Permanent to Contract work

DireEmblem

Has anyone done this before?

I'm considering it given the current market - I have known a fair amount of people who lost their jobs, got 3-6 months redundancy pay and then used that as a buffer to try out contract work and they have all turned out to be much better off the past 2-3 years. I just seem to be one of the unlucky ones who didnt get made redundant.

Now I probably dont have much to complain, but the last few years there have been 0 bonuses, and payrises that ranged from 0 to below the annual inflation rate.

This is the reason I am considering striking out on my own.

A friend of mine has put me in touch with a company who are looking for someone with my particular set of skills. This is an initial 6 months contract - what should I be looking for if I am to give this some serious consideration?

I realise that I will lose some work perks - no more company contributions into my pension pot, no more free gym membership, no more free health care. I realise for my salary I should tag a value onto these in terms of comparison. What sort of markup should I also put forward from my current salary?

Thanks in advance.

gettingready

I have jumped from permanent to contract 2 month ago (2 months today actually).

Same 6 months contract as you are looking at, would not make the move for less then 6 months contract and also I have a 4 week's notice (either side) written in my contract.

Someone on here told me "your contract is only as long as your notice period" and that is spot on.

I went with Ltd, some people chose to go with Umbrella company - do your own research.

Accountants - have a look here:

http://www.sjdaccountancy.com/about/ourservices/sjd_contractors_guide.html


In my perm job I had 6 weeks A/L plus all BH /Christmas/Easter off (paid) so to calculate my REAL "salary" on the contract I have multiplied my daily rate by 5 (to get a week) and then by 44 weeks a year. To get a figure I would get if I was to take the same amount of time off.

Compared travel cost, tax etc etc.

All depends on the rate offered, I am on £300.00 per day (7 hours work) so of course contract came out wayyyyyyyyyyyyyyyyyyyyyyy better than permanent as permanent I was on about £100.00 per day (my last job) or £165 per day (job before that) with higher work related outgoings.

And I made the jump.

Do a lot of research - all the best...

DireEmblem

Cheers gettingready, yes I'm currently doing my research right now, so that if the offer is put on the table, I am ready to go 'yes/no'.

InsideInsurance

In the world of projects then the optimistic approach is to take your annual salary, divide by 100 and that is your day rate - ie a £60,000 salary should be £600 per day. More realistic if you were on £60k then you'd be looking at £500-£600 a day net

Ultimately contract jobs are the same as employee jobs in that they have a range they are considering for the role and you just position yourself within that range based on your match to their requirements and your experience level

DigForVictory

Don't forget the [STRIKE]vultures (I mean [/STRIKE]HMRC) want their cut too...
As may any agencies involved time future.
All the best!

gettingready

InsideInsurance wrote: »

In the world of projects then the optimistic approach is to take your annual salary, divide by 100 and that is your day rate - ie a £60,000 salary should be £600 per day. More realistic if you were on £60k then you'd be looking at £500-£600 a day net

l

Care to expand on that one?

My maths is normally quite good but I really do not follow the reasoning above?

Thaks

DKLS

I have had a recent jump from permie to contract again and have more than doubled my wage and have half the hassle of a permie role.

Am currently pondering a couple of contracts overseas, retaining 97% of contract value is becoming hard to ignore.

quidsy

Start a LTD company & benefit from the lower corp tax rates & tax free dividend payments. I've been doing this for a couple of years, when I went fro PAYE to LTD I increased my hourly rate by £5 to compensate for lack of holiday & sick pay. You do have to be disiplined in saving your tax but you can get a private pension if you wish, which also has some tax benefits.

DireEmblem

quidsy wrote: »

Start a LTD company & benefit from the lower corp tax rates & tax free dividend payments. I've been doing this for a couple of years, when I went fro PAYE to LTD I increased my hourly rate by £5 to compensate for lack of holiday & sick pay. You do have to be disiplined in saving your tax but you can get a private pension if you wish, which also has some tax benefits.

I need to look into this more. I work in financial services, but I'm not a trained accountant. Would I not need to hire someones services to create the company accounts for IR - or would a P&L/trial balance be sufficient?

I really need to investigate this further - whats required to be filed as part of the company accounts, as I could potentially produce these myself if I knew the end requirements.

quidsy

I do my own accounts.

I registered my company online at companies house & I do my corporation tax filing every year (deadline 30/09) by myself too.

The HMRC web system is quite straightforward & they have online tutorials too, but the first year I hired a firm to do my yearly accounts & it cost me around 200 quid. The next year I used their accounts as a template to what I could claim for.

As my company is for my own personal contract services only & has a very limited incoming & outgoing (invoices in, directors salary out, travel expenses, some minor overheads such as clothing allowance, phone costs, small costs on business premises (my home address) with the rest being paid as dividend) it is quite simple.

Of course if you were to start adding cars, business rents etc then it might need a professional but for me it is very simple.

Barclays also offer fee free for the first year on a basic business account.

getmore4less

tax going ltd is very similar the big savings are on NI.

...corp tax is 20% same as personal you hit 40% at the same point.