Reply to: Salary / 1000 gives an hourly rate. (Does it?)

[DimPrawn]

In contracting, I never rely on more than a week ahead. Cameron has lubricated his arse for the Indian IT industry so unless you have a truly niche skills, your days are numbered

WHS on this.

Camoron = Indian arse licking

[malvolio]

FFS, chaps...

It's not meant to be a standard answer, it's basically an simple indicator for dumb permies to get an idea of the appropriate rate to aim for to get the same net pay as their permie role at the end of the month, allowing for the long list of variables that permies don't have to pay for. It's only a starting point, of course it's not going to give yuo an accurate answer.

That list includes but is not limited to:
Corporation Tax
Paid holidays
Bank Holidays
SSP
Employers NICs
Pension funding
Training
Accountancy/Umbrella
PI/PLI/ELI Insurance
PCG memberhsip or equivalent insurances
Contract reviews
Bench time
Travel and accomodation expenses
Notice periods
Redundancy pay
etc....

IF you want an accurate answer then do the sums yourself. If you want an initial guesstimate, use the rule. And of course we earn more, we're very good at what we do or we wouldn't succeed as contractors in the first place.

[Angrybunny]

It's nothing to do with ending up with the same net income. The rule of thumb is that if you would be on a permanent salary of £x,000 a year, you should be aiming for contracts that pay £x per hour...

That was the 'something' I was missing. Thanks.

[Bunk]

I've read you can get a 'rough' comparison of perm to contract with Salary / 1000.

So if someone was earning about 50 k a year.
Their equivalent daily rate would work out at £400 a day (based on a 8 hour day).

When I compare the net incomes I get a very different result though.


Perm
Yearly Gross £50,000
Yearly Net £35,963
Pension £2,500
bonus £2,000
Healthcare £1,000
Net Year £41,463.36


Contracting:
Day £400.00
Days Per Year 220
Yearly Gross £88,000.00
Gross Month £7,333.33

Net Month £5,500 (based on 75% take home - working outside of IR35)
Net Year £66,000

So this 'rough' calculation looks miles out, with nearly a 25 k difference.
Am I missing something?

It's nothing to do with ending up with the same net income. The rule of thumb is that if you would be on a permanent salary of £x,000 a year, you should be aiming for contracts that pay £x per hour. If your contract rate only gets you the same net as your permanent salary then it's not worth it, ditch the contract and go permanent. For most people however, they can earn more by contracting. The rewards are higher but the risks are greater.

[MarillionFan]

Point taken but the calculation still looks miles out.
if I was on the beach for two months (which I'd say is pretty unlikely in my field of work) the difference between the figures would still be £15,000.

You are correct. The /1000 calculation is one of the dumbest pieces of advice that keeps getting discussed.

Use the calculator you have but work on 38 or 40 weeks to do the calculation and include / exclude expenses.

[TheFaQQer]

Do forum members meet up? Is it very geeky, I'm not sure I could cope.

It's not that geeky.

We mostly just slag off other forum members who aren't there.

It's more this.

Bitch and moan about your client for a few minutes, then slag off MF.

Might have changed now, it's been over 2 years since I went to one.

[stek]

The risk factor is surely relative to each individual and their skill set. I do appreciate your sentiments though. I would like to earn more money than I am on now (who wouldn't) but it's not the sole motivating factor to switch from perm to contracting.

I work with Qlikview & am a BA. There seem to be plenty of opportunities. Most employers would prefer someone on sight sight than in Delhi in my experience.

Don't bank on it, today's in demand skill is tomorrow's chip wrapper and if you are only experienced in that, your fooked when the next big thing comes in.

Believe me, you will have bench time and plenty of opportunities may well only mean plenty of agents fishing.

Illness. Factor that in, I had two months in hospital last year not invoicing....




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[mudskipper]

Do forum members meet up? Is it very geeky, I'm not sure I could cope.

We mostly just slag off other forum members who aren't there.

[Angrybunny]

Double vision?

Perhaps I should stick to smilies not text.... Oh that doesn't work either.

[Angrybunny]

And handy for London drinkies

Do forum members meet up? Is it very geeky, I'm not sure I could cope.

[mudskipper]

Most employers would prefer someone on sight sight than in Delhi in my experience.

Double vision?

[Angrybunny]

If you are having to calculate what’s best comparing salary vs contract daily rate then contracting is not for you, the risk factor in contracting is too great. If money is your goal then you need to pick a contract with at least double your salary. If you are looking to escape the corporate bull, then the money aspect will not matter.

In contracting, I never rely on more than a week ahead. Cameron has lubricated his arse for the Indian IT industry so unless you have a truly niche skills, your days are numbered

The risk factor is surely relative to each individual and their skill set. I do appreciate your sentiments though. I would like to earn more money than I am on now (who wouldn't) but it's not the sole motivating factor to switch from perm to contracting.

I work with Qlikview & am a BA. There seem to be plenty of opportunities. Most employers would prefer someone on sight sight than in Delhi in my experience.

[VectraMan]

But I'll be clearer if you want. As an employed consultant I used to work away from home and the local office all the time so claimed mileage (at 45p a mile), hotel bills (better than the ones I now stay in) and evening meals (likewise). Most consultancies work in this way you work on a client site and rarely visit any company office.

As a contractor working in the same(ish) location I have to cover those costs myself and yes I can deduct them as expenses

Fair enough, I don't doubt that's how you work. But I've never been an employed consultant working on client's sites. I've been either an employee working on one site, or a contractor working on one site, and I imagine this is how 99% of us are working. In both cases the client/employer would pay if they needed me to go anywhere else, but in the case of being a contractor I can claim the mileage/expenses for travelling to the normal site from myco (which obviously only saves the tax), whereas as a permie I claim nothing. So for most of us, expenses mean the contractor increases his take home earnings over an equivalent permie and isn't worse off as you're claiming.

Perhaps you need to renegotiate your contract?

[TheFaQQer]

I'll live and work in London, so not so much of an issue but thanks.

Or so you hope, anyway.

[TheFaQQer]

Well that's cobblers. As a contractor you wouldn't normally get expenses on top of your rate to travel to the normal client site, but you would be able to pay the expenses yourself and get the tax relief. As a permie, you pay 100% of the cost of your normal commute to work. And in both cases, if you're working away from the normal site, the client/employer will pay expenses.

If you are a mobile worker, then your employer pays your travel from home to client site. If you are a contractor, then your employer pays your travel from home to client site.

The difference is that if you are a contractor, that means that you can't take that money as salary or dividends, though.

Unless you are lucky enough to find a client who will pay your travel for you (like mine, for example )