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obewan

Joined:

Mar 03

Posts: 2925

obewan says:

Contracting

I am sure some of you folks must be self-employed / contracting.

I am being made redundant in Sept, and have always been employed but I've had a few contract approaches. Seems to be quite a bit of short-term contracts out there at the moment 3, 6 even 9 months.

What I am trying to figure out is what premium I ought to be adding to cater for the loss of the employed benefits - holiday pay, sick pay, pension, BUPA, Dental care etc.?

I know I need to speak with an accountant type to see what I can claim for and as the contracts would be full time with one firm I am aware that I would still be treated by the HMRC as an employee but I wouldn't be getting the usual benfits from the employer. So I think I am looking at about a 20% uplift on basic salary to cover these benefits.

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  • Posted 71 days ago (11 June 2014 12:25)

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spondonste

Joined:

Aug 02

Posts: 2730

spondonste says:

Way too low.

You really need to speak to an accountant but 20% would result in you being massively out of pocket. If you set yourself up as a limited company (for example) you will need to still pay  income tax and employees national insurance on whatever you pay yourself PLUS the employers portion of national insurance (approx an additional 12.8% of your salary). You loose employers contribution to your pension which you will now have to fund entirely, you loose being able to claim full salary for sick, you loose holiday pay, you wont get paid on bank holidays and are subject to lack of long term guarantee of income so will need to ensure the business has enough money to make it through periods without a contract in place.

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obewan

Joined:

Mar 03

Posts: 2925

obewan says:

Cheers Bud

I guess I am also worried about pricing myself out of roles. For my trade seem to be seeing about £500 a day but I am gettng approx £350 at the moment - that is taking my monthly salary and converting back to a daily rate (5 day week), but of course on top of that £350 equivalent I get all the usual corporate benefits.

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babyblade41

Joined:

Aug 05

Posts: 7568

babyblade41 says:

I made a long post but

most of it would be irrelevant as I'm not sure what trade you are in

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philehidiot

Joined:

Feb 09

Posts: 4735

philehidiot says:

As an example

A locum working on a short and easily terminated contract will get twice may pay. For me to survive as a locum I would need to account for being out of work potentially for as long as I'm in work, set up a private pension and account for tax from a LTD company and PAYE. You then have to account for the risk that you are taking and the ease with which they can hire and fire which is worth money in this game as it puts you at personal risk whilst giving them flexibility over their workforce.


If you have money saved up and can afford to take the risk of being out of work then you can undercut other contractors. The other thing to perhaps consider is that thing that came out a while back about temporary employees being given similar protection rights to permanent staff, such as notice period and even sick pay. Look into that as if you can still get a decent whack on top then you'd be potentially looking at an attractive offer.

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spondonste

Joined:

Aug 02

Posts: 2730

spondonste says:

Almost forgot

Forgot to mention that you'll also be subject to 20% corporation tax each year on any profits and may also have to pay corporation tax on company assets (high cost machine tools, buildings etc). You'll also need to factor in admin/accountancy costs for monthly PAYE/ RTI returns, annual PAYE returns, corporation tax returns, companies house returns and VAT (if applicable). Failure to submit the appropriate paperwork on time can land you with a £100 fine each month for EVERY piece of paperwork you forget (or which has been rejected)

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obewan

Joined:

Mar 03

Posts: 2925

obewan says:

Folks

Many thanks

All food for thought need to consider all the above and whether to maintian the current take-home pay I would be pricing myself out at the gross per day rate. Or am I now over the hill and have to take a hit in the take home.

Or do a Shaun the sheep and sell a kidney, the wife, house, her horse and the cat. (no kids or dog to add to the Ebay listing:biggrin:)

cheers

 

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stevebaldy

Joined:

Aug 07

Posts: 6078

stevebaldy says:

£350-£500

p/day..!!  :shock: clearly i'm in the wrong job. 

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obewan

Joined:

Mar 03

Posts: 2925

obewan says:

Steve

Yeah but trust me I still dont have anymore money at the end of the month than when I was on half of what I am today.

Big mortgage (my choice I know), work away from home a lot 3 to 4 days a week, rent on a room in london (more than the mortgage on our last place in Birmingham), travel to and from, Bike and beer habit.

I found out a friend just moved into a semi in a small town not far away for the price of which I could be mortgage free. Fuck me its tempting, but hopefully this house will be the pension fund. As lets face it there wont be any government one in 15 - 20 years when I can eventually retire.

 

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