Contracting worth it any more?
Discussion
I am looking for a change. As with everyone I would like to earn more money but permanent jobs in my area aren't as well paid as I'd like, but contract jobs seem to be.
Is contracting still a viable option? I recall something changed over the last few years that has made it less worthwhile.
Any hints, tips, advice etc is gratefully accepted.
Is contracting still a viable option? I recall something changed over the last few years that has made it less worthwhile.
Any hints, tips, advice etc is gratefully accepted.
IR35 has changed things for some. Essentially if a contractor is doing general ' undefined stuff' (I.e acting as an employee) HMRC tax as if you were a PAYE employee (as I understand it).
Doesn't apply to projects with specific deliverables (e.g consulting)
The answer is "it depends" on industry and current salary really. I'm PAYE and have thought about it - I could increase my gross by circa 30k in theory, but lose pension etc and have risk of downtime between commissions.
In my line if work I've not seen day rates increase enough to offset the additional tax expense ... Yet.
Doesn't apply to projects with specific deliverables (e.g consulting)
The answer is "it depends" on industry and current salary really. I'm PAYE and have thought about it - I could increase my gross by circa 30k in theory, but lose pension etc and have risk of downtime between commissions.
In my line if work I've not seen day rates increase enough to offset the additional tax expense ... Yet.
Depends on your rates and your specialty really.
It's certainly not as lucrative as it used to be but unless you get caught by IR35 it can still be worthwhile even if just for flexibility.
In my last year for example, most of my income went straight into a pension fund tax free. You can't do that as a permit unless you have a very understanding employer.
I much preferred contracting to permanent employment but mostly because I didn't have to get caught up in the political games permie work seems to bring with it.
My last 4 years of contracting helped me double my pension pot and retire at 56. No way could I have done that as a permit.
It's certainly not as lucrative as it used to be but unless you get caught by IR35 it can still be worthwhile even if just for flexibility.
In my last year for example, most of my income went straight into a pension fund tax free. You can't do that as a permit unless you have a very understanding employer.
I much preferred contracting to permanent employment but mostly because I didn't have to get caught up in the political games permie work seems to bring with it.
My last 4 years of contracting helped me double my pension pot and retire at 56. No way could I have done that as a permit.
Still worth it? IMHO yes, but the ever tightening IR35 (and the likely expansion of public sector rules to the private sector) will affect things.
Recent changes to dividend tax rates make it less rewarding financially (assuming you need to extract the funds from the Ltd Company).
Rates are generally a little depressed in many sectors... supply and demand and "wage" stagflation have seen many rates (just like perm roles) remain the same for many years.
When you are comparing the perm and contract roles you are looking at, what are the numbers involved?
Recent changes to dividend tax rates make it less rewarding financially (assuming you need to extract the funds from the Ltd Company).
Rates are generally a little depressed in many sectors... supply and demand and "wage" stagflation have seen many rates (just like perm roles) remain the same for many years.
When you are comparing the perm and contract roles you are looking at, what are the numbers involved?
Still worth it for me (outside IR35, not had HMRC knocking on my door yet...)
As long as your skills are in demand and you're confident of getting new roles without any downtime, you'll be fine. I've been contracting for over 6 years continuously doing lots of different things.
Interestingly, I've just joined a team where the hiring manager is someone I worked alongside as a permie in the same team 8 years ago. He's progressed up the career ladder but I have no interest in that kind of thing and I've been happy with the lifestyle I've been able to live with all the cash from contracting
As long as your skills are in demand and you're confident of getting new roles without any downtime, you'll be fine. I've been contracting for over 6 years continuously doing lots of different things.
Interestingly, I've just joined a team where the hiring manager is someone I worked alongside as a permie in the same team 8 years ago. He's progressed up the career ladder but I have no interest in that kind of thing and I've been happy with the lifestyle I've been able to live with all the cash from contracting
Shaoxter said:
Still worth it for me (outside IR35, not had HMRC knocking on my door yet...)
As long as your skills are in demand and you're confident of getting new roles without any downtime, you'll be fine. I've been contracting for over 6 years continuously doing lots of different things.
Interestingly, I've just joined a team where the hiring manager is someone I worked alongside as a permie in the same team 8 years ago. He's progressed up the career ladder but I have no interest in that kind of thing and I've been happy with the lifestyle I've been able to live with all the cash from contracting
I'm not sure my skills are in demand. I am experienced in many things but I specialise in nothing, which is not ideal. As long as your skills are in demand and you're confident of getting new roles without any downtime, you'll be fine. I've been contracting for over 6 years continuously doing lots of different things.
Interestingly, I've just joined a team where the hiring manager is someone I worked alongside as a permie in the same team 8 years ago. He's progressed up the career ladder but I have no interest in that kind of thing and I've been happy with the lifestyle I've been able to live with all the cash from contracting
I have progressed through the career ladder thing a bit, and tbh I think I'd rather be a worker as such but earn better money.
TheAngryDog said:
Permie seems to be around £40k to £45k, contract £250 to £300 per day.
Very little difference there IMHO, depending on what the perm package looks like... maybe £500/month more (inside ir35), better if outside obviously, but you'll have to self fund pension, training, accountancy fees, insurances, holidays, periods out of contract (forget notice periods or redundancy, you can be gone instantly), tools of the trade, etc.I wouldn't say don't do it, but if that £45k is a basic, and there is a bonus, pension, healthcare etc etc included it narrows the gap pretty quickly.
UpTheIron said:
TheAngryDog said:
Permie seems to be around £40k to £45k, contract £250 to £300 per day.
Very little difference there IMHO, depending on what the perm package looks like... maybe £500/month more (inside ir35), better if outside obviously, but you'll have to self fund pension, training, accountancy fees, insurances, holidays, periods out of contract (forget notice periods or redundancy, you can be gone instantly), tools of the trade, etc.I wouldn't say don't do it, but if that £45k is a basic, and there is a bonus, pension, healthcare etc etc included it narrows the gap pretty quickly.
I'm about to jump back into perm work after contracting for a number of years. The changes to dividend tax and the ongoing uncertainties around IR35 have made it far less attractive.
I'll keep my limited company on the back burner just in case i'm made redundant or need a quick change.
I'll keep my limited company on the back burner just in case i'm made redundant or need a quick change.
keirik said:
Depends on your rates and your specialty really.
It's certainly not as lucrative as it used to be but unless you get caught by IR35 it can still be worthwhile even if just for flexibility.
In my last year for example, most of my income went straight into a pension fund tax free. You can't do that as a permit unless you have a very understanding employer.
I much preferred contracting to permanent employment but mostly because I didn't have to get caught up in the political games permie work seems to bring with it.
My last 4 years of contracting helped me double my pension pot and retire at 56. No way could I have done that as a permit.
Same here. I've been piling money into my pension which means I can retire in 2 years at 55. The pension payments also reduce the IR35 risk.It's certainly not as lucrative as it used to be but unless you get caught by IR35 it can still be worthwhile even if just for flexibility.
In my last year for example, most of my income went straight into a pension fund tax free. You can't do that as a permit unless you have a very understanding employer.
I much preferred contracting to permanent employment but mostly because I didn't have to get caught up in the political games permie work seems to bring with it.
My last 4 years of contracting helped me double my pension pot and retire at 56. No way could I have done that as a permit.
I love being a contractor rather than a permie. Just doing the job I'm good at rather than having to deal with the political/HR/company ethos crap.
98elise said:
Same here. I've been piling money into my pension which means I can retire in 2 years at 55. The pension payments also reduce the IR35 risk.
I love being a contractor rather than a permie. Just doing the job I'm good at rather than having to deal with the political/HR/company ethos crap.
Interesting that pension payments help reduce IR35 risk, didn’t know this and good to know.I love being a contractor rather than a permie. Just doing the job I'm good at rather than having to deal with the political/HR/company ethos crap.
tighnamara said:
98elise said:
Same here. I've been piling money into my pension which means I can retire in 2 years at 55. The pension payments also reduce the IR35 risk.
I love being a contractor rather than a permie. Just doing the job I'm good at rather than having to deal with the political/HR/company ethos crap.
Interesting that pension payments help reduce IR35 risk, didn’t know this and good to know.I love being a contractor rather than a permie. Just doing the job I'm good at rather than having to deal with the political/HR/company ethos crap.
98elise said:
Just to be clear it doesn't mean you are less likely to be caught by IR35, that's down to the relationship with your client. I meant if you were deemed to be inside, the tax difference would be smaller. It's reducing the taxrisk you are taking if you are boarder line on IR35.
That’s clearer, thanks. 98elise said:
I love being a contractor rather than a permie. Just doing the job I'm good at rather than having to deal with the political/HR/company ethos crap.
A lot of 'pure' freelancers wouldn't care if the money is a bit less. Many don't work non-stop but take lots of breaks. It's a mentality.Moonhawk said:
I'm about to jump back into perm work after contracting for a number of years. The changes to dividend tax and the ongoing uncertainties around IR35 have made it far less attractive.
I'll keep my limited company on the back burner just in case i'm made redundant or need a quick change.
And then there is your type that is the reason for IR35 I'll keep my limited company on the back burner just in case i'm made redundant or need a quick change.
I think I'm going to make a jump into contracting in March. Been a business analyst at various companies for the last 7 years and have seen first hand BA's with rubbish experience and talent but managing to get £450 a day so seems madness not to do it really.
Hopefully it'll pull off otherwise I'll be finding a perm job.
Hopefully it'll pull off otherwise I'll be finding a perm job.
richatnort said:
I think I'm going to make a jump into contracting in March. Been a business analyst at various companies for the last 7 years and have seen first hand BA's with rubbish experience and talent but managing to get £450 a day so seems madness not to do it really.
Hopefully it'll pull off otherwise I'll be finding a perm job.
Oh no. BA's definately in decline contracting, better stay as a permie Hopefully it'll pull off otherwise I'll be finding a perm job.
pherlopolus said:
Oh no. BA's definately in decline contracting, better stay as a permie
I hope so, in my 3 years of working in agile teams alongside BA's they literally do f
k all most of the time (maybe I've only worked with bad examples?). I don't mean to be offensive to any BA's as they've all been nice people in my experience but my god, almost anybody who was worked in an office based environment can do that job. The fact I've worked with some contractors earning £500 p/d for it is shocking.S9JTO said:
I hope so, in my 3 years of working in agile teams alongside BA's they literally do fk all most of the time (maybe I've only worked with bad examples?). I don't mean to be offensive to any BA's as they've all been nice people in my experience but my god, almost anybody who was worked in an office based environment can do that job. The fact I've worked with some contractors earning £500 p/d for it is shocking.
What is it that you do? I could get into a big argument but i can't be bothered and you may have just had bad examples of BA's as i certainly work my arse off (I edited it sorry I was too ashamed of my grammar to ensure the team know what they are needing to develop & the business side of things. k all most of the time (maybe I've only worked with bad examples?). I don't mean to be offensive to any BA's as they've all been nice people in my experience but my god, almost anybody who was worked in an office based environment can do that job. The fact I've worked with some contractors earning £500 p/d for it is shocking.Edited by richatnort on Thursday 13th September 10:30
richatnort said:
as i certainly don't do anything
Hmm...On a serious note, a good BA is absolutely invaluable. Unfortunately they've gone the way of the PM, every man and their dog realised you could pick up few hundred £ per day contracts as one so they've decided that's what they are, thus so many poor ones.
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