Permanent consultancy vs contract?

I am currently contracting inside IR35. Money is, quite frankly, jaw dropping as I took home the same as my graduate salary in a month. The role - they wanted a senior and someone that isn't afraid, had experience of senior stakeholder management.

Yet i have applied for a perm position in a group company that owns many of the worlds best know airlines. The money is less than half. A new position, one that is full of unknown and fun. The contract i have a blurred reporting line that ultimately is through a the prime contractor hence we come to blows in a few areas (they prefer the picture that everything is under control when it’s not and the client knows that.. which is why I am there. Hence is politically complex.). The perm position is the same, but in a smaller team, earlier in the journey without bring the difficult politics.
 
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Buffman said:
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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I agree, 400 and it may be good to boost your pension and grow you capabilities.
 
NickK said:
I am currently contracting inside IR35. Money is, quite frankly, jaw dropping as I took home the same as my graduate salary in a month. The role - they wanted a senior and someone that isn't afraid, had experience of senior stakeholder management.

Yet i have applied for a perm position in a group company that owns many of the worlds best know airlines. The money is less than half. A new position, one that is full of unknown and fun. The contract i have a blurred reporting line that ultimately is through a the prime contractor hence we come to blows in a few areas (they prefer the picture that everything is under control when it’s not and the client knows that.. which is why I am there. Hence is politically complex.). The perm position is the same, but in a smaller team, earlier in the journey without bring the difficult politics.
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Good luck! I may well have put a shift in at the same firm around 2001. If you are in a position to use the staff travel (bargains on standby!) then please do this. You can’t beat a weekend away in somewhere like the US or South America in business class for £100, assuming the system still works now as it did then.
 
As someone who has been freelance consulting for the last six years, my advice is to keep perm until you a) have a wide network, b) are reasonably known in the particular field, c) are looking at it being career-ending rather than defining.

I have been working as a digital solution architect/ecommerce architect for twenty years including for accenture, Deloitte and Capgemini and in IT for nearly forty years. When I went freelance I already had connections across retail and software vendors and system integrators. I had been to trade shows, done trade talks, networked my backside off and with all that was able to stay in work for most of the last six years.

Even with all that - including being able to charge anything up to £850 a day and never less than £625 - if you count all the corporate benefits that you get from a decent employer, I would have been better off being a perm. And I never worked inside IR35 but still worse off.

Do not underestimate the value of a corporate pension, of free family private health, of paid holiday and sick leave. The freedom to take a holiday when you like is wonderful. As a contractor, you're always trying to arrange for a holiday between contracts, but even then you can't help consider the lost work as a holiday "cost". You avoid taking a day off to play golf with your mates because it "costs" you hundreds.

The single advantage to contracting is the freedom to say "no". When I worked for the big boys, sometimes I'd be in London but sometimes Zurich, or Lyons, or Stockholm, or Heathrow (2 hours each way commute for me), or Eastleigh (living in a crappy Crown hotel), or Bradford (living in a hotel in central Leeds - not bad actually) or 18 months of three nights a week in the Belfry (great for my golf!) but away from home four days a week. As a contractor, I never worked outside central London, never had to stay away from home overnight.

Permanent consultancy is slavery. The work/life balance sucks. It is a life for a young person or an insanely dedicated one. Career over everything else. Before joining a consultancy, ensure your partner understands you will be away a lot and even when you are home you will be mentally away. Hugely stressed and not pleasant to be around. Your kids will draw portraits of you for school that include your laptop (one of mine actually did that).

www.miketimbers.com
 
MikeTimbers said:
As someone who has been freelance consulting for the last six years, my advice is to keep perm until you a) have a wide network, b) are reasonably known in the particular field, c) are looking at it being career-ending rather than defining.

I have been working as a digital solution architect/ecommerce architect for twenty years including for accenture, Deloitte and Capgemini and in IT for nearly forty years. When I went freelance I already had connections across retail and software vendors and system integrators. I had been to trade shows, done trade talks, networked my backside off and with all that was able to stay in work for most of the last six years.

Even with all that - including being able to charge anything up to £850 a day and never less than £625 - if you count all the corporate benefits that you get from a decent employer, I would have been better off being a perm. And I never worked inside IR35 but still worse off.

Do not underestimate the value of a corporate pension, of free family private health, of paid holiday and sick leave. The freedom to take a holiday when you like is wonderful. As a contractor, you're always trying to arrange for a holiday between contracts, but even then you can't help consider the lost work as a holiday "cost". You avoid taking a day off to play golf with your mates because it "costs" you hundreds.

The single advantage to contracting is the freedom to say "no". When I worked for the big boys, sometimes I'd be in London but sometimes Zurich, or Lyons, or Stockholm, or Heathrow (2 hours each way commute for me), or Eastleigh (living in a crappy Crown hotel), or Bradford (living in a hotel in central Leeds - not bad actually) or 18 months of three nights a week in the Belfry (great for my golf!) but away from home four days a week. As a contractor, I never worked outside central London, never had to stay away from home overnight.

Permanent consultancy is slavery. The work/life balance sucks. It is a life for a young person or an insanely dedicated one. Career over everything else. Before joining a consultancy, ensure your partner understands you will be away a lot and even when you are home you will be mentally away. Hugely stressed and not pleasant to be around. Your kids will draw portraits of you for school that include your laptop (one of mine actually did that).

www.miketimbers.com
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You personally might have been better off but I'd say the majority of people aren't going to better £850 a day in a permanent job.
 
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MikeTimbers said:
Even with all that - including being able to charge anything up to £850 a day and never less than £625 - if you count all the corporate benefits that you get from a decent employer, I would have been better off being a perm. And I never worked inside IR35 but still worse off.
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This is the position I’m in. Even though my ‘take home’ is probably less than when I was contracting, when I take everything else into account I’m better off. Then there’s bonuses, RSUs etc to take into consideration. Maybe I’m lucky with what I get paid as a perm, but with current market rates I’d find self-employed consultancy a difficult change to make.
 
When I made friends with contractors early in my career, I was flabbergasted by what they were earning compared to me. 10-15 years later, it doesn't seem that much anymore and most of them are still doing the same thing for similar rates as they gave up their opportunity to grow a career. That said, they probably haven't had to deal with the responsibility and associated stress that I have.
 
All I'm saying is don't be fooled by the day rate. Even a really good one outside IR35 attracts significant tax. And you have to build your own pension with no contribution from your client so you're making both sides of the pension contributions.

If you get sick, zero help except from your own reserves. If you are terminated unexpectedly, zero help. No training except what you pay for. If the taxman decides to investigate your IR35 status and deems it to be inside, you may now have to find a shedload of back tax.

And if you're inside IR35, you have very few advantages over a permie. In effect you are a fixed length contract employee with zero perks.

This is why I'm saying that contracting is a great way to make some cash once you are already very good at something and are happy to keep doing it.

None of the work I did while contracting was as challenging as the work I did as a permie to learn my trade.
 
sigma said:
You personally might have been better off but I'd say the majority of people aren't going to better £850 a day in a permanent job.
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I never earned anywhere close to 850 a day as a permie. Very few do. That's nearly 250K pa. C-suite in a large corporate. All I'm saying is that even on 850 a day as a contractor it wasn't really any better than a salary of around half that simply down to the benefits.

My last permie job included free health for the family (costs me £6k p.a. now for my wife and I and that doesn't make it "free" free), company pension contribution was 12.5% so around 15k into the pension per year, free gym membership, 26 days leave, regular training, discounted airfares.

We're talking about permie consultancies. I was a senior manager at three of them, made very good money. As a contractor I made more cash but was no better off except for the freedom to choose my own work.

Don't be fooled by the day rate.
 
MikeTimbers said:
If the taxman decides to investigate your IR35 status and deems it to be inside, you may now have to find a shedload of back tax.
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A good mate of mine had a £38k bill from HMRC. He had very little time to pay it!

I know very few contractors with that sort of money in their personal account.
 
A nice insight @MikeTimbers.
Sometimes I have a lot of regret that I didn't push myself to get into contracting, but I only really say that from the money side. I've worked with "Project Managers" making £1000 a day who couldn't organise a **** up in a brewery. That kind of hurts a bit when you see that, wondering how they get hired. I think a lot of contractors - especially PMs - tend to only mention past projects during hiring process, that have been successful where they have been surrounded by good teams that met the overall target/objective.

I guess at the point of my career where I felt I was at a level where I could contract, I was already being paid an amount that was "good enough" for me to be satisfied enough that I have done "ok". For me to break into that game, I would only want outside of IR35 and as you say, don't really have the network under me. I used to have a network, but I've changed track a bit in the last few years in terms of what I do so I'm more new to it.

I look at what I get paid, and look at cost of living, current state with house/kids and it's an easy decision on paper; go contracting... I need more money.

But then you look at what that actually involves and the cost in terms of time, effort, keeping yourself up to date and trained, constantly keeping abreast of market/projects and all the things you mention whilst not really having a backup money pot for gaps between projects etc. It's a risk. It's a risk that is hard to take in a nice comfy permie role with good perks. I think if I were made redundant again and the money buffer was good enough, I would still consider contracting, but it would have to be highly paid and outside of IR35.

As you say, there are days where you want to play golf, family stuff, take holiday, go sick and ya know...browse OCUK forums. :)
 
It's worth pointing out that currently the client is liable for unpaid tax if you are investigated and found to be inside IR35 (though this is obviously muddied if you were a contractor with them prior to the rule change).
 
MikeTimbers said:
I never earned anywhere close to 850 a day as a permie. Very few do. That's nearly 250K pa. C-suite in a large corporate. All I'm saying is that even on 850 a day as a contractor it wasn't really any better than a salary of around half that simply down to the benefits.

My last permie job included free health for the family (costs me £6k p.a. now for my wife and I and that doesn't make it "free" free), company pension contribution was 12.5% so around 15k into the pension per year, free gym membership, 26 days leave, regular training, discounted airfares.

We're talking about permie consultancies. I was a senior manager at three of them, made very good money. As a contractor I made more cash but was no better off except for the freedom to choose my own work.

Don't be fooled by the day rate.
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Sounds like you've worked for some good companies. From what I've seen (currently considering contracting myself) the day rate is better even after all company benefits. Plus the freedom to choose work. And work even less. Even 10 months at a good day rate beats perm for me currently. I wouldn't mind two months off a year!
 
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sigma said:
Sounds like you've worked for some good companies. From what I've seen (currently considering contracting myself) the day rate is better even after all company benefits. Plus the freedom to choose work. And work even less. Even 10 months at a good day rate beats perm for me currently. I wouldn't mind two months off a year!
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5 weeks paid time off, 8 bank holidays and a few sick days is already pretty much 2 months off a year for most permanent employees.
 
EvilRob said:
5 weeks paid time off, 8 bank holidays and a few sick days is already pretty much 2 months off a year for most permanent employees.
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~50 days off v say ~38 perm? So more days off and better pay?

Although as I'm still working out if it is truly is better I need to better understand the tax etc. I read something recently which said there are changes coming in next year? It was on one of the contractor calculator websites which said that the landscape is moving more towards independent contractors contracting via agencies. Surely this is a thing already?

One issue is that I think I've hit an earning ceiling with my current skillset so I am looking to expand that also.
 
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