New contract

[ttommy]

Hi,

I have just been offered a contract at 18 per hour. I am just wondering how much that would relate to if I was on a permy salary. Reading around it seems that it is the same as 100 * the hourly rate, therefore 18k. This seems very low.

Can someone help me.
Thanks
Wayne

[malvolio]

Yep, that's about right. It also includes the holiday and similar benefits a permie gets as standard, so the paid salary would likely be about £16.5k

[ttommy]

Yep, that's about right. It also includes the holiday and similar benefits a permie gets as standard, so the paid salary would likely be about £16.5k

I am confused how this figure is calculated...

Working on a 40hour week.... = 40*18 = 720

Say you do 48weeks the year = 48 * 720 = 34560.

Obviously I am miscaluclating somwhere, but 16.5k seems to be a very low equivalent salary and if it is I am well below on what I should be.

[malvolio]

Cost of employment is typically 60-120% on top of salary, to cover 52 weeks salary, Employers taxation and NI costs, office space, heat, light, health care (even SSP costs something), pensions, support staff, HR, holidays, bank holidays, PI, PEI, ELI, H&S, etc., etc. etc.

As a contractor, you cover all that for yourself and rarely work more than 45 weeks a year. Tust us, the 100*hourly works out about right.

QED

[ttommy]

thanks for your explanation.......

So there is 2 things here.....

If i was going to be offered a permy job for 25k - and decided to contract for £18an hour - I am basically saving my employer ALOT of money... I should be contracting to them for around £25per hour which would be the equivalent cost to the company to 25k a year permy job.

But in my pocket - Working as a contractor I am going to be better off than I would be if i worked for 25k a year because I dont have to worry about most of the things you mentioned and the amount in my bank will be greater.

Is this correct

[expat]

I am confused how this figure is calculated...

Working on a 40hour week.... = 40*18 = 720

Say you do 48weeks the year = 48 * 720 = 34560.

Obviously I am miscaluclating somwhere, but 16.5k seems to be a very low equivalent salary and if it is I am well below on what I should be.

If you work 48 weeks in the year (a) you'll be lucky (b) you'll be working more than a permie so you will make more money.
Also, you have not taken into account:
Public holidays
Sick leave (you may not be sick but it's factored into permie salary calculations)
Unpaid time searching for contracts, seeing your accountant, agency, VATperson...
and the following items that permies don't pay:
Accountant's fees
Liability insurance
Employer's national insurance contributions.

[tim123]

If i was going to be offered a permy job for 25k - and decided to contract for £18an hour - I am basically saving my employer ALOT of money... I should be contracting to them for around £25per hour which would be the equivalent cost to the company to 25k a year permy job.

But in my pocket - Working as a contractor I am going to be better off than I would be if i worked for 25k a year because I dont have to worry about most of the things you mentioned and the amount in my bank will be greater.

Is this correct

Exactly correct.

18ph for a 25k perm job is TTP

tim

[ttommy]

Exactly correct.

18ph for a 25k perm job is TTP

tim

no idea what TTP means???? could you explain....

well hopefully the contract will be extended for a year on year..... but i understand you normally could not expect to be in constant work as a contractor.

If i work over the year 45 weeks - that is 35 days holiday... i will still be on over 30k. Yeah i have to factor in the umbrella company costs and employers NI..... but I was told by the umbrella company that with my mileage and some subsistence that this should be offset enough to cover it.

Thanks for your time guys......... this is all new to me.

[Xerxes]

I was told by the umbrella company that with my mileage and some subsistence that this should be offset enough to cover it.

Remember Tommy, you can only claim reimbursement for expenses you have incurred, and then only if they were incurred wholly and necessarily in the performance of your job. Don't take any notice of your umbrella encouraging you to make up a few expenses to release some tax free dough because they have "a dispensation from HMCR". The unreceipted per diem allowance is a fiction invented by umbrellas to make their take home figures look good.

It is YOU that has to produce a receipt (or other proof of expense, e.g. rail tickets, credit card bills) when challenged by HMCR, not your umbrella, and it will be YOU that gets the tax bill plus penalties, interest, etc. when you can't.

[ttommy]

Remember Tommy, you can only claim reimbursement for expenses you have incurred, and then only if they were incurred wholly and necessarily in the performance of your job. Don't take any notice of your umbrella encouraging you to make up a few expenses to release some tax free dough because they have "a dispensation from HMCR". The unreceipted per diem allowance is a fiction invented by umbrellas to make their take home figures look good.

It is YOU that has to produce a receipt (or other proof of expense, e.g. rail tickets, credit card bills) when challenged by HMCR, not your umbrella, and it will be YOU that gets the tax bill plus penalties, interest, etc. when you can't.

i totally understand that and the umbrella company has never asked me to claim for anything which I havent used. The mileage is genuine and the food I will be claiming for I will have receipts for. Hopefully this will offset the NI contribs etc