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Been offered a job.
It's 20 hours a week for 6 months.
I'd rather do this as a contractor since I'd prefer more money than the negligible benefits of the employee/employer relationship for such a short period. Am already set up with HMRC as a sole trader.
The company are happy with that and are going to get back tomorrow with an hourly rate.
They were initially offering £34k pro ratad down as a salaried employee which is £17.80 an hour gross...
What would you expect the hourly rate to be as a contractor?
iirc the rough guide is take your salary and divide it by 100, that gives you your day-rate
Or else roughly double the hourly rate you'd get as a wage slave. Intended as ballpark only. You can charge what you can get away with/are prepared to do the job for.
Look at it from take home point of view. After taxes, what would £34k be as take home? Hourly rate at typical hours, what would you need to achieve the same take home, factoring in taxes you'd have to pay.
The salary, the employer will be paying it with PAYE and pay your taxes NI and employers NI. Contractor rate, they (as client) are giving you all cash and it's up to you to pay those taxes (and as sole trader there's no employer NI as I understand it). With the salary the employer is paying overheads in sick, holidays and maybe certain expenses which as a contractor you are paying.
So you may need a higher rate to get the equivalent after factoring in the costs and what you need as take home. To the employer/client the total cost to them may be much the same whichever way (and less admin).
Given the flexibility on your side on how you spend the money, you can take more home than you might under PAYE.
Note your business liabilities apply to yourself as a sole trader. That's where a limited company comes in as it literally limits your liabilities personally.
Or else roughly double the hourly rate you’d get as a wage slave.
That's the estimate I've always believed. Seems about right for proper contract work with limited benefits no guarantee of employment.
It's not just taxes/benefits, there's also time spent touting for business/unemployed to factor in. You are also saving them a shedload of time, money and hassle on recruitment, it should be worth their while paying you a good premium per hour for that.
As someone who is heavily involved with contingent worker hiring (temps and contractors), the going rate for a specialist day worker is roughly twice what they'd earn per day as an 'employee '. Ie 45 k per annum project managers get paid roughly 400 quid a day, or around 90k based on 230 days work over the year.
Hourly rate lower skilled temps tend to get the peem salary pro rated however. All depends on the skill set however.
Depends on what they can afford.... I've met plenty of people who can't translate what market rate or contract rates are worth, be prepared to walk or compromise if you want it, oh and be careful not to trip up and break something on day 2 😉
I’m a bit confused about this. The company has already told you what costs they are prepared to incur to employ you (Salary, benefits, Employers NI) so that is all you are likely to receive. Albeit you should be paid all those things in cash.
Ok, that kind of confirms what I had expected at ~£30-35 per hour
£30-35 per hour
Sounds about right to me
Are they really paying you by the hour, or is that just the way you're looking at it? Taxman is increasingly looking to treat people as employed if that's what the job looks like, and charging tax retrospectively. In their view, a contractor is employed to do a specific item of work, and pricing as a fixed sum (which can be paid monthly) makes that more credible.
Unsure what line of work you’re in but other things to think of include:
- IR35: Are you or out for this (and potential roles). This can affect your take home quite a bit.
- sole trader / umbrella / limited company: Pros and cons abound re benefits, take home , protection etc
- travelling and other expenses: How much will this eat into your pay and work/life balance? This may not be a deal for some, but for me, a salaried role in London is not as enticing as an 8-9 month contract working from home (with a bit of travel). Costs and time/faff etc just don’t appeal anymore with the former.
Only my tuppence as I’ve now been contracting 3 months and had to grasp quite a few things in that time.
EDIT: IR35 isn’t always that complicated when you see how it applies to different scenarios. One of my mates has been operating outside of it for years even though there is no way his role would ‘pass the test’. Saved him a small fortune.
Ok, that kind of confirms what I had expected at ~£30-35 per hour
Thats the figure (almost) I got too.
£32.38 ph to be exact.
There will be a calculator on here that will help. Try to put in as much info as you can as the defaults for things like weeks worked are probably wrong for you.
There's generally no IR35 with sole trader as it's aimed at abuse of limited companies. Specifically it needs an intermediary between client and worker (the company) and a sole trader is one entity.
IR35 should be OK. I will be billing monthly for a fixed term/price piece of work. I also have some other work with a different client I'll be billing for. It's a work from home job as well which suits me perfectly. Occasional trips to London for meetings, but they pay the train fare.
Hmmm, they've offered £150/day - much below what I was expecting..
Will have to negotiate that up as it's barely more than I'd get as an employee, but without benefits
Sounds to me like they may have grossly unrealistic expectations and you might as well walk away. Depends how much you want the job and your alternative options of course...
It sounds like this is in reality an employee/employer relationship even if both sides want to pretend there's a contractor/client relationship. That has its risks (not only angry taxpeople).