Biting The Bullet

[AnthonyQuinn]

So, had a 3 month extension on the table as well as a permie position. £75k vs £450, BA up north. Looks like I'll probably take it.

Struggled with the decision, the turning point was browsing LinkedIn and seeing quite a lot of (good) former colleagues having lost their contract or permie role and struggling to get anything.

Obviously going to be speaking to my account, but my intention is to see out this financial year and see what the market looks like in 12 months.

Any of you guys done anything similar before? I imagine it's better to keep the company open?

congratulations. Good to see some companies still hiring. 75k is a very good deal for 450 a day. Normally 450 a day doesn't equate to a perm salary as high as that.

[darsa]

congratulations. Good to see some companies still hiring. 75k is a very good deal for 450 a day. Normally 450 a day doesn't equate to a perm salary as high as that.

I've seen plenty of DevOps / AWS jobs around the 70-85K mark up north, but I think for a BA position that's a solid salary indeed.

[Yuri F]

congratulations. Good to see some companies still hiring. 75k is a very good deal for 450 a day. Normally 450 a day doesn't equate to a perm salary as high as that.

I'll have to strongly disagree,
purely from financial standpoint £450/day (+VAT) via Ltd with proper tax handling
(as net financial outcome - after tax {Corp+Income} income to personal bank account,
e.g. efficient dividend distribution across years to match tax correct bands)
equals £146.7K on a perm. salary basis or £657/day umbrella rate,
so your £75K is practically half below the target (to get net £88.7K after tax income for £450/day Ltd)

Obviously it's a bit less if accounted for 1-month holidays a year
or because of other perks (pension, gym, expenses, etc.), but £75K is still way off..


£75K gross annual salary on perm. (net after tax income of £52.1K)
would be equal Ltd rate of £261/day (+VAT, not in IR35 scope)
or £319/day umbrella rate (plus their premium/comission)

[vwdan]

I'll have to strongly disagree,
purely from financial standpoint £450/day (+VAT) via Ltd with proper tax handling
(as net financial outcome - after tax {Corp+Income} income to personal bank account,
e.g. efficient dividend distribution across years to match tax correct bands)
equals £146.7K on a perm. salary basis or £657/day umbrella rate,
so your 75K is practically half below the target.

Obviously it's a bit less if accounted for 1-month holidays a year
or because of other perks (pension, gym, expenses, etc.), but £75K is still way off..

That's because he wasn't talking in pure financial comparison. I think your numbers are well off anyway, but it's immaterial because nobody asking £450p/d is getting job offers at £150k. That's just not even worth considering.

That said, I disagree with the other person too - in my field at least £4-500 a day is pretty smack on the £70-80k mark in permie world in terms of skillset and experience, so I think OP is in the right world.

It's a crude way of looking at it, but nobody cares what you make per day. Most of us should know, give or take, the kind of salary we could reasonably negotiate.

Now whether it's financially prudent to do so, that's a whole different question.

[Yuri F]

That's because he wasn't talking in pure financial comparison. I think your numbers are well off anyway, but it's immaterial because nobody asking £450p/d is getting job offers at £150k. That's just not even worth considering.

Yes, I'm getting a lot of calls offering £75-100-120K a year and obviously just politely sending them all into the void.. (p.s. my rates are well above £450)
We can't expect agents to know finances very well (and majority of public doesn't)
- but they're trying so hard to sell it as a extremely amazing opportunity (wow!!)..
// of course due to ethical reasons I never say where they can put "such a great offer".. //
(as you know £75K comes with some extra costs, e.g. is for 11 months, not 12, +13.8% of NI {above PT/ST}, net workplace allowance, and range of other etc.)

P.S. if you can prove my numbers are well off (not just marginally a bit off including accounting for some other assumptions, because I'm on holidays atm anyway)
- I'm ready to eat my hat and long list of my clients I was working on financial/accounting/MI reporting projects for - might get very upset with such enlightenment..

After all - it's always value for money approach balanced down with supply/competition (perm supply is much-much higher)..
Highly specialized contractors fill a (temporary) gap on non-systematic demand,
and extra premium over regular mortals (with all the respect perms are professionals too but with a bit different mindset)
is there for a reason.. (and not only because of technical professionalism, sacrifice/less stability, other risks/responsibilities, entrepreneurship {Ltd is a business after all} etc.)

[vwdan]

Yes, I'm getting a lot of calls offering £75-100-120K a year and obviously just politely sending them all to void.. (p.s. my rates are well above £450)
We can't expect agents to know finances very well (and majority of public doesn't)

It's got nothing to do with people "knowing finances" - it's just market demand. They don't need to pay somebody £150k to get what a contractor on £450 does, so they won't. If you want to go perm, then you have to drop the "I earn x £p/d" mindset, really, because you ain't gonna match it.

P.S. if you can prove my numbers are well off (not just marginally a bit off, because I'm on holidays atm anyway)
- I'm ready to eat my hat and long list of my clients I was working on financial/accounting/MI reporting projects for - might get very upset with such enlightenment..

A salary of £145k has a take home, in your bank account, net of £7311 a month or £87,740 a year.

A Ltd Co contractor on £450p/d, working 48 weeks of the year is going to take home in the region of £75000 even with no expenses. And that's properly best case - add in insurance, accountancy, a bit of sickness etc and you're getting further and further away. But let's stick to £75k take home (£6250 per month) - to match that you need a salary of £125,000. I'd say an error of £21,000 is pretty substantial, and that's still best case.

It ignores, well, everything else about permie vs contract.

After all - it's always value for money approach balanced down with supply/competition (perm supply is much-much higher)..
Highly specialized contractors fill a (temporary) gap on non-systematic demand,
and extra premium over regular mortals (with all the respect perms are professionals too but with a bit different mindset)
is there for a reason.. (and not only because of technical professionalism, sacrifice/less stability, other risks/responsibilities, entrepreneurship {Ltd is a business after all} etc.)

Of course, I don't disagree with any of that. I am a contractor, after all. But none of that means anybody is going to even consider paying £150k to somebody on £450p/d

[Yuri F]

...If you want to go perm...

Yep, that's a key point here, a big "if" .. sacrifices are inevitable.

A salary of £145k has a take home, in your bank account, net of £7311 a month or £87,740 a year.

listentotaxman is my favorite too.

A Ltd Co contractor on £450p/d, working 48 weeks of the year is going to take home in the region of £75000 even with no expenses....to match that you need a salary of £125,000. I'd say an error of £21,000 is pretty substantial, and that's still best case...

I've taken 252 working days in 2020, you're referring to 240, 10 days is not a big difference anyway
(I thankfully don't get sick, not really taking holidays in classical sense but some breaks between contracts are inevitable).
the only thing here - take home (salary of say £14K, rest - dividends) with 252 working days year (gross revenues of £136K incl. VAT) will land you on £88.7K net (the rest on taxes: £20K VAT, £1.3K NI {both ends}, Salary IT £180, £19K CT, £1K exp. {incl. insurance}, £6K div/CGT {not in one go, spread across professional activity/pension years for efficiency, earning income as investment while sitting in Ltd acc.}, £46.3K on taxes in total)

Of course, I don't disagree with any of that. I am a contractor, after all. But none of that means anybody is going to even consider paying £150k to somebody on £450p/d

agree, first point in this message and some other in previous.

[vwdan]

I've taken 252 working days in 2020, you're referring to 240, 10 days is not a big difference anyway
(I thankfully don't get sick, not really taking holidays in classical sense but some breaks between contracts are inevitable).
the only thing here - take home (salary of say £14K, rest - dividends) with 252 working days year (gross revenues of £136K incl. VAT) will land you on £88.7K net (the rest on taxes: £20K VAT, £1.3K NI {both ends}, Salary IT £180, £19K CT, £1K exp. {incl. insurance}, £6K div/CGT {not in one go, spread across professional activity/pension years for efficiency, earning income as investment while sitting in Ltd acc.}, £46.3K on taxes in total) .

Something isn't right here - you're assuming over 78 percent take home. And I'm not sure why you've mentioned VAT - we can basically forget about VAT here.

[Yuri F]

As you've seen from 1K expenses - I'm on a different VAT scheme (low cost service business), so actually have some gain on it adding to company profits (taxable).
(and we're not talking about VAT on a different end of it - while spending.. that would drop net-take-home {aka actually usable} into another form of
it by another 15%~20%, increasing tax burden on a full cycle ring, which is if I'm not mistaken normally above 60% in UK)

As for "..something is not right.." - well, all numbers are there (revenue, tax breakdown), nothing is hidden, all is very transparent.

[AnthonyQuinn]

I'll have to strongly disagree,
purely from financial standpoint £450/day (+VAT) via Ltd with proper tax handling
(as net financial outcome - after tax {Corp+Income} income to personal bank account,
e.g. efficient dividend distribution across years to match tax correct bands)
equals £146.7K on a perm. salary basis or £657/day umbrella rate,
so your £75K is practically half below the target (to get net £88.7K after tax income for £450/day Ltd)

Obviously it's a bit less if accounted for 1-month holidays a year
or because of other perks (pension, gym, expenses, etc.), but £75K is still way off..


£75K gross annual salary on perm. (net after tax income of £52.1K)
would be equal Ltd rate of £261/day (+VAT, not in IR35 scope)
or £319/day umbrella rate (plus their premium/comission)

Have you ever negotiated a permanent position from contract? If you had you wouldnt be posting this crap. everyone here knows the f*****g maths. No one translates like that while hiring