmetic. I'm doing the one with Employer's NICs.

What mug pays those

And I forgot to mention the cost of having to do weekly commutes, which I do much of the time. OTOH if you had to do that as a permie, it would be worse.

Hardly a fair consideration... many contractors don't work away from home and many (OK some) permies do.

[malvolio]

£400 a day is roughly £50k salary with the usual package, assuming you work close to the full year. Not a bad screw, but pretty much par for any competent technical or business expert with ten years under their belt these days.

I look at it the other way. I know what I need to live on, and how much it costs to do the gig. Add on the various taxes and that's the minimum rate. All else is bonus.

[Ignis Fatuus]

Yes I know that's the line we spin to permie friends lest they get jealous, but it's not accurate in reality. On £400/day you gross £40k in just 20 weeks. If you're working <50% of the year on average, you're crap. And of course we're more tax efficient up to £42k than permies anyway.

ah, we're doing different arithmetic. I'm doing the one with Employer's NICs.

And I forgot to mention the cost of having to do weekly commutes, which I do much of the time. OTOH if you had to do that as a permie, it would be worse.

[d000hg]

true but if you assume 220 billable days per year this comes to 88k - but as we know two things to consider

1) Overheads of running a company etc

About £1500 a year. How much NI are you NOT paying as a director?

2) you will not always be earning 400 per day

See previous post. Even at 50-60% off the bench you're raking it in.