Permanent consultancy vs contract?

413x

413x

413x

Caporegime
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I have managed to land a contract (Inside IR35 unfortunately) interview for a 6 month FTC. Alongside an expected offer for a permanent consultancy position.

I've been tempted for a while to go for contract work. But so far have only had interviews for perm positions. I understand completely this is only an interview and no indication that I'll even get it. Unfortunately I will likely have to commit or reject the perm offer before outcome of the contract role


I expect the consultantcy position to be offered at 45-47k. 5pc matched pension and 10pc bonus.
I expect the inside IR35 to be 400 a day 5 days a week.


Obviously the contract job is more lucrative. But it obviously comes with that uncertainty.

Let's say I get it. This would be my first real opportunity at Contracting.


Is the Contract role as good as it sounds? Or am I looking at it through rose tinted glasses?


If I've worked it out correctly I could work. 8 months of the year with contracts like this and get about same as 12 in this perm work.




Considerations
-I know lack of pension, sick pay, holiday etc is a negative
-I know the impact on mortgages (mines fixed for 5 more years)
-I know it can be difficult between contracts. This is probably the area in most concerned about.

Am I likely to be out of work for 1 month? 6 months? Am I lucky to get this opportunity less than a month after redundancy? And am I over confident that I can make this contracting work? I get this is probably a "no one knows". Just assessing realistic expectations
 
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(400x21) x 6 = £50,400 pre tax for 6 months

vs.

£45-47k pre tax for 12 months
£5k bonus
I don't know the UK situation on contractor tax these days and the best way to optimize (and what the % would work out as) but you can of course contribute yourself to pensions.


If you didn't get another contract you could, like now, apply for a perm role?

I'm no doubt biased because I contracted for 11 years!
 
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randomshenans said:
(400x21) x 6 = £50,400 pre tax for 6 months

vs.

£45-47k pre tax for 12 months
£5k bonus
I don't know the UK situation on contractor tax these days and the best way to optimize (and what the % would work out as) but you can of course contribute yourself to pensions.


If you didn't get another contract you could, like now, apply for a perm role?

I'm no doubt biased because I contracted for 11 years!
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I know. I'm very very drawn to the contract side.
For sure the money is a massive benefit.

Tax inside IR35 (vs outside) is high. (taxed like an employee). But it's still very lucrative in comparison.

And yes I guess there's no reason why not. I have no idea how easy/hard it is to transition between them.


For a bit of background I've had 3 jobs in 4 years so I feel like I'm almost contracting anyway. I tend to get bored after 9 months or so I've found. Which is why I'm considering contracting as something that might work even better for me than perm


And yes. I'm behind in pension too so I planned to heavily pay into that. Maybe less so at start to building a "savings buffer" for out of work time
 
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It's a tough call. I moved from permanent to contract (Ltd Co) and have enjoyed it thoroughly. I have had quiet spells but as you have pointed out, the money earned contract allows for some quiet periods before the permanent role becomes the "better" option.

The majority of permanent staff that I talked to about going contract said they were scared about the uncertainty of contract and they had kids, mortgage whatever. That didn't sit well with me since every company I have worked for as staff has gone through multiple redundancy periods. I didn't see permanent as a "sure thing" compared to contract with all these redundancies happening, so it made going contract easier.

I know why you have asked the question about how long you're likely to be out of work but I'm sure you already know it's impossible to answer. My experience of 4-5 years of contracting is that overall the earnings have been much more than permanent, despite quiet spells.

Don't count on the contract having a 6 month deadline. I have had a 3 month contract go 8 months and a 6 month contract go for 2 years. What is your feel for the industry? How many other contractors or potential clients do you know? Are you proactive and prepared to hunt down contracts and network?
 
Cadder said:
It's a tough call. I moved from permanent to contract (Ltd Co) and have enjoyed it thoroughly. I have had quiet spells but as you have pointed out, the money earned contract allows for some quiet periods before the permanent role becomes the "better" option.

The majority of permanent staff that I talked to about going contract said they were scared about the uncertainty of contract and they had kids, mortgage whatever. That didn't sit well with me since every company I have worked for as staff has gone through multiple redundancy periods. I didn't see permanent as a "sure thing" compared to contract with all these redundancies happening, so it made going contract easier.

I know why you have asked the question about how long you're likely to be out of work but I'm sure you already know it's impossible to answer. My experience of 4-5 years of contracting is that overall the earnings have been much more than permanent, despite quiet spells.

Don't count on the contract having a 6 month deadline. I have had a 3 month contract go 8 months and a 6 month contract go for 2 years. What is your feel for the industry? How many other contractors or potential clients do you know? Are you proactive and prepared to hunt down contracts and network?
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Yeah I know first hand that permanent work. Is hardly secure.

This job I have been made redundant under 2 years due to cost cutting.
Last job company got bought out. So I left.
So really I don't see the uncertainty as an issue. I'm not concerned now for example being made redundant as interviews are coming in. I'm more concerned with regretting my next move. Ie taking the more traditional, perm role, regretting it, wishing I had focused on contract.

It is a hard call and I don't have a network right now. This opportunity was found by a recruiter for me.
I'd say this is the biggest issue. I've been told that your personal network is where most opportunities come from and mine is, let's say, tiny!
 
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413x said:
Yeah I know first hand that permanent work. Is hardly secure.

This job I have been made redundant under 2 years due to cost cutting.
Last job company got bought out. So I left.
So really I don't see the uncertainty as an issue. I'm not concerned now for example being made redundant as interviews are coming in. I'm more concerned with regretting my next move. Ie taking the more traditional, perm role, regretting it, wishing I had focused on contract.

It is a hard call and I don't have a network right now. This opportunity was found by a recruiter for me.
I'd say this is the biggest issue. I've been told that your personal network is where most opportunities come from and mine is, let's say, tiny!
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In my experience I would agree with what you have been told. Most of my work comes from my own network. I have, however, built most of that network whilst contracting.

Things change all the time. Look how crazy the last few years have been. That makes the choice easier for me - I pick short term contracts over permanent work all the time.

Picture yourself in 3 months time, in two separate situations - one permanent, the other contract. In which situation do you most regret not picking the other option?
 
Cadder said:
In my experience I would agree with what you have been told. Most of my work comes from my own network. I have, however, built most of that network whilst contracting.

Things change all the time. Look how crazy the last few years have been. That makes the choice easier for me - I pick short term contracts over permanent work all the time.

Picture yourself in 3 months time, in two separate situations - one permanent, the other contract. In which situation do you most regret not picking the other option?
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If I got both offers on table at same time? I'd go for the contracting one. Just to try it.

Problem is having been made redundant I don't know if this is a rare opportunity (being my first contract interview) and by waiting I could essentially miss a decent perm opportunity. (I'd go for this perm if I was sure I wanted perm)

Its a difficult decision. Heart says contract.only live once. Head says, you need a job, next opportunity might be the best one
 
Once you have some contracting work under your belt you will probably get better perm consulting offers

It's also much easier to contracting to perm than the other way round so if you want to try it nows the time
 
The BIGGEST thing I would say is not to fall into lifestyle creep. I know I did. I was 25 and went quickly went from 25k, to 50k, to 200k... To really make it work, if you take everything over your current take home and put it into savings etc. and ignore it, you have essentially 6 months to find your next gig (which I honestly don't think you'll ever need as contracts tend to move so quickly the hiring process is more like, "can you start in a week") so mentally you'd then be prepared and you've balanced risk. If you get a contract right away, you've got a lumpsum always to fall back on, plus if you never use it, you can bulk up your pension with it.

Don't do what I did as someone in their mid 20s and idiotically YOLO it :cry: :cry: :cry:
 
413x said:
I've been told that your personal network is where most opportunities come from and mine is, let's say, tiny!
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I think this is subjective as surely it depends on the size (and quality) of your network. If you have a small network then it's unlikely you'd get lots of opportunities via it. If you have a big network it's more likely. So it's the type of statement I expect comes from people with big networks rather than small ones.

Ignoring internal moves I've never got a job through my network, it has got me a couple of opportunities (being put forward for roles in other companies) but none of those came to fruition except one where I withdrew from the process due to getting another offer elsewhere.

In recent times the biggest opportunity for me has been LinkedIn, last two roles I've taken where based on recruiters approaching me there. I don't really class that as part of my 'network' as they are just random recruiters rather than people I've worked with etc.
 
I'm having a similar dilemma at the moment. I've been contracting (healthcare, outside IR35) for a few years but now that I'm in my mid to late 30s, another child due imminently, wife going on mat leave and likely to only return to work (very) part time, looking for our permanent family home, lack of career progression... I'm looking for more stability. Thankfully our outgoings are reasonable and we've not succumbed to any major lifestyle creep. If you're young and don't have too many of these 'grown up' factors then I would highly recommend going contracting to experience it. I'm struggling to come to terms with a probable pay drop and the fact I won't be me own boss.
 
If going contracting don’t forget:

Christmas Furloughs (unpaid)
You’ll be the first out of the door
You’ll be funded by a project. When it’s over you’ll no doubt be kept on if you are good but don’t count on it

If you aren’t looking for career progression but want the moolah go for it though. It is however possible to get both.
 
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I contacted for a few years and loved the variety. Generally asked to contract where theres lots of change happening. Money was erratic though.

I went back to a secure perm job there a long time am bored. I know it's partially my lethargy. But there's just isn't that appetite for change or new ideas.

I learnt so much contracting in a short period of time but when permanent is just far slower.
 
CapitalOne said:
If going contracting don’t forget:

Christmas Furloughs (unpaid)
You’ll be the first out of the door
You’ll be funded by a project. When it’s over you’ll no doubt be kept on if you are good but don’t count on it

If you aren’t looking for career progression but want the moolah go for it though. It is however possible to get both.
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I learned more as a contractor then i did as a permie as i get to switch to different kinds of projects and teams and always learn something new vs staying in a dead end same project perm role
 
jonneymendoza said:
I learned more as a contractor then i did as a permie as i get to switch to different kinds of projects and teams and always learn something new vs staying in a dead end same project perm role
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Depends on where you are working/doing though, it's not true of all roles on either side.

I would say though, in terms of seniority/progression the place you will get the breaks is in a perm role. That is different to "new projects".
 
randomshenans said:
The BIGGEST thing I would say is not to fall into lifestyle creep. I know I did. I was 25 and went quickly went from 25k, to 50k, to 200k... To really make it work, if you take everything over your current take home and put it into savings etc. and ignore it, you have essentially 6 months to find your next gig (which I honestly don't think you'll ever need as contracts tend to move so quickly the hiring process is more like, "can you start in a week") so mentally you'd then be prepared and you've balanced risk. If you get a contract right away, you've got a lumpsum always to fall back on, plus if you never use it, you can bulk up your pension with it.

Don't do what I did as someone in their mid 20s and idiotically YOLO it :cry: :cry: :cry:
Click to expand...
Good advice that should be heeded.

I've seen a few friends over the years fall into that trap too. Go from regular wage to contracting with a take home pay mindset on their earnings. Then they come to tax time, find next contract time or sorry we can't renew as planed time and really struggle for months, the odd couple to the point of desperation. Gotta run it like a business not a PAYE employee.
 
Housey said:
Good advice that should be heeded.

I've seen a few friends over the years fall into that trap too. Go from regular wage to contracting with a take home pay mindset on their earnings. Then they come to tax time, find next contract time or sorry we can't renew as planed time and really struggle for months, the odd couple to the point of desperation. Gotta run it like a business not a PAYE employee.
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Just assume that half your profits goes to tax and you should be golden
 
I've been considering similar and similar figures (say around 55k per year (+pension /benefits) versus £400 ish a day inside IR35)

I recall /believe you may need to pay both employers and employees national insurance if you're inside or 35 so tax will be higher than just being a conventional employee.

Obviously even with the higher tax 400 a day better than 50ish k - you could also sacrifice a large amount of salary to pension to reduce tax bill.

Id work on the basis that only take half the income and use the rest for tax/pensions
 
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