Re: To contract or not to contract?

[rtjward]

Hi All,

I'm sure this question has been asked 1000 times before but having trawled through the back-log of questions I can't seem to find anything specific!

I'm currently a permie (have been for the past 6yrs with blue-chips) and am now seriously (I've thought about it before!) considering making the move into the contract market.

Ultimately, my question is, is it financially still feasible taking into account all you read about IR35, going Ltd Vs Umbrella, etc etc etc!!!!

I appreciate that it's a life-style change, that's a given. My current situation though is that I'm currently in the Consulting division of a blue-chip and could therefore be posted pretty much anywhere in the UK. I therefore figure that rather than doing this for someone else, I should do it for myself, if it is financially more beneficial?

So, take this scenario - On a permie salary of £40K with all the blue-chip benefits and all expenses paid, would a move to a contract role on say £350 p/d be worth while? Throw in that there may also be expenses (travel / accommodation) to pay if the contract is away from home.

I've got a number of (v.bright) friends that are contracting and I figure that they wouldn't be doing it if it wasn't worth it. However it's always good to do your own research, in my opinion.

Any views appreciated.

Regards.

R.

[Churchill]

Stay a permie, there's nothing for you here!

Move along.

Why not talk to one of your friends? They're more likely to be aware of your individual circumstances and offer appropriate advice.

[ChimpMaster]

Going contracting is not necessarily always about the money -- believe it or not!

I left my previous consultancy (where I used to earn a salary/bonus of almost 6 figures) to go contracting so that I could choose where to travel rather than be "told" by management. We had no choice as to what project we'd be placed on and for how long -- and they thought they justified that by paying a good salary (all right for some I guess!). But I'd been in consultancy for some 7 years and that was just too long for me. I just want to be at home now, as much as is possible.

Anyway I chose to leave so that I can now choose where to work. Yes contracting involves being flexible and the location isn't always great, but at least I can now choose to avoid all those jobs in Germany, Luxembourg, Scotland etc etc!

The money probably works out about the same, or a little less, but I don't really care so long as I'm bringing in some dosh and working where I want to work.

[DaveB]

Try using one of the contractor caluclators out there. They'll give you a rough idea how much your rate works out to as a permie equivalent and what IR35 is likely to cost you should you get caught.

If your serious about it go LTD, if your unsure go with an Umbrella.

Join the PCG and get the contract templates etc and dont be afraid to negotiate with agencies on the contract details to get what you need.

Get a professional opinion on whether your contract is IR35 friendly or not. If it isnt, change it.

Get a good accountant. Listen to what they tell you.

I was in a similar position to you. Was in a Permie role, just under 40k a year, good pension but not much else. I've doubled my income by going contracting, based on a 44 week working year. There are expenses to bear in mind but they arnt actually that huge and some of it, like critical illness cover, are things that are a good idea to have even if you're a permie.

[Lucifer Box]

Stay permie. Sounds like you have a cushy number so stay put until a nice voluntary redundancy package comes along.

In any case, you've come to the wrong place. This is a board for permies, shopkeepers, farmers, giant alien lizards, senior NCOs, fundamentalist christians and revolutionary communists. Oh, and Milan of course. Can't remember the last time I saw a contractor here.

[rtjward]

Dave B,

Thanks, that's useful feedback.

I am serious about contracting and would therefore go down the Ltd route. Something that I do need to get more of a handle on is IR35 but I've got the contacts/friends to do that.

It's interesting that you mention about doubling your salary, that is in the main the responses that I've had.

I know Tazman said that it's not all about the money and, I agree totally. It's not just about that for me, it's about the ability to make decisions for myself and also the future option of actually establishing something more on the lines of a consultancy.

R.

[DaveB]

Oh come on, you know it's about the money really

[DaveB]

In any case, you've come to the wrong place. This is a board for permies, shopkeepers, farmers, giant alien lizards, senior NCOs, fundamentalist christians and revolutionary communists. Oh, and Milan of course. Can't remember the last time I saw a contractor here.

I'm over here behind the Giant Alien Lizard ( It's the safest pace to be! )

[ChimpMaster]

I know Tazman said that it's not all about the money and, I agree totally. It's not just about that for me, it's about the ability to make decisions for myself and also the future option of actually establishing something more on the lines of a consultancy.

R.

Ah yes I too had a dream, a dream of setting up a consultancy and running a team of enthusiastic consultants to do my bidding. But the product I am an expert in declined rapidly in business, then the company was bought out by another American software house and then IBM ate that company up.

So now there are only about 30 contractors in the UK who do what i do, and barely enough clients to feed them all. But the money's OK while you can get it. So now I'm just earning while I can, saving up everything possible and waiting until my product dies out completely. And at 32 I'm too old to learn something new or even re-learn something old.

After all this, I will of course, go where old contractors go ....

[expat]

as old as you feel

And at 32 I'm too old to learn something new or even re-learn something old.

I switched from COBOL to C at 44, added Oracle at 45, switched again to Siebel at 48..... and I haven't retired yet.