Permanent Equivalent Salary

[grumpyjr]

Hi All,

First post so please go easy on me NorthenLad I promise I have read all the guides and been a long time lurker.

I am in a contract at the moment and have been offered a fairly decent Permie package. I just wanted to see what the thoughts are on an equivalent salary to £500 per day working 220 days a year? I have read a few posts on here but they seem to be quite old and so I was just wondering what the current thinking is based on the changes to Dividend tax etc etc.

Some experienced contractors I've spoken to have suggested deducting around 30% from turnover to get a "take home" figure. Just wondering what the general consensus was as the package offered equates to around 90k so take home of about 58k.

[Whorty]

There are various calculators on the web that can give you an idea. At 500 per day, inside IR35 it will be a perm salary of about 90k, outside IR35 something like 114k. These will package values so included in these will be pension, bonus, BUPA etc that you might get as a benefit.

Very few companies will pay a contractor a salary that is anywhere near their day rate equivalent.

In my line of work, my day rate is 550-600 yet a perm salary would be 60k plus benefits (so total package around 70k). Well short of my day rate, but then I'd get this every month and have no time on the bench which is what the extra day rate cash pays for

And who doesn't like bench time ... catch up on the gardening, Tour de France, long holiday

[greenlake]

I am in a contract at the moment and have been offered a fairly decent Permie package.

[malvolio]

£500 a day is £62.50 an hour is roughly £62,500 to get the same net takehome. Thats very roughly...

[SueEllen]

There are various calculators on the web that can give you an idea. At 500 per day, inside IR35 it will be a perm salary of about 90k, outside IR35 something like 114k. These will package values so included in these will be pension, bonus, BUPA etc that you might get as a benefit.

I actually had a company interview me for a role with a salary around the £110K mark. The interviewer sounded suicidal so I chose not to progress onto the next step.

I personally find it amusing that when some permies interview you they don't realise that if they sound miserable then unless you are desperate you aren't going to take the role.

[blackeye]

£500 a day is £62.50 an hour is roughly £62,500 to get the same net takehome. Thats very roughly...

How?

[jamesbrown]

How?

Well, I think you can deduce the rule of thumb being applied. It's pretty useless though. They all are. Apples meet pears. You can't use a contractor's day rate as a bargaining chip or yardstick for a permie salary. The best way to benchmark a permie salary is to look at the permie market, not extrapolate from a contract rate.

[MrMarkyMark]

Well, I think you can deduce the rule of thumb being applied. It's pretty useless though. They all are. Apples meet pears. You can't use a contractor's day rate as a bargaining chip or yardstick for a permie salary. The best way to benchmark a permie salary is to look at the permie market, not extrapolate from a contract rate.

In IB, I have seen a guy jump straight from contractor to Director, just recently. The guy would have been on a good day rate, others on not much more may only make VP, or at worse AVP.
Obviously, you need to "sponsored" by senior management so sometimes there is much more to it, than purely day rate.

[blackeye]

Well, I think you can deduce the rule of thumb being applied. It's pretty useless though. They all are. Apples meet pears. You can't use a contractor's day rate as a bargaining chip or yardstick for a permie salary. The best way to benchmark a permie salary is to look at the permie market, not extrapolate from a contract rate.

Agreed.

I certainly don't think £500/d = £62k perm, even with great benefits. Unless you start putting value on the intangible benefits such as development etc.

[Fronttoback]

In IB, I have seen a guy jump straight from contractor to Director, just recently. The guy would have been on a good day rate, others on not much more may only make VP, or at worse AVP.
Obviously, you need to "sponsored" by senior management so sometimes there is much more to it, than purely day rate.

I have seen this too. If you are useful and on a good day rate and they want you to go perm, if your contract market is good you can leverage that to get a senior perm role. Depends on market conditions at the time you approach this transition. But in principal I've seen several (non-management) contractors cross over into senior perm management roles. Obviously you have to be polished to pull this off. Not a boiler room techie who's never had a shave.

And I'm talking about 200k/Yr plus bonus IB perm roles, fr 750/day sterling gigs.