Contractors - You still think it is worth it?

[krisdelta]

Derek Chevalier said:

Dr Jekyll said:

Welshbeef said:

Genuine question why are you assuming such a low 10% bonus ?
As an example in my company those who are on bonus grade the tiers start at 20% as you go up then 100% is the level (beyond that I've not had sight of the package but share options in addition to 100% or simply uncapped. ).

I think 10% is a fair average.

In front office IT it's not, unless you've had a terrible year

Or your company has...

[bigandclever]

What's a bonus?

[wombleh]

The two perm offers I've had recently were a 5% and 8% bonus which seemed about average for senior IT roles. Am surprised people say they're so high, my impression was that high bonuses were rare outside sales roles.

[Derek Chevalier]

wombleh said:

The two perm offers I've had recently were a 5% and 8% bonus which seemed about average for senior IT roles. Am surprised people say they're so high, my impression was that high bonuses were rare outside sales roles.

I think it must be very sector specific

[Welshbeef]

wombleh said:

The two perm offers I've had recently were a 5% and 8% bonus which seemed about average for senior IT roles. Am surprised people say they're so high, my impression was that high bonuses were rare outside sales roles.

Welcome to the matrix - the bonus or scorecard or on target earnings are what it's all about.

[bucksmanuk]

CaptainSlow said:

schmunk said:

bucksmanuk said:

If I was staff I would be on £55-60K. Salaries have not really risen in about 4 years- I don’t care what some turd in HR says.
To take home what I do, I would need to be on £107.8K p.a. according to Excel, and that’s with 5 weeks holiday a year, which I do take, 2 days sick and all the bank holidays. That’s also with a fairly hefty pension contribution as well.

That seems like quite a difference. What's your day rate to achieve that, out of interest?

Does the £108k include bonus and pension?

I'm taking the pension as equivalent to the 10% employer contributions and 3% personals contributions, as per my last permie job - but pro-rata compared to the new rate - if that make sense, I could easily double that, but the money is going somewhere else. I don’t know anyone on a final salary scheme unless they have been there 25+ years or they are public sector, and those are getting thin on the ground.
Bonus?
In 26 years as a permie I got a bonus 9 times, the maximum being 15% of yearly salary. The rest would be in the region of 2-3%, or say £3-500. I have every pay slip since 1986, so I could check….
I always ignore the effect of the engineering bonus tree, as it bore fruit so rarely.

[Welshbeef]

bucksmanuk said:

I'm taking the pension as equivalent to the 10% employer contributions and 3% personals contributions, as per my last permie job - but pro-rata compared to the new rate - if that make sense, I could easily double that, but the money is going somewhere else. I don’t know anyone on a final salary scheme unless they have been there 25+ years or they are public sector, and those are getting thin on the ground.
Bonus?
In 26 years as a permie I got a bonus 9 times, the maximum being 15% of yearly salary. The rest would be in the region of 2-3%, or say £3-500. I have every pay slip since 1986, so I could check….
I always ignore the effect of the engineering bonus tree, as it bore fruit so rarely.

Take the last 10 years - for me it's been a 100% bonus hit year and year.

The lowest being 85% of my maximum possible bonus. With 4 hitting max bonus and then stretch beyond that.

Conversely a friend of mine different company (very different role same industry) zero his entire career.

[schmunk]

Welshbeef said:

Take the last 10 years - for me it's been a 100% bonus hit year and year.

The lowest being 85% of my maximum possible bonus. With 4 hitting max bonus and then stretch beyond that.

Conversely a friend of mine different company (very different role same industry) zero his entire career.

...and that's why you have 10 eBay Porsches lined up on your driveway and he has none.


Edit: in seriousness, from a brief period working as a reward consultant, and my own employment in a few different firms, most 'office' staff have reward schemes which allow for a maximum performance- rating bonus of e.g. 15% of salary, with about 80% of staff bell curved into the 'middle' category, thus receiving less than 10%.

This increases considerably in the financial services and oil & gas industries, and usually there are different, rather more generous schemes for C-suite and "Director / Head of" roles.

Edited by schmunk on Friday 6th October 06:48

[HannsG]

OP here, when permanent a bonus was never guaranteed (made 9-10% each year when i got one), back biting, politics (this exists in contracting but nowhere near as much - you basically stick your stake in ground).

Contracting i have a greater self of well being, worth, i dont need to go to pointless meetings, parties, training, leaving do's. Been there and done that.

I'm OK coming in doing my work and delivering, walking away and letting someone else deal with the aftermath or getting it in the neck high up.

I dont miss man management or heading up a whole area / division. I look around at the permies and they get shat all over by their staff. And i still earn more...

Also i can move on when i feel like it. There is always work out there.

Edited by HannsG on Friday 6th October 13:03

[PostHeads123]

HMRC killed off contracting most of the old skool who saw the good times 2000 - 2009 have since quit / gone permy as they fully understand IR35 and how dangerous HMRC is. A lot of the contractors I see now are newbies to the game, nothing wrong with that but there still a bit wet between the ears when it comes to IR35 and HMRC and what they will do so still have head in the sand. It didn't used to be so much of an issue as HMRC had to take you to court and prove you were guilty before you had to pay up, now with 'APN's' HMRC can demand the money they think you owe before it ever gets near court and you only get it back if you win. S

Contracting now isn't really about the £ or at least in tech its not as the reality is (though most deny it) they fail IR35.

I contracted for many years, I would only go back to it for life style not £ and would operate inside IR35, as Ive seen to many ex contractors lifes wrecked by HMRC.

Edited by PostHeads123 on Friday 6th October 13:15

[RizzoTheRat]

schmunk said:

from a brief period working as a reward consultant, and my own employment in a few different firms, most 'office' staff have reward schemes which allow for a maximum performance- rating bonus of e.g. 15% of salary, with about 80% of staff bell curved into the 'middle' category, thus receiving less than 10%.

This increases considerably in the financial services and oil & gas industries, and usually there are different, rather more generous schemes for C-suite and "Director / Head of" roles.

That varies massively with different industries though. Leaving aside a few years contracting, in my 20+ years as a permie I think I've had about 3 bonuses (not because I've been crap but because bonus' have only been because of specific events rather than as a yearly thing). Just applied for a new job where there's no mention of bonuses either.

One organisation I've contracted for had a "non-consolidated performance related pay" system which basically meant staff got a minute pay rise and a "bonus" which was paid monthly as part of their salary for the year, so not included in any percentage rise the next year. Meant the overall percentage award looked good but was a pretty crap deal after a couple of years.

[Shaoxter]

PostHeads123 said:

I contracted for many years, I would only go back to it for life style not £ and would operate inside IR35, as Ive seen to many ex contractors lifes wrecked by HMRC.

Really? How many contractors' lives have you seen wrecked by HMRC? I've never heard of anyone who's got any kind of letter from HMRC.

[768]

bucksmanuk said:

schmunk said:

bucksmanuk said:

If I was staff I would be on £55-60K. Salaries have not really risen in about 4 years- I don’t care what some turd in HR says.
To take home what I do, I would need to be on £107.8K p.a. according to Excel, and that’s with 5 weeks holiday a year, which I do take, 2 days sick and all the bank holidays. That’s also with a fairly hefty pension contribution as well.

That seems like quite a difference. What's your day rate to achieve that, out of interest?

£475/day

Some seem to gently question the veracity of this, but I'd say it's even more exaggerated for me. My day rate is higher yet 5 years or so ago I was on little more than £30k even taking pension as salary, no car, no healthcare. I think I'd be doing very well to get anywhere near £55-60k with salaries not really having risen and I doubt it would happen at all without taking on management responsibilities.

The permie and contractor markets are almost unrelated.

[Dr Jekyll]

I did know a software developer with skills on ancient IBM gear that contracted for around £250/£300 a day then got a permie job for £45k. He reckons he can't afford to contract.

[filski666]

I have been considering permicide....been contracting the automotive industry for 15 years ish - it has been good, nice to go off and do the high rate jobs for a few months, but always seem to end up back at one OEM. The amount they are offering coupled with the bonus and significant pension contribution mean it comes almost equal to the jobber rate I am on. Consider no more accountant fees and so forth, and it almost looks good.

Yes, I could get a much higher rate working elsewhere, but kinda enjoying being close to home, taking my daughter to school in the morning etc, so certainly for the next few years, I fancy a slower more family orientated pace of life without the big commutes just to get an extra £5-£7 an hour more.

I guess it is all down to priorities. Want more money and flexibility - contracting still works if you happy to chase the rates.

(sure I will come to my senses soon... ha ha ha)

[Countdown]

For a decent FD Agency rates are currently £600/day, Deputy FD / Head of Finance/ FC about £450/day, Finance Manager about £300/day. That's in the Manchester area, Lonodn rates are usually 30% higher or more.

[bucksmanuk]

Shaoxter said:

PostHeads123 said:

I contracted for many years, I would only go back to it for life style not £ and would operate inside IR35, as Ive seen to many ex contractors lifes wrecked by HMRC.

Really? How many contractors' lives have you seen wrecked by HMRC? I've never heard of anyone who's got any kind of letter from HMRC.

The only people I have heard of (4 of them) whom have had their lives interrogated by HMRC are those who have been taking the piss. The guy who sits next to me pays himself a minimum salary AND a dividend EVERY month (WTF?) , offsets a huge mobile phone bill £800+ p.a. , sub lets a room in his house to his business as an office, submits all his food receipts, even when working away from home etc.… expensive PPE allowance and so it goes on.

Then there are all the other fiddles as well, like your non-working partner being a director in name only to use up their tax allowance, working there for 5+ years, the business loaning you money which you never pay back, and again so it goes on. Those people have got it in the neck.

[CaptainSlow]

How frequently is it acceptable to pay dividends?

[98elise]

bucksmanuk said:

Shaoxter said:

PostHeads123 said:

I contracted for many years, I would only go back to it for life style not £ and would operate inside IR35, as Ive seen to many ex contractors lifes wrecked by HMRC.

Really? How many contractors' lives have you seen wrecked by HMRC? I've never heard of anyone who's got any kind of letter from HMRC.

The only people I have heard of (4 of them) whom have had their lives interrogated by HMRC are those who have been taking the piss. The guy who sits next to me pays himself a minimum salary AND a dividend EVERY month (WTF?) , offsets a huge mobile phone bill £800+ p.a. , sub lets a room in his house to his business as an office, submits all his food receipts, even when working away from home etc.… expensive PPE allowance and so it goes on.

Then there are all the other fiddles as well, like your non-working partner being a director in name only to use up their tax allowance, working there for 5+ years, the business loaning you money which you never pay back, and again so it goes on. Those people have got it in the neck.

What's wrong with paying a dividend every month? Personally I pay it all in one lump at the beginning of the tax year, but I'm pretty sure dividend can be paid at any frequency.

Again nothing wrong with a mobile phone bill, as long as it's for the business. I've not had a work land line in 7 years. My only work number is my work mobile and it's in the company name.

Director loans don't work like that. IIRC you have a loan after a certain period then there is a large tax bill heading your way. I certainly had to pay interest, and then my accountant let me know when I had to pay it back in full, or pay the extra tax. You then have to leave a set period before you take another loan.

I can't comment on the rest as it's not something I do.

[Shaoxter]

You can pay yourself a dividend whenever you want (assuming the company has enough profits).
Claiming tonnes of expenses for a services based company is just asking for trouble really.