Contract Vs perm
Discussion
I was just wondering if someone can help me come to a sensible conclusion.
I am a contractor in the engineering sector and I’m at a bit of a crossroads work wise. I’ve been contracting a while but I’ve found a company I like working at, and they’ve offered me a perm position, but also happy for me to stay as I am. The figures we are talking about here sadly aren’t like those in the IT contracting world, and while not massive, i think the money would still make a difference.
I enjoy the flexibility of contracting, typically I’ll work 45-55 hours per week, and if I need to do something I can often start early and finish early for example, which would be more difficult if perm. However, planning for holiday etc, I usually just stick aside £50 per week, sometimes it’s plenty, sometimes it’s not enough. Paid holiday would be nice.
The main thing is money difference.
Contract rate £18 per hour (which can also be + VAT, which i’d Get to keep around half of providing I spend £250 per quarter on useable tools), accountants fees £30 per week, I know I can get cheaper but they’re very good. Generally with my expenses I’ll take home 85% of my wages after tax and accountancy fees.
Permanent rate £16.00 per hour 42.5 hour standard week. Overtime paid at x1.25. 33 days holiday inc. BH’s. No other real benefits other than it’s a decent place to work.
Is the gap big enough to warrant staying as a contractor in your opinions? Anyone made the switch and regretted it?
With regards to job security, I know a lot can change very quick, but I’ve been contracting 6 years and never been out of work... the sector I’m in is booming and skills in demand.
Any opinions welcomed, I’ve done the sums, but I’m wondering if there’s something I’m missing or some good advice out there for someone in my position.
Thanks
Swede
I am a contractor in the engineering sector and I’m at a bit of a crossroads work wise. I’ve been contracting a while but I’ve found a company I like working at, and they’ve offered me a perm position, but also happy for me to stay as I am. The figures we are talking about here sadly aren’t like those in the IT contracting world, and while not massive, i think the money would still make a difference.
I enjoy the flexibility of contracting, typically I’ll work 45-55 hours per week, and if I need to do something I can often start early and finish early for example, which would be more difficult if perm. However, planning for holiday etc, I usually just stick aside £50 per week, sometimes it’s plenty, sometimes it’s not enough. Paid holiday would be nice.
The main thing is money difference.
Contract rate £18 per hour (which can also be + VAT, which i’d Get to keep around half of providing I spend £250 per quarter on useable tools), accountants fees £30 per week, I know I can get cheaper but they’re very good. Generally with my expenses I’ll take home 85% of my wages after tax and accountancy fees.
Permanent rate £16.00 per hour 42.5 hour standard week. Overtime paid at x1.25. 33 days holiday inc. BH’s. No other real benefits other than it’s a decent place to work.
Is the gap big enough to warrant staying as a contractor in your opinions? Anyone made the switch and regretted it?
With regards to job security, I know a lot can change very quick, but I’ve been contracting 6 years and never been out of work... the sector I’m in is booming and skills in demand.
Any opinions welcomed, I’ve done the sums, but I’m wondering if there’s something I’m missing or some good advice out there for someone in my position.
Thanks
Swede
Had a similar dilemma recently.
Do the maths with your figures, you can get examples of a 50 hour average week or 55 or whatever, all roughly speaking, by x-Ing the weekly earning by 52 and then tapping in to google the £xx,xxx after tax. The top website that comes up has a breakdown of monthly pay after tax. Then compare with 50 x £18 x 0.85 - your accountancy fee and £50 a week for your holidays.
It seems because of the increase in wage after the 42 hours, you’ll never be much more than £300 a month worse off perm, whether you do basic, 50 or 55 hours. Doesn’t seem worth the risk and hassle of staying contract to me, it’s got to be really worth it, especially with ever tightening IR35 rules.
Do the maths with your figures, you can get examples of a 50 hour average week or 55 or whatever, all roughly speaking, by x-Ing the weekly earning by 52 and then tapping in to google the £xx,xxx after tax. The top website that comes up has a breakdown of monthly pay after tax. Then compare with 50 x £18 x 0.85 - your accountancy fee and £50 a week for your holidays.
It seems because of the increase in wage after the 42 hours, you’ll never be much more than £300 a month worse off perm, whether you do basic, 50 or 55 hours. Doesn’t seem worth the risk and hassle of staying contract to me, it’s got to be really worth it, especially with ever tightening IR35 rules.
Have been claiming the 55 hour weeks as hourly pay? If so will they pay those extra 12 hours or so as overtime. You need to make sure you are comparing apples with apples in terms of what you will be paid for so that perm vs contracting amounts are correct. If the perm only works out 12% or so less money how much is the holiday worth to you etc
I looked into this for my partner, the rule of thumb seemed to be contract income needs to be at least 12-15% more than permanent to make it comparible (and obviously you want higher).
Factors to consider - pension, sickness, paid holidays, ability to get credit - loans, mortgages etc all that is easier with permanent role.
Factors to consider - pension, sickness, paid holidays, ability to get credit - loans, mortgages etc all that is easier with permanent role.
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