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What would be the permanent salary equivalent for the contracting pay?

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    What would be the permanent salary equivalent for the contracting pay?

    If one is open for both contract and permanent, how to arrive at equivalent pay?

    Suppose we put 400/day inside IR35 on contractor calculator, we get below calculation :
    • Contract outside of IR35:
      • Net monthly income is around £5,096
      • Permanent salary required is £90,470
    • Contract inside of IR35:
      • Net monthly income is around £4,194
      • Permanent salary required is £71,797
    Suppose if someone was working at 400/day inside IR35, now wants to switch to perm, what is the typical perm salary he would be offered? Is it around £71,797

    What is the rough calculation between contract rate to actual typical perm pay?

    Many thanks.
    Last edited by Contractor UK; 7 July 2022, 17:48.

    #2
    Unanswerable. There are too many variables. This has been asked many times and we've never come up with a realistic formula.
    Blog? What blog...?

    Comment


      #3
      Originally posted by malvolio View Post
      Unanswerable. There are too many variables. This has been asked many times and we've never come up with a realistic formula.
      This.. There are a load of stuff like holidays and the like that you have to factor in to it. It's not just about the like for like comparison of numbers.

      If you want to go look at the multiple attempts we've had to answer it then try a google search of the forums. In Google type <keywords> site:forums.contractoruk.com and have a read. Mess with the keywords a bit to make sure you've got them all. perm vs contract pay or something like that to start.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by northernladuk View Post

        This.. There are a load of stuff like holidays and the like that you have to factor in to it. It's not just about the like for like comparison of numbers.
        And pension contributions, and healthcare and equipment and insurances and payments and...
        And then there's personal circumstances - if you run your own Ltd and have your parents, partners etc all down as shareholders or "employees", then you can reduce your taxes, you can put more into your pension pot out of the company and reduce taxes, etc.

        The OP's question is the equivalent of "What did the Romans ever do for us?"
        If you only focus on one element and ignore everything else, then the calculation is simple. But the "everything else" should really be a big factor in the calculation, which will vary from one person to the next.
        …Maybe we ain’t that young anymore

        Comment


          #5
          Originally posted by WTFH View Post

          And pension contributions, and healthcare and equipment and insurances and payments and...
          And then there's personal circumstances - if you run your own Ltd and have your parents, partners etc all down as shareholders or "employees", then you can reduce your taxes, you can put more into your pension pot out of the company and reduce taxes, etc.

          The OP's question is the equivalent of "What did the Romans ever do for us?"
          If you only focus on one element and ignore everything else, then the calculation is simple. But the "everything else" should really be a big factor in the calculation, which will vary from one person to the next.
          I did google search before posting but could not find the answer. I will try again.
          My personal situation is, I am mostly going with an umbrella company now. Even if I eventually start a Ltd. company, I don't have anyone to add to it as shareholder.
          What I am looking for is an approximate equivalent so that I don't quote a perm pay which is out of place (way too high or way too low).
          May be I don't get the best pay as of now but that is ok. I will eventually get there in few months.
          So, basically I am looking for ROUGH perm pay range equivalent of 400/day inside IR 35.

          Comment


            #6
            Originally posted by stit View Post

            I did google search before posting but could not find the answer. I will try again.
            My personal situation is, I am mostly going with an umbrella company now. Even if I eventually start a Ltd. company, I don't have anyone to add to it as shareholder.
            What I am looking for is an approximate equivalent so that I don't quote a perm pay which is out of place (way too high or way too low).
            May be I don't get the best pay as of now but that is ok. I will eventually get there in few months.
            So, basically I am looking for ROUGH perm pay range equivalent of 400/day inside IR 35.
            We still don't know because that isn't how markets work.

            The market for contractors is very different to the market rate for an employee - I've seen people get £400 a day for a job that paid £25,000 and £400 a day for a job that paid £70,000. It all depends on how desperate the end client is for the work to be done asap.
            Last edited by eek; 4 April 2022, 08:12.
            merely at clientco for the entertainment

            Comment


              #7
              Originally posted by stit View Post

              I did google search before posting but could not find the answer. I will try again.
              My personal situation is, I am mostly going with an umbrella company now. Even if I eventually start a Ltd. company, I don't have anyone to add to it as shareholder.
              What I am looking for is an approximate equivalent so that I don't quote a perm pay which is out of place (way too high or way too low).
              May be I don't get the best pay as of now but that is ok. I will eventually get there in few months.
              So, basically I am looking for ROUGH perm pay range equivalent of 400/day inside IR 35.
              Sadly the answer remains the same. We can't tell you, especially inside IR35. Even the old (hourly rate x 1000 = perm gross salary) doesn't hold up any more, and that was for outside IR35 anyway.

              You want money comparisons for a given role, start by analysing Jobserve or Indeed for quoted salaries and even then there will be huge variations.
              Blog? What blog...?

              Comment


                #8
                What is the equivalent £, or what is the market rate for the equivalent role?

                Let's imagine £200 per day was the equivalent of £200,000 per year. (Silly numbers, but I'm trying to make you think)
                £200 per day will get you a role on a support desk as 1st line MS support.
                £200,000 a year will get you the director of IT in a big company.
                Somewhere less than £200,000 a year is what a permanent 1st line support person will earn.

                Then there's location. Are you a contractor who has travelled for work before or always stayed with roles near where you live? Would you be prepared to relocate for a permanent role? Would you expect the same salary in different locations?
                …Maybe we ain’t that young anymore

                Comment

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