To Contract or not to Contract

[Downinja]

The "paid" part is effectively semantics.

I get 33 days paid leave. But I can sell 5 of them at my rate of of pay. I can also buy more for my rate of pay.

If you can give annual leave days up and your employer will pay you more then to argue they are paid days leave is a little futile.

 

[imightbewrong]

Not sure what you mean by that ?

See later explanation.

It's pure semantics.

Say an employee gets paid £50K salary and works for 220 days a year.
Next to them is a contractor who bills at £227 per day so invoices £50K over 220 working days.

They could both decide to sacrifice 5 days income and work 215 days instead, each losing about £1,100 gross income.

The contractor can choose to work some more days for more money - maybe the employee can too.

It's no different at the end of the day.

 

[vacant]

The company I worked full time for went bust but the MD did a "phoenix"and started up with half the staff. I went back for the same money (critical project) but a 25 hour week and a letter agreeing I could do my own consultancy work as long as there were no conflicts of interest. Perhaps you could work part time for both?

 

[oneman]

See later explanation.

The contractor wouldn't be allowed to be bill for 220 days, 8 public holidays so 212 at most and most likely between 190 and 195 to match permies, it's how budgets are generally calculated and the figure usually used for a full time head for management purposes. If on shorter contractor then figures can vary.

 

[imightbewrong]

The contractor wouldn't be allowed to be bill for 220 days, 8 public holidays so 212 at most and most likely between 190 and 195 to match permies, it's how budgets are generally calculated and the figure usually used for a full time head for management purposes. If on shorter contractor then figures can vary.

I used to bill more than 220 but that is beside the point. The point is that a permanant employee is given an annual rate and a contract which states how many days they must show up. The total number of possible weekdays in year is 260. If you take off 8 bank holidays and say 25 other holiday days then that is 227 days you have to work. So an employee is paid £x total (e.g. £50K) to work for 227 days. They can either view that as getting:

• £x/227 (e.g. £220) for each day they turn up and £0 on days they don't turn up; or
• £x/260 (e.g. £192) for each weekday of the year whether they turn up or not

The first is like the 'contractor' calculation; the second is the 'paid holidays' calculation.

Whichever way they view it, they get paid the same for the same amount of days worked.

 

[smokedog]

If you contract via PAYE you get paid holidays.

 

[gangzoom]

Pension is NHS, so would be a little costly to give that up (nothing like final salary though, sadly missed that boat). Have full sickness and holiday benefits.

Sounds like you are an IT manager in the NHS been head hunted to work in the private sector x3 your current pay?

You would join countless others who have left, the NHS simply cannot afford to pay you what you can earn in the private sector, and your experience is something the private sector is fighting over, in your position I would even ask the company head hunting you for ADDITIONAL financial compensation to make up for lost NHS pensions.

It's the wild west current in digital transformational projects in the NHS. Everyone can see the need and potential, but the companies with technology simply don't have the clinical experience, and the NHS hasn't got a £ to pay for the IT skills needed.

You are in a very thought after position, don't under sell your self. You will also not going to be struggling to find a job, you know how the NHS works, 'transformational' projects takes decades if not longer.

A working/real life knowledge of the NHS environment + IT background + Project management experience is the golden ticket right now.

 

[Downinja]

Thanks @gangzoom I suppose that's pretty much the crux of it.

Slightly nervous having not worked that way before.

Still need a few thing to align for me to take it on, but it's looking increasingly likely. Had a call with an accountancy firm yesterday and have another one today.

 

[WombatDeath]

I unexpectedly found myself contracting ten years ago and haven't looked back (aside from a temporary "permanent" job during during 2020-21, as the contract market had collapsed). The money's very welcome and I enjoy the absence of the HR stuff, but the best bit is having more time off than I could reasonably expect as a permanent employee.

The advice I would offer is:

1) Read some reviews and get a decent accountant (I use InTouch, who are generally not awful)
2) Go the limited company route rather than umbrella, the admin overhead isn't particularly onerous and your accountant will tell you what you need to do
3) At all costs avoid companies who offer schemes purporting to legally reduce your payable tax - lots of contractors have ended up ruined at the end of that road.

 

[imightbewrong]

At all costs avoid companies who offer schemes purporting to legally reduce your payable tax - lots of contractors have ended up ruined at the end of that road.

Oh yes - the Isle of Man pay-third-party-then-loan-it-back-to-yourself-lol system.

Two mistakes:

1 - Doing it
2 - Spending so much of your income that you need to sell your house to pay the bill when the tax man catches on

e.g. Thousands of contractors face backdated tax bills as BN66 case is lost in High Court

 

[hoponbaby]

Have they confirmed whether the contract is inside or outside of IR35? If it's inside you might as well go umbrella route - their fees will be lower than the accountancy costs of running a company and there's no real benefit in having a company. If it's outside then ltd offers a lot more flexibility.

I am an accountant so any queries ask away.

 

[Downinja]

Now confirmed it is outside IR35.

The Mrs wants me to apply for a career break in current role. I suspect I have more chance of plaiting fog, but it obviously would provide some security towards the end.

Managed to secure an accountant who is a friend of a friend, will be going down the LTD route, no crazy off shore loan back schemes etc. Although of course tax efficiency in terms of dividend / corporation tax and expenses will be factored.

 

[KBD]

The thing about contraction is, don't forget to add the apostrophe.

Example:

Mine is = Mine's

 

[Downinja]

The thing about contraction is, don't forget to add the apostrophe.

Example:

Mine is = Mine's

There’s a joke in there somewhere… I’ll keep searching