Underpaid but too scared to go leave

MyRealNameToo

D1ss1lusioned said:

MyRealNameToo said:

Certainly consider the total reward package not just the take home cash and the other soft benefits you appreciate like flexible working from home etc. 

Im in the exact opposite boat, as a contractor I get a very high income but no paid holiday, no sick pay, no job security etc. It works for me and some are envious of it but the reality is the difference is as big as it first looks when considering pension comes 100% out of my money, no employers 10% for me, holidays really eat into monies etc. 

There is always the option of securing another job elsewhere and use an offer on the table of an extra £x per hour as leverage to get them to pay you more but only do it if you will genuinely walk away if they won't come close enough. Also be clear with them, just because you have an offer of £20/hr doesnt mean you have to have a counter offer of the same, you could say that you do value parts of the current role and therefore you'd be happy with £18 or whatever 

That's great, thanks. I did consider contract work or being self employed before. Definitely much to consider with the pros and cons for those. I must admit I didn't even consider the pension aspect, more the requirement for finding new contracts but potentially having nice gaps inbetween them.
There isn't really much in the way of rewards, very small if anything. There is a small yearly bonus but definitely small and less than I had about 10 years or so ago.

In my view securing jobs is a skill and one you absolutely have to have as a contractor.  I dont consider myself to be particularly brilliant at what I do, I'm decent and I have a lot of experience but I know other people who are at least as good at me but get paid less and have notable breaks between contracts whereas with a few weeks notice I've only once failed to secure another role in 15 years. 

The dream is to work 6 months on, 6 months off and know a couple of chaps that do but they have no mortgages, they have a DB pension from before they were contractors and dont really need to work at all. Most contractors I know need their income and so whilst taking time off between contracts is the ideal the reality is that fear of not securing the next gig kicks in and so normally its straight back to gig hunting as soon as you realise your current engagement is ending. 

D1ss1lusioned

MyRealNameToo said:

D1ss1lusioned said:

MyRealNameToo said:

Certainly consider the total reward package not just the take home cash and the other soft benefits you appreciate like flexible working from home etc. 

Im in the exact opposite boat, as a contractor I get a very high income but no paid holiday, no sick pay, no job security etc. It works for me and some are envious of it but the reality is the difference is as big as it first looks when considering pension comes 100% out of my money, no employers 10% for me, holidays really eat into monies etc. 

There is always the option of securing another job elsewhere and use an offer on the table of an extra £x per hour as leverage to get them to pay you more but only do it if you will genuinely walk away if they won't come close enough. Also be clear with them, just because you have an offer of £20/hr doesnt mean you have to have a counter offer of the same, you could say that you do value parts of the current role and therefore you'd be happy with £18 or whatever 

That's great, thanks. I did consider contract work or being self employed before. Definitely much to consider with the pros and cons for those. I must admit I didn't even consider the pension aspect, more the requirement for finding new contracts but potentially having nice gaps inbetween them.
There isn't really much in the way of rewards, very small if anything. There is a small yearly bonus but definitely small and less than I had about 10 years or so ago.

In my view securing jobs is a skill and one you absolutely have to have as a contractor.  I dont consider myself to be particularly brilliant at what I do, I'm decent and I have a lot of experience but I know other people who are at least as good at me but get paid less and have notable breaks between contracts whereas with a few weeks notice I've only once failed to secure another role in 15 years. 

The dream is to work 6 months on, 6 months off and know a couple of chaps that do but they have no mortgages, they have a DB pension from before they were contractors and dont really need to work at all. Most contractors I know need their income and so whilst taking time off between contracts is the ideal the reality is that fear of not securing the next gig kicks in and so normally its straight back to gig hunting as soon as you realise your current engagement is ending. 

Thanks, it does sound a bit daunting if you don't do it all right. I do recall the high rates I was offered on short term contracts but always that concern as well that they can also get rid of you potentially at short notice and some degree of hitting the ground running.
I did favour the idea that you only spend a short time in each job, get variety and could be a good way of avoiding work do's as you're not associated with one company as such. I'm not into the social aspect of working at all, hence the preference for WFH.

monkey-fingers

MyRealNameToo said:

D1ss1lusioned said:

MyRealNameToo said:

Certainly consider the total reward package not just the take home cash and the other soft benefits you appreciate like flexible working from home etc. 

Im in the exact opposite boat, as a contractor I get a very high income but no paid holiday, no sick pay, no job security etc. It works for me and some are envious of it but the reality is the difference is as big as it first looks when considering pension comes 100% out of my money, no employers 10% for me, holidays really eat into monies etc. 

There is always the option of securing another job elsewhere and use an offer on the table of an extra £x per hour as leverage to get them to pay you more but only do it if you will genuinely walk away if they won't come close enough. Also be clear with them, just because you have an offer of £20/hr doesnt mean you have to have a counter offer of the same, you could say that you do value parts of the current role and therefore you'd be happy with £18 or whatever 

That's great, thanks. I did consider contract work or being self employed before. Definitely much to consider with the pros and cons for those. I must admit I didn't even consider the pension aspect, more the requirement for finding new contracts but potentially having nice gaps inbetween them.
There isn't really much in the way of rewards, very small if anything. There is a small yearly bonus but definitely small and less than I had about 10 years or so ago.

In my view securing jobs is a skill and one you absolutely have to have as a contractor.  I dont consider myself to be particularly brilliant at what I do, I'm decent and I have a lot of experience but I know other people who are at least as good at me but get paid less and have notable breaks between contracts whereas with a few weeks notice I've only once failed to secure another role in 15 years. 

The dream is to work 6 months on, 6 months off and know a couple of chaps that do but they have no mortgages, they have a DB pension from before they were contractors and dont really need to work at all. Most contractors I know need their income and so whilst taking time off between contracts is the ideal the reality is that fear of not securing the next gig kicks in and so normally its straight back to gig hunting as soon as you realise your current engagement is ending. 

See, also as a contractor, I don't look at it this way.

Admittedly, my wage is significantly more than the OP, however, I look at it this way:

I did the same job previously, so my contractor job isn't significantly different.
As a contractor, I earn twice what I did as a perm.
As it stands, I'm putting 50% away for pension.
10% away for rainy day.
40% salary/dividends.

Because of the tax benefits, the 40% salary/dividend take-home is around 20% more than my previous earnings.
Always plan to have 2 weeks between contracts as annual leave.

I'm lucky, that my outgoings aren't super-huge - I've not got into the situation that some contractors have of having high outgoings to match the large income. My savings are currently around 6 months minimum outgoings. And my wife is perm, so arguably she could afford most of our joint outgoings anyway.

D1ss1lusioned

Sounds like a good arrangement. The good part for me is that I can afford to live on my income. It's mainly the thought I could be or should be earning more than I am for what I do. More money would mean being mortgage free sooner and bring on retirement. I know some people can work for many years on low pay and some earn lots of money and are able to retire sooner (if they live well within their means). I very much set myself up to afford to live on pretty much close to minimum wage and have contingency plans with insurance etc. Should anything go wrong as such although it was a struggle being out of work before still. Any extra income of course is considered a bonus and can be put into paying off the mortgage.

MyRealNameToo

monkey-fingers said:

MyRealNameToo said:

D1ss1lusioned said:

MyRealNameToo said:

Certainly consider the total reward package not just the take home cash and the other soft benefits you appreciate like flexible working from home etc. 

Im in the exact opposite boat, as a contractor I get a very high income but no paid holiday, no sick pay, no job security etc. It works for me and some are envious of it but the reality is the difference is as big as it first looks when considering pension comes 100% out of my money, no employers 10% for me, holidays really eat into monies etc. 

There is always the option of securing another job elsewhere and use an offer on the table of an extra £x per hour as leverage to get them to pay you more but only do it if you will genuinely walk away if they won't come close enough. Also be clear with them, just because you have an offer of £20/hr doesnt mean you have to have a counter offer of the same, you could say that you do value parts of the current role and therefore you'd be happy with £18 or whatever 

That's great, thanks. I did consider contract work or being self employed before. Definitely much to consider with the pros and cons for those. I must admit I didn't even consider the pension aspect, more the requirement for finding new contracts but potentially having nice gaps inbetween them.
There isn't really much in the way of rewards, very small if anything. There is a small yearly bonus but definitely small and less than I had about 10 years or so ago.

In my view securing jobs is a skill and one you absolutely have to have as a contractor.  I dont consider myself to be particularly brilliant at what I do, I'm decent and I have a lot of experience but I know other people who are at least as good at me but get paid less and have notable breaks between contracts whereas with a few weeks notice I've only once failed to secure another role in 15 years. 

The dream is to work 6 months on, 6 months off and know a couple of chaps that do but they have no mortgages, they have a DB pension from before they were contractors and dont really need to work at all. Most contractors I know need their income and so whilst taking time off between contracts is the ideal the reality is that fear of not securing the next gig kicks in and so normally its straight back to gig hunting as soon as you realise your current engagement is ending. 

See, also as a contractor, I don't look at it this way.

Admittedly, my wage is significantly more than the OP, however, I look at it this way:

I did the same job previously, so my contractor job isn't significantly different.
As a contractor, I earn twice what I did as a perm.
As it stands, I'm putting 50% away for pension.
10% away for rainy day.
40% salary/dividends.

Because of the tax benefits, the 40% salary/dividend take-home is around 20% more than my previous earnings.
Always plan to have 2 weeks between contracts as annual leave.

I'm lucky, that my outgoings aren't super-huge - I've not got into the situation that some contractors have of having high outgoings to match the large income. My savings are currently around 6 months minimum outgoings. And my wife is perm, so arguably she could afford most of our joint outgoings anyway.

Level of tax efficiency always depends on your personal circumstances. Not seeing where your 19-25% corporation tax is in your equation? 

I have known some doing silly umbrella company based schemes based on loans etc and they certainly could do what you are suggesting and make more than their previous income despite putting 60% into pensions/savings and paying 20% corporation tax etc unless HMRC ever come and look into why they haven't paid NI or Income Tax for 15 years despite being on £1,000 per day. 

Having a spouse earning well helps a lot, though will make the contracting side less tax efficient. Most contracts I know their spouses either dont work or have a hobby type job so can't materially contribute if there is a big gap between contracts etc. 

monkey-fingers

MyRealNameToo said:

monkey-fingers said:

MyRealNameToo said:

D1ss1lusioned said:

MyRealNameToo said:

Certainly consider the total reward package not just the take home cash and the other soft benefits you appreciate like flexible working from home etc. 

Im in the exact opposite boat, as a contractor I get a very high income but no paid holiday, no sick pay, no job security etc. It works for me and some are envious of it but the reality is the difference is as big as it first looks when considering pension comes 100% out of my money, no employers 10% for me, holidays really eat into monies etc. 

There is always the option of securing another job elsewhere and use an offer on the table of an extra £x per hour as leverage to get them to pay you more but only do it if you will genuinely walk away if they won't come close enough. Also be clear with them, just because you have an offer of £20/hr doesnt mean you have to have a counter offer of the same, you could say that you do value parts of the current role and therefore you'd be happy with £18 or whatever 

That's great, thanks. I did consider contract work or being self employed before. Definitely much to consider with the pros and cons for those. I must admit I didn't even consider the pension aspect, more the requirement for finding new contracts but potentially having nice gaps inbetween them.
There isn't really much in the way of rewards, very small if anything. There is a small yearly bonus but definitely small and less than I had about 10 years or so ago.

In my view securing jobs is a skill and one you absolutely have to have as a contractor.  I dont consider myself to be particularly brilliant at what I do, I'm decent and I have a lot of experience but I know other people who are at least as good at me but get paid less and have notable breaks between contracts whereas with a few weeks notice I've only once failed to secure another role in 15 years. 

The dream is to work 6 months on, 6 months off and know a couple of chaps that do but they have no mortgages, they have a DB pension from before they were contractors and dont really need to work at all. Most contractors I know need their income and so whilst taking time off between contracts is the ideal the reality is that fear of not securing the next gig kicks in and so normally its straight back to gig hunting as soon as you realise your current engagement is ending. 

See, also as a contractor, I don't look at it this way.

Admittedly, my wage is significantly more than the OP, however, I look at it this way:

I did the same job previously, so my contractor job isn't significantly different.
As a contractor, I earn twice what I did as a perm.
As it stands, I'm putting 50% away for pension.
10% away for rainy day.
40% salary/dividends.

Because of the tax benefits, the 40% salary/dividend take-home is around 20% more than my previous earnings.
Always plan to have 2 weeks between contracts as annual leave.

I'm lucky, that my outgoings aren't super-huge - I've not got into the situation that some contractors have of having high outgoings to match the large income. My savings are currently around 6 months minimum outgoings. And my wife is perm, so arguably she could afford most of our joint outgoings anyway.

Level of tax efficiency always depends on your personal circumstances. Not seeing where your 19-25% corporation tax is in your equation? 

I have known some doing silly umbrella company based schemes based on loans etc and they certainly could do what you are suggesting and make more than their previous income despite putting 60% into pensions/savings and paying 20% corporation tax etc unless HMRC ever come and look into why they haven't paid NI or Income Tax for 15 years despite being on £1,000 per day. 

Having a spouse earning well helps a lot, though will make the contracting side less tax efficient. Most contracts I know their spouses either dont work or have a hobby type job so can't materially contribute if there is a big gap between contracts etc. 

I'm fortunate enough to be outside IR35, so I have a limited company.

Let's put some real world figures in. Let's say £500 a day, so roughly £125k a year (taking no holidays)
Take £60k out for pension.
£12.5k out for my wages. Employers NIC and so on.

Now left with around £48k. That's small company rates, so 19%.
Now left with around £39k. The dividends tax on that is mostly on the lower rate. Say £4k at most.

So now, your take home is £35k + £12.5k = £47.5k. That's the equivalent of earning £65k a year under PAYE with no pension contributions. And you're dumping £60k a year into your pension!

I've been generous with the numbers too. That's not taking into account any expenses (you may know about the seasonal allowances, gift cards and other "allowable" expenses that HMRC allow).

And yes, I am VAT registered of course, so that helps with other expenses (Accountants fees etc.)