How to calculate PAYE to Day Rate Subcontractor?
Discussion
Afternoon Gents,
I work within the construction industry and have been offered a job outside of IR35 which I really like the look of.
The trouble is, I have always been PAYE and I am being asked to go as a subcontractor which I am perfectly fine about. I need to negotiate my day rate but there are so many different factors to consider that I’m not sure how I do this to ensure I am not on less money that I currently earn.
Is anyone able to convert my current stats into an accurate day rate for me along with explanation so I can understand the rational please, I would like to earn the same or more with a day rate.
Current stats are:
70k pa salary .
Standard auto enrolment pension with no company enhancement other than statutory.
25days holiday plus bank holidays.
Fully expensed travel
Costs I can foresee:
£50 travel costs a day.
Accountancy fees unknown..
20% cis tax
Laptop purchase every 2-3yrs approx £1k
Mobile phone to run each month approx £400pa.
Making my own pension contributions
Happy to provide any more information to help - thank you so much!
I work within the construction industry and have been offered a job outside of IR35 which I really like the look of.
The trouble is, I have always been PAYE and I am being asked to go as a subcontractor which I am perfectly fine about. I need to negotiate my day rate but there are so many different factors to consider that I’m not sure how I do this to ensure I am not on less money that I currently earn.
Is anyone able to convert my current stats into an accurate day rate for me along with explanation so I can understand the rational please, I would like to earn the same or more with a day rate.
Current stats are:
70k pa salary .
Standard auto enrolment pension with no company enhancement other than statutory.
25days holiday plus bank holidays.
Fully expensed travel
Costs I can foresee:
£50 travel costs a day.
Accountancy fees unknown..
20% cis tax
Laptop purchase every 2-3yrs approx £1k
Mobile phone to run each month approx £400pa.
Making my own pension contributions
Happy to provide any more information to help - thank you so much!
different sector and different time, but i used to try and pull folks out of permie jobs and turn them into contractors in the IT/Telecoms sector. The very general rule of thumb was that a contractor would on paper double their salary.
quick tips:
remember if you're paid by the day, then every day off sick comes off your earnings, same with pub holidays.
travel = needs to be documented: if you 100% always have the same place of work its fine, but you should write into the contract that any other travel is at their expense ( in case you're asked to go to another site/place of work for a while).
pay terms & notice; if you have 4 weeks notice now (example) then you'd want the same as a contractor, and would try to ensure that you don't get paid too far in arrears - ie/ some industries might expect you to submit a timesheet at the end of the month and then pay you 'x' days after that; so you're vulnerable to late payment etc
pay increases; not always so easy to get as a contractor.
remember that whilst whatever number you throw at them may seem high, they'll be saving the employers NI, and saving on your sickies etc etc.
quick tips:
remember if you're paid by the day, then every day off sick comes off your earnings, same with pub holidays.
travel = needs to be documented: if you 100% always have the same place of work its fine, but you should write into the contract that any other travel is at their expense ( in case you're asked to go to another site/place of work for a while).
pay terms & notice; if you have 4 weeks notice now (example) then you'd want the same as a contractor, and would try to ensure that you don't get paid too far in arrears - ie/ some industries might expect you to submit a timesheet at the end of the month and then pay you 'x' days after that; so you're vulnerable to late payment etc
pay increases; not always so easy to get as a contractor.
remember that whilst whatever number you throw at them may seem high, they'll be saving the employers NI, and saving on your sickies etc etc.
I do mine through a limited company and found a good app called Staffology to sort out PAYE and NI, it produces payslips and is free for a small business.
You will need to be careful to make sure that you are not caught by IR35. There is a good checker online here:
https://www.gov.uk/guidance/check-employment-statu...
You will need to be careful to make sure that you are not caught by IR35. There is a good checker online here:
https://www.gov.uk/guidance/check-employment-statu...
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