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Salary / 1000 gives an hourly rate. (Does it?)

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    Salary / 1000 gives an hourly rate. (Does it?)

    I've read you can get a 'rough' comparison of perm to contract with Salary / 1000.

    So if someone was earning about 50 k a year.
    Their equivalent daily rate would work out at £400 a day (based on a 8 hour day).

    When I compare the net incomes I get a very different result though.


    Perm
    Yearly Gross £50,000
    Yearly Net £35,963
    Pension £2,500
    bonus £2,000
    Healthcare £1,000
    Net Year £41,463.36


    Contracting:
    Day £400.00
    Days Per Year 220
    Yearly Gross £88,000.00
    Gross Month £7,333.33

    Net Month £5,500 (based on 75% take home - working outside of IR35)
    Net Year £66,000

    So this 'rough' calculation looks miles out, with nearly a 25 k difference.
    Am I missing something?
    Last edited by Angrybunny; 24 July 2013, 10:30.

    #2
    You're missing the fact that contracting, due to it's inherent lack of job security, needs to provide you with quite a bit of extra for the warchest, to see you through whilst you're on the bench.

    Comment


      #3
      Originally posted by Angrybunny View Post
      Am I missing something?
      Plenty
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        #4
        Originally posted by formant View Post
        You're missing the fact that contracting, due to it's inherent lack of job security, needs to provide you with quite a bit of extra for the warchest, to see you through whilst you're on the bench.
        The above can be ignored if you don't require the bench. Some of us don't and that's the trick.
        But I discovered nothing else but depraved, excessive superstition. Pliny the younger

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          #5
          Originally posted by formant View Post
          You're missing the fact that contracting, due to it's inherent lack of job security, needs to provide you with quite a bit of extra for the warchest, to see you through whilst you're on the bench.
          Point taken but the calculation still looks miles out.
          if I was on the beach for two months (which I'd say is pretty unlikely in my field of work) the difference between the figures would still be £15,000.

          Comment


            #6
            Originally posted by TheFaQQer View Post
            Plenty
            Care to elaborate?

            Comment


              #7
              Accountancy fees?
              Insurances?

              Yes, at that rate you'll earn more as a contractor - as long as you're working.

              Comment


                #8
                I would say 220 days or 44 weeks a year in contract is pushing it, yes its possible to get long term contracts, and a few people do seem to jump from one gig to another with little or no down time but these don't seem to be newbies.

                Also how do you arrive at 75% take home, does this mean you are going brolly??
                Last edited by SimonMac; 24 July 2013, 10:26.
                Originally posted by Stevie Wonder Boy
                I can't see any way to do it can you please advise?

                I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

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                  #9
                  you miss expenses.

                  As an employed consultant I could be working anywhere in the country but would pocket mileage and have hotels and meals paid for.

                  As a contractor you usually get a daily or hourly fixed rate from which you have to pay your own expenses unless you either live in London and work locally or hit luck and always have local contracts.

                  And 45p mileage doesn't look so good when you realise all you are saving is the 9p in corporation tax your company would otherwise pay.
                  merely at clientco for the entertainment

                  Comment


                    #10
                    Originally posted by Angrybunny View Post
                    So if someone was earning about 50 k a year.
                    Their equivalent daily rate would work out at £400 a day (based on a 8 hour day).
                    Why are they a ?
                    Originally posted by MaryPoppins
                    I'd still not breastfeed a nazi
                    Originally posted by vetran
                    Urine is quite nourishing

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