Contracting vs. Permanent employment

What's better – Contracting or Permanent Employment?

Contracting offers some major financial advantages for you if you can enjoy the lifestyle!

Contractors are often targeted for lower paid permanent jobs

60% of the IT Market is permanent so you will always get more permanent calls. Recruitment Consultants realise your financial pressures and target you for lower level/paying permanent jobs often 25% or more below market value! Esspecially new arrivals to the UK, make sure you know your market value, join BITE.

Accepting such a role means being permanently under paid

Contract roles pay 25%-100% higher and rates can be increased on renewals. There is two very important benefit of contracting if your contract and working conditions keep you outside IR35. Firstly you can claim legitimate work related expenses to reduce your tax bill and secondly in some cases choose to be paid via dividends attracting lower rates of taxation and reduced national insurance (approx 20%) resulting in large savings in deductions and increased net pays.

Contracting vs Permanent [EXAMPLE]

Contracting Role		Permanent Employment
How much can your earn?
Rate:	£35/hour	Rate:	£35,000/year
Hours:	40/week	Hours:	40/week
Years Earnings (50w):	£70,000	Years Earnings (52w):	£35,000
Expenses claimed (before tax)
Travel / Lunch:	£50/week	None	£0.00
Tax
Total Taxable:	£65,598.00	Total Taxable:	£29,965.00
Tax Paid:	£5,190.00	Tax Paid:	£6,334.30
National Insurance:	£525.25	National Insurance:	£3,149.16
Corporation Tax:	£11,118.00	Corporation Tax:	£0.00
Total tax paid:	£16,833.25	Total tax paid:	£9,483.46
In your pocket
Expenses:	£2,600	Expenses:	£0.00
Net pay:	£51,355.75	Net pay:	£25,516.54

More info Contract vs Permanent

This simple example takes no account of relocation or large expense claim benefits also available for overseas contractors, flights accommodation costs and food allowance. These are approximate figures and are dependent on your personal circumstances, tax code expenses, spousal allowance and administering your contract to be outside of IR35 through your contract, contract log and actual negotiated working conditions.

A qualified accountant or tax adviser should be used to advise you and provide actual figures for your situation.