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Freelance Rate vs on the books rate

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Hi all,
im looking at a bit of change in career paths, trying to move away from the corporate 9-5, to a more flexible
worklife whilst also spending more time looking after some of my investment properties.
I’ve been offered a couple of days a week with someone and they’ve said I can either be on the books or freelance. 
I’d like the flexibility of freelance but whilst I know exactly what I’d be asking for if I’m on the books, I’m not sure what a comparable freelance rate would be taking into account all the costs that are shifted from the employee to me.
for example if I was on £200 on the books the employer would then have pension, NI costs, holiday pay etc Therefore what should I be asking for to take into account the on costs. I’d got 30% in my head is this fair? (so £260/day)
He a good friend and said just let me know what I want, I’m grateful fpr
the opportunity so I want to keep it reasonable, I just want some logic behind what I ask for.
Thanks in advance.

Comments

  • MalMonroe
    MalMonroe Posts: 5,783 Forumite
    First Anniversary First Post Name Dropper Photogenic
    edited 19 September 2022 at 1:56AM
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    Hi, when you're freelance you have to register as self employed and arrange to pay income tax and national insurance and into a pension plan. 

    See info in the following two links -

    https://www.gov.uk/working-for-yourself

    https://www.gov.uk/set-up-self-employed

    If you want a holiday or you're off sick, you get no pay. 

    If you're on the books, everything is taken care of for you - pension, sick pay, holiday pay, tax, national insurance, etc.

    You don't say what it is that you are going to be doing so it's difficult to comment on what you should be asking for.

    The best thing to do, since you know exactly what you'd be asking for if you were on the books, is to negotiate a fair price with your friend if you do decide to go freelance. 

    There's a rough guide here -

    https://www.freelancesolutions.co.uk/day-rate-calculator/

    I'm about to launch myself as a freelancer but I'm also retired and have the safety net of pensions behind me and I've registered as self-employed in the hope that this will bring megabucks my way (lol).

    I do feel that if you're only going to be working for your friend for a couple of days a week you might be just as well going on his books because you already know what you want to charge him. Then you can relax and enjoy the work and change of direction, while your friend takes care of the rest.

    Just my opinion of course, for what it's worth.
    Please note - taken from the Forum Rules and amended for my own personal use (with thanks) : It is up to you to investigate, check, double-check and check yet again before you make any decisions or take any action based on any information you glean from any of my posts. Although I do carry out careful research before posting and never intend to mislead or supply out-of-date or incorrect information, please do not rely 100% on what you are reading. Verify everything in order to protect yourself as you are responsible for any action you consequently take.
  • SensibleSarah
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    I went full time freelance mid-2021 and my income via day rate is roughly 30-35% more than the same job as an employee - which covers off stuff like taking some time off every now and again, contingency if I'm sick, pension etc - so your figures are probably about right. Obviously tax/NI and student loan repayments are also factored in before that in my case.

    For me, I'm really enjoying the flexibility of freelance, and I've very much landed on my feet with some brilliant clients so far offering reliable work. I still work pretty much 9-5, but it's my choice rather than dictated to by an employer and I feel much more in control. Obviously there is an element of risk that all the work could dry up overnight - but not many jobs have much security these days, so it's a risk I'm happy enough to take at this point. 
    I quite enjoy doing my own accounts etc, working out how much tax and NI I need to set aside and that kind of stuff - it appeals to the geek within - but I know some people would run a mile at the thought - so it all depends on whether you want to deal with that kind of thing or would rather just do the job and have someone else worry about it. 

  • ben9090
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    I went full time freelance mid-2021 and my income via day rate is roughly 30-35% more than the same job as an employee - which covers off stuff like taking some time off every now and again, contingency if I'm sick, pension etc - so your figures are probably about right. Obviously tax/NI and student loan repayments are also factored in before that in my case.

    For me, I'm really enjoying the flexibility of freelance, and I've very much landed on my feet with some brilliant clients so far offering reliable work. I still work pretty much 9-5, but it's my choice rather than dictated to by an employer and I feel much more in control. Obviously there is an element of risk that all the work could dry up overnight - but not many jobs have much security these days, so it's a risk I'm happy enough to take at this point. 
    I quite enjoy doing my own accounts etc, working out how much tax and NI I need to set aside and that kind of stuff - it appeals to the geek within - but I know some people would run a mile at the thought - so it all depends on whether you want to deal with that kind of thing or would rather just do the job and have someone else worry about it. 

    Thanks that’s a great help. I’ve always done my own tax returns so happy doing these bits. Are you set up as a limited co? 
  • SensibleSarah
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    ben9090 said:
    Thanks that’s a great help. I’ve always done my own tax returns so happy doing these bits. Are you set up as a limited co? 
    Glad you found it helpful!

    No, I'm sticking with sole trader for the moment as my business is just really simple and there don't seem to be many benefits of being a ltd company in my situation. 
  • Marcon
    Marcon Posts: 11,487 Forumite
    First Anniversary First Post Name Dropper Combo Breaker
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    This is extremely helpful reading: https://www.litrg.org.uk/tax-guides/self-employment
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • DullGreyGuy
    DullGreyGuy Posts: 12,121 Forumite
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    ben9090 said:
    I went full time freelance mid-2021 and my income via day rate is roughly 30-35% more than the same job as an employee - which covers off stuff like taking some time off every now and again, contingency if I'm sick, pension etc - so your figures are probably about right. Obviously tax/NI and student loan repayments are also factored in before that in my case.

    For me, I'm really enjoying the flexibility of freelance, and I've very much landed on my feet with some brilliant clients so far offering reliable work. I still work pretty much 9-5, but it's my choice rather than dictated to by an employer and I feel much more in control. Obviously there is an element of risk that all the work could dry up overnight - but not many jobs have much security these days, so it's a risk I'm happy enough to take at this point. 
    I quite enjoy doing my own accounts etc, working out how much tax and NI I need to set aside and that kind of stuff - it appeals to the geek within - but I know some people would run a mile at the thought - so it all depends on whether you want to deal with that kind of thing or would rather just do the job and have someone else worry about it. 

    Thanks that’s a great help. I’ve always done my own tax returns so happy doing these bits. Are you set up as a limited co? 
    Remember that if you go down the LTD company route you are then having to consider IR35 or your mate has to depending on the size of his company.

    If you are looking for neutrality in monies then just be an employee... you can be equally flexible assuming you remain mates and fairly flexible even if you dont.

    Depending on what level you are operating at, freelancers can earn substantially more than an employee but you are carrying the risks and can be easily disposed of if required (often a 1 week notice -v- the 3 month norm for an equiv employee) even if you are doing an exceptional job.
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