Contractor Day Rate Calculation

Bar · 14 Aug 2006 at 14:45

Hi,

Looking for a bit of help here.

Just about to start contracting and have been offered my first position.

Its a 6 month contract with a day rate ranging from £300 to £350 per day.

The hard part is trying to work out what this means at the end of the day interms of take home pay.

I am going to go through as PAYE through the recruitment agency initially but I might change to direct after that.

Online calculators are giving me all sorts of different answers.

Could someone experienced in these matters please advise me of what I can expect my NET PAYE pay to be either weekly or monthly.

Kind Regards,

Matthew

alexthecheese · 14 Aug 2006 at 14:48

Net pay? Monthly isn't that just 350 x 5 * 52... / 12?

i.e. a lot of money?

dozer · 14 Aug 2006 at 14:51

i would forget about paye and go through a limited company. they are very easy to setup and you would be looking at returns of 20% higher than paye.

i use

http://www.paystream2000.com/

and they return 19% of my total invoice, so on £300 a day you would have approx £240 banked in your account after taxes.

[DOD]Asprilla · 14 Aug 2006 at 15:20

There are all sorts for different ways for doing this and almost all of them exist in some grey areas.

I use a method similar to the one above and get the same benefit over PAYE but most umbrella companies will tell you that what I (and dozer by the looks of things) do isn't legal. However, there has never been a test case so we don't know yet.

However, they will also do lots of calculations and tell you that they have special dispensation to claim this and that against tax with out receipts. This is a lie, and the HMCR website stats that they have no special arangements with anyone and that all expenses must be receipted (over a certain amount, can't remember what) which means that you have to keep those receipts for five years in case the tax man commeth.

The differences between the calculators you are looking at depends upon what assumptions they are making about what you are going to claim against tax. Remember, it's very important, that in order to claim something as tax free you have to spend the money in the first place. You could pay no tax if you spent all your money on things you could claim back, but unfortunately you'd be living in a hotel and have no savings.

Bar · 14 Aug 2006 at 15:34

Cheers for this,

Unfortunately after notifying my boss of my leaving they are being a pain about it.

I am in the middle of a development between grades (from 7-8) and they are now trying to hold me to the notice period of a grade 8.

This changes my notice from 4 weeks to 12 weeks.

I can go down the route of constructive dismissal due to what has happened in the last 6 months but I really don't want to.

I never signed the contract for the grade 8 role.

What are the ramifications of just walking out and never returning on my proposed leaving date?

Cheers,

Matthew

Samtheman1k · 14 Aug 2006 at 15:44

Bar said:
What are the ramifications of just walking out and never returning on my proposed leaving date?

Depends on if you ever need a reference from your old boss...

Bar · 14 Aug 2006 at 15:59

Depends on if you ever need a reference from your old boss

Nope not today, tomorrow or never. Shame really as we always got on well.

Trimbo · 14 Aug 2006 at 22:09

http://www.ir35calc.co.uk/

in your case (assuming 8 hour day and inside IR35):

http://www.ir35calc.co.uk/IR35Calcu...=Parasol&wl=InsideLondon&uds=Basic&Host=LOCAL

To get the same income via permanent employment would require a salary of £50,025

Morba · 14 Aug 2006 at 22:15

defo get into an umbrella company. the amount you are getting is a good starting rate but there is a load more to be earnt as you spend more time contracting.

was going to do it myself recently, but went for the stable full time job instead (and thank god i did!)