Corporation tax and Dividends

[webbym]

"In truth, comparing the tax take from a contractor and an employee earning the same amount creates an inaccurate representation, because contractors typically charge considerably more than employees are paid. "

Also, that higher pay is to sacrifice below advantages which only permies get and are harder to quantify for comparison than readily available tax numbers.

1. Promotion and pay rises linked to company performance.
2. Redundancy pay and inherent job protection during lean times, even if that means extra redundancy payout.
3. Discounted share and option plans, potentially worth a lot.
4. Higher coverage for life, critical illness etc based on salary levels.
5. 'No work, no pay' rules whereby contractor can be shown the door immediately.

Sick pay and Holiday pay amounts are nowhere near compared to these.

IR35 changes now tilt the balance in favour of permiedom.

[jayn200]

You think a 2-bed flat is lavish?

I don't.. that was the point. Show me the non lavish life that costs 8k a month.

[jamesbrown]

I don't.. that was the point. Show me the non lavish life that costs 8k a month.

I don’t think you understand the word lavish. It means opulent, luxurious, rich. On 100k in London, you’re miles away from that lifestyle. I dare say it’s just inside the top 5% of London incomes, certainly not top 1% nationally.

[jayn200]

I don’t think you understand the word lavish. It means opulent, luxurious, rich. On 100k in London, you’re miles away from that lifestyle. I dare say it’s just inside the top 5% of London incomes, certainly not top 1% nationally.

Difference between incomes and expenditures... Being an IT contractor and having expenses of more than 100k a year is ridiculous and foolish and excessive. Don't get so stuck on word lavish. What word would you prefer?

[jamesbrown]

Difference between incomes and expenditures... Being an IT contractor and having expenses of more than 100k a year is ridiculous and foolish and excessive. Don't get so stuck on word lavish. What word would you prefer?

Middle class

I appreciate that it's all a matter of perspective. My perspective is that 100k after tax is a perfectly fine income (statistically, it compares very well with an average income), but it hardly supports a luxurious lifestyle.

A three-bed terrace in a half-decent part of London is, what, a million quid? As a worthless data point, my mate just sold his dingy terrace in Newham for 750k

If you want luxury housing in London, that 100k will go literally nowhere and housing is, afterall, the major expense for most people.

[NowPermOutsideUK]

Lavish means childcare live in nanny’s shopping at selfridges private schools and many holidays a year

100k is middle of middle class affording you one of the above at most

Finally there are so many fiddles available as contractor not as perm. The first page talked about er which means living on Credit cards and withdrawing the lump sum after a few years. I can think of many more examples

In London many went contracting for the money only and were probably disguised perms

[lecyclist]

The entire premise of the OPs argument is flawed. By defining a narrow range of operating criteria, which he incorrectly assumes is representative of your average contractor, he then proceeds to link to content that confirms his hypothesis.

Let me present a counter-hypothesis. This website would not have the longevity and success it has experienced, if not for the fact that contracting is more rewarding (both financially and in terms of lifestyle choices and flexibility) than permanent employment.

[Paralytic]

The entire premise of the OPs argument is flawed. By defining a narrow range of operating criteria, which he incorrectly assumes is representative of your average contractor, he then proceeds to link to content that confirms his hypothesis.

Let me present a counter-hypothesis. This website would not have the longevity and success it has experienced, if not for the fact that contracting is more rewarding (both financially and in terms of lifestyle choices and flexibility) than permanent employment.

This.

Anyone who is contracting and not earning more/having a better quality of life than an employee doing an equivalent job is doing something wrong.