IT contracting - hows the market?

[theboss]

98elise said:

daemon said:

Ynox said:

Remember that's not your take home either! Too many people see the headline rates and think people are coining it in.

Not Sure if Serious?

45 weeks a year at £500 a day would be £112,500.

£100 day expenses and you're still talking £90,000.

A contractor will not be PAYE, but will take the bulk at 20% dividends quarterly, so that £90K is probably as good as £110K if you were PAYE.

Dividends get taxed at high rate just like salary. All you save is the NI.

Personally I gross about 30% more as a contractor, after all benefits are taken into account. Thats without any time out of contract.

'All you save' is 25.8% in the basic rate and 15.8% in the higher rate - not insignificant.

Also, should circumstances allow you to split a limited company's profits with an otherwise non-working spouse then the tax efficiency becomes even greater.

I'd have to gross about £160k as a permie for a comparable income level and the market would pay approximately half that. Even if found that salary, hypothetically, I'd rather be a contractor as I value my independence, the ability to have many clients and generally work on my own terms.

[98elise]

theboss said:

98elise said:

daemon said:

Ynox said:

Remember that's not your take home either! Too many people see the headline rates and think people are coining it in.

Not Sure if Serious?

45 weeks a year at £500 a day would be £112,500.

£100 day expenses and you're still talking £90,000.

A contractor will not be PAYE, but will take the bulk at 20% dividends quarterly, so that £90K is probably as good as £110K if you were PAYE.

Dividends get taxed at high rate just like salary. All you save is the NI.

Personally I gross about 30% more as a contractor, after all benefits are taken into account. Thats without any time out of contract.

'All you save' is 25.8% in the basic rate and 15.8% in the higher rate - not insignificant.

Also, should circumstances allow you to split a limited company's profits with an otherwise non-working spouse then the tax efficiency becomes even greater.

I'd have to gross about £160k as a permie for a comparable income level and the market would pay approximately half that. Even if found that salary, hypothetically, I'd rather be a contractor as I value my independence, the ability to have many clients and generally work on my own terms.

Can you show how you get those figures? Surely at the 40% rate you have already paid 20% CT, then you pay and additional 20% on that for every £ in the higher rate band. NI isn't 15%.

As you can tell I'm not a financial expert. My accountant recommends what I draw as salary and dividend, then tells me what to pay HMRC

[theboss]

98elise said:

theboss said:

98elise said:

daemon said:

Ynox said:

Remember that's not your take home either! Too many people see the headline rates and think people are coining it in.

Not Sure if Serious?

45 weeks a year at £500 a day would be £112,500.

£100 day expenses and you're still talking £90,000.

A contractor will not be PAYE, but will take the bulk at 20% dividends quarterly, so that £90K is probably as good as £110K if you were PAYE.

Dividends get taxed at high rate just like salary. All you save is the NI.

Personally I gross about 30% more as a contractor, after all benefits are taken into account. Thats without any time out of contract.

'All you save' is 25.8% in the basic rate and 15.8% in the higher rate - not insignificant.

Also, should circumstances allow you to split a limited company's profits with an otherwise non-working spouse then the tax efficiency becomes even greater.

I'd have to gross about £160k as a permie for a comparable income level and the market would pay approximately half that. Even if found that salary, hypothetically, I'd rather be a contractor as I value my independence, the ability to have many clients and generally work on my own terms.

Can you show how you get those figures? Surely at the 40% rate you have already paid 20% CT, then you pay and additional 20% on that for every £ in the higher rate band. NI isn't 15%.

As you can tell I'm not a financial expert. My accountant recommends what I draw as salary and dividend, then tells me what to pay HMRC

NI contributions are comprised of:

12% employee + 13.8% employer contributions in the basic rate
2% employee + 13.8% employer contributions in the higher rate (I recall Gordon Brown abolished the upper threshold for employer's NICs)

By extracting limited company profits as a small salary plus dividends, both lots of NI contributions are avoided altogether.

Income tax rates for dividends are different - 10% in the basic rate and 32.5% in the higher rate - however when combined with the dividend tax credit and the fact that, of course, the dividend is paid after corporation tax, the overall effective tax rates on profits gross corporation tax, are 20% in the basic rate, and 40% in the higher rate. You end up paying a balancing tax payment of 25% of the net dividend income above the higher rate threshold.

I'm not an accountant either, just a contractor with a ltd, but I try and understand these things as thoroughly as possible - I'll happily stand corrected if someone points out that I'm wrong!

[98elise]

theboss said:

98elise said:

theboss said:

98elise said:

daemon said:

Ynox said:

Remember that's not your take home either! Too many people see the headline rates and think people are coining it in.

Not Sure if Serious?

45 weeks a year at £500 a day would be £112,500.

£100 day expenses and you're still talking £90,000.

A contractor will not be PAYE, but will take the bulk at 20% dividends quarterly, so that £90K is probably as good as £110K if you were PAYE.

Dividends get taxed at high rate just like salary. All you save is the NI.

Personally I gross about 30% more as a contractor, after all benefits are taken into account. Thats without any time out of contract.

'All you save' is 25.8% in the basic rate and 15.8% in the higher rate - not insignificant.

Also, should circumstances allow you to split a limited company's profits with an otherwise non-working spouse then the tax efficiency becomes even greater.

I'd have to gross about £160k as a permie for a comparable income level and the market would pay approximately half that. Even if found that salary, hypothetically, I'd rather be a contractor as I value my independence, the ability to have many clients and generally work on my own terms.

Can you show how you get those figures? Surely at the 40% rate you have already paid 20% CT, then you pay and additional 20% on that for every £ in the higher rate band. NI isn't 15%.

As you can tell I'm not a financial expert. My accountant recommends what I draw as salary and dividend, then tells me what to pay HMRC

NI contributions are comprised of:

12% employee + 13.8% employer contributions in the basic rate
2% employee + 13.8% employer contributions in the higher rate (I recall Gordon Brown abolished the upper threshold for employer's NICs)

By extracting limited company profits as a small salary plus dividends, both lots of NI contributions are avoided altogether.

Income tax rates for dividends are different - 10% in the basic rate and 32.5% in the higher rate - however when combined with the dividend tax credit and the fact that, of course, the dividend is paid after corporation tax, the overall effective tax rates on profits gross corporation tax, are 20% in the basic rate, and 40% in the higher rate. You end up paying a balancing tax payment of 25% of the net dividend income above the higher rate threshold.

I'm not an accountant either, just a contractor with a ltd, but I try and understand these things as thoroughly as possible - I'll happily stand corrected if someone points out that I'm wrong!

I wouldn't count employers NI when comparing PAYE and contractors pay for an individual. No PAYE employee would count the employers NI as a part of their salary/deductions. Its valid when looking at total tax paid to HMRC, or total cost to the employer/client though.

[MadDad]

BUMP....

Just wondered how other (IT) contractors are finding the market at the moment (specifically Thames Valley)?

Jan/Feb seemed dead, last month things seemed to start to pick up but in the last 3 weeks things seem to have fallen off a cliff. I know a lot of contractors who are looking, and have been looking for quite some time with little or no luck. I have seen a few ad's placed time and time again since the start of the year, not sure if they can't fill the vacancies or if it is agencies harvesting CV's.

I have also noticed that the list of 'must haves' in the job spec's seems to have grown to almost unrealistic length for a lot of positions, mermaids and unicorns only need apply! I am a PM, a lot of IT PM vacancies seem to be combining the role of a PM, technical/solutions architect, and BA - not long ago PM roles majored on PM experience, now the 'must haves' often include a deep understanding of XYZ technology....

Pharma, Finance and mobile telco seem the most buoyant sectors at the moment but are demanding several years experience, and what is being advertised generally speaking seems to be quite low day rates by comparison with a year ago.

I have also personally had experience of projects being cancelled, or delayed until the summer. Am I looking in the wrong places or others finding the market a little odd right now?

[pherlopolus]

I've been off the bench for about 10 weeks now, but notice that there are few high end BA positions out there, also Solution Architects seem in demand. Not sure about the PM side as having got alerts set for them.

But as a Hybrid BA/SA/Cost Consultant/Programme Lead I find your experience quite positive

do you have secondary skills you could create a second jobsite profile for?

[MadDad]

If the current trend continues you will be set for life!

I have quite a broad skill-set, although most of my recent roles have been project or program management, as a permy I have worked as a service delivery manager, outsourcing/transition manager and also run/managed professional services/consulting teams.

My current stumbling block seems to be lack of in-depth technology knowledge which has never been required in the past, clients were more interested in a PM who could deliver and manage technical experts - now they want the experienced PM + technical expertise + sector specific knowledge. Often the ads will be worded along the lines of 'PM with 3 to 4 years of delivering XYZ technology, prior to which you will have 5 years experience as a developer'....

The job sites don't look too bad on the face of it, but once you filter out the roles that have been placed by multiple agencies, then the ones that appear weekly and never seem to be filled, then the ones which are genuinely specialist there isn't a huge amount about at the moment - or at least that is how it feels to me!

[daemon]

Finishing up this friday in my current contract.

Started applying for roles 3 weeks ago, averaging 3 applications per working day. Have had maybe 10 callbacks from agencies, 1 interview / second interview, one interview lined up and another couple pending.

In the ITIL Configuration Management / Data Analyst arena. Rates £350 - £400 a day for Config, £300-£350 a day for Data Analyst roles.

3 month contracts + likely extensions.

Edited by daemon on Wednesday 22 April 13:14

Edited by daemon on Wednesday 22 April 13:22

[theboss]

I'd say the last year as generally been the sttest I've seen things in my 7 years contracting in Microsoft infrastructure roles, but then there are seemingly always opportunities arising - I just secured something out in the South West paying £75 more than the current gig (London IB). My two brothers - both contractors - are also finding their respective markets to be very buoyant. Speaking for my own market - anyone on the bench must be feel happy / secure enough to remain there by choice, or isn't prepared to travel far. My overall point is that the IT market 'as a whole' can look rather polarised from different perspectives - some people are raking it in like never before and others are finding it dire.

Edited by theboss on Wednesday 22 April 18:05

[theboss]

98elise said:

I wouldn't count employers NI when comparing PAYE and contractors pay for an individual. No PAYE employee would count the employers NI as a part of their salary/deductions. Its valid when looking at total tax paid to HMRC, or total cost to the employer/client though.

As you've said, it's relevant when considering the total cost to the employer... and therefore by avoiding this overhead the contractor can be more competitively priced for any given contractor rate vs perm package comparison. It's money that may of course by saved by the client, but in reality some of which will also end up in the contractor's pocket. Permies don't generally think about it because I presume it would induce vomiting.

[daemon]

3 weeks on the bench and i've now got a contract starting Tuesday - 3 months with likely extensions and a strong day rate.

Quite pleased with that, was buckling down for a long stint if needs be (Xbox One had been ordered)

[pherlopolus]

daemon said:

3 weeks on the bench and i've now got a contract starting Tuesday - 3 months with likely extensions and a strong day rate.

Quite pleased with that, was buckling down for a long stint if needs be (Xbox One had been ordered)

great news.

I'm 3 month into a 6 month initial, programme looks set to be a long one too. best thing is working from home 2-3 days a week on average

[daemon]

pherlopolus said:

daemon said:

3 weeks on the bench and i've now got a contract starting Tuesday - 3 months with likely extensions and a strong day rate.

Quite pleased with that, was buckling down for a long stint if needs be (Xbox One had been ordered)

great news.

I'm 3 month into a 6 month initial, programme looks set to be a long one too. best thing is working from home 2-3 days a week on average

Excellent!

This one looks likely for extensions and theres the option of working from home - came out of the blue too - callback wednesday lunchtime, telephone interview 09:00 Thursday, confirmed as successful 09:35 with Tuesday start!

[George111]

I've been recruiting recently for Citrix/VMware/SQL/Win/Cisco engineer with at least 5-8 years experience in all technologies and a bit of storage knowledge and finding it difficult to get good CVs submitted. What's the market like right now ? We've now decided to get a contractor rather than perm - is that set of skills a big ask these days ? What's the expected day rate for an experienced engineer with these skills in the South East, outside London ? Was thinking £350-£400 a day ?

[Studio117]

I've noticed a lot more permi roles at the lower(support) end of the market.

[pherlopolus]

George111 said:

I've been recruiting recently for Citrix/VMware/SQL/Win/Cisco engineer with at least 5-8 years experience in all technologies and a bit of storage knowledge and finding it difficult to get good CVs submitted. What's the market like right now ? We've now decided to get a contractor rather than perm - is that set of skills a big ask these days ? What's the expected day rate for an experienced engineer with these skills in the South East, outside London ? Was thinking £350-£400 a day ?

350-400 to the contractor or the agency?

[George111]

pherlopolus said:

George111 said:

I've been recruiting recently for Citrix/VMware/SQL/Win/Cisco engineer with at least 5-8 years experience in all technologies and a bit of storage knowledge and finding it difficult to get good CVs submitted. What's the market like right now ? We've now decided to get a contractor rather than perm - is that set of skills a big ask these days ? What's the expected day rate for an experienced engineer with these skills in the South East, outside London ? Was thinking £350-£400 a day ?

350-400 to the contractor or the agency?

Contractor, expecting 15% or so uplift for agency.

[theboss]

George111 said:

Contractor, expecting 15% or so uplift for agency.

If you want somebody with that breadth of skills and some depth to any of them, you'll be looking at 450-550.

[pherlopolus]

theboss said:

If you want somebody with that breadth of skills and some depth to any of them, you'll be looking at 450-550.

sounds like a Unicorn to me hence the lack of CV's

[944fan]

I'm considering a break in to IT Contracting. I was a developer for about 12 years then moved in to team lead / manager roles. Currently I am called IT Direct but that's bks. I lead a small team of developers and my role is almost 95% hands on dev.

I am getting fed up with a number of things. Mostly having to be the manager and have ultimately responsibility but also spending nearly all my time developing. Just want to do one or the other. The other problem is being owned by the company and expected to go over and above all the time. We also seem to carry so much baggage with clients and get reminded constantly of one small mistake made a year ago and constantly having to bust our balls to keep people happy.

Interested in contracting for some work flexibility, and the ability to shut off from work and not carry the baggage with me.

I'm currently on £65K as a permie so I think I can earn a comparable salary as a contractor. I know when I have hired contractors myself I have paid them between £380-£500 day rate with the top end rate being for people with similar skills and experience to me.

Is it best to go with an umbrella company to begin with or go straight for the limited company?