freelancing on £350per day, been asked to go permanent.... what salary should i ask for(25 Posts)
I've just started freelancing for a largeish organisation and been asked to consider joining them permanently. I have a meeting next week to discuss in more detail but would really appreciate any advice on what salary I should be asking for.
I charge them £350 per day so taking into account 5 weeks holiday per yr and 5 weeks not working I make £82K. Now of course this is the best case scenario and it would be easy to make less if i couldnt find work. But also I have been offered work at £400 a day so in my head I have around £80K as my freelance salary. I am the director and sole shareholder/employee of my ltd company so I actually take home a lot more than if I was employed on £80K due to tax efficiencies so I'm not sure what to ask for as a salary if I go permanent.
My last permanent job was on £70K but obviously I have more experience than that now.
There are many things to consider apart from cold hard cash but if anyone has any thoughts I would really appreciate it!!
Will speak to my accountant as well but no doubt he'll want me to stay freelance as it gives him business so thought i'd post here too!
Thanks in advance
sorry - error in message above.
5 weeks holiday gives me £82K but 5 weeks hol and 5 weeks not working gives me £73.5K...
If you were on 70k permanently previously, why are you only sking 350 per day now? I assume you are a BA, PM?
I was on £70K in London and moved out to the country so salaries are a lot lower.... I know I should look to charge more but I didn't think I'd get in the door with some companies... and as it's a new area I don't have a network so I thought I'd build up a good client base then hopefully raise my day rate! Tax wise I am still better off than before. What sort of day rate do you think equates to £70K out of interest? When I looked on some sites it advised all sorts of calculations to get to day rate which ended up with me on about £600 per day which I just knew I wouldn't get round here....
Funnily enough London recruiters told me freelance marketers at my sort of level were only making around £250-£300 at the moment as the market's a bit flooded due to redundancies.
I assume you are a BA, PM?
Sorry - I have no idea what you mean by this!
Hi sorry, I mean Business Analyst or Project Manager!
Now have read your detail, I understand why you don't get such a mark up on your rate from contract to permie.
If you were on 70k in London, and have moved out, then you normally lose around 10-15%, so I would say around 60k to 65k , bit finger in air as not sure of seniority of your role?
Thanks JD, I was a marketing manager, now do all sort of marketing, project work, creative stuff.
it would be nuts for me to go permy for £65K i think - just wondering whether i should go back to the security of a perm job!
Hi, I've worked both at contract and perm. My contract rate varies between £350-450, but the perm salary for my position is between £60-75K.
Most of my contracts have been longish term up to a year but now being perm I like the certainty of salary, holidays, sick pay etc. But I would go back to contract dependant on the job. If you are not in London then I think the realistic/ real perm rate will be difficult to achieve. It also depends on what you do. I work in IT but I have seen contract rates drop to £250 for senior developers or about £50K and I live in london. There are a lot of people in IT who will work for below the rate that should be paid.
If you are not in IT/Project management then ignore.
What industry do you work?
thanks scrummummy i'm in marketing. It also works the other way a little bit because there aren't that many people with my experience in this area of the country but there are still some big businesses so they are willing to pay more than i expected..... tricky isn't it!
What other benefits would you get attached to the role that you wouldn't get freelance - pension, childcare vouchers, healthcare, bonus, dental plans etc? These would bump up your overall compensation making the 70k more reasonable.
sorry just seen. I've seen marketing managers (dependent on sector) going for about £35/40K in london I know the marketing manager where I work is only on about £38K
When they take you on they will have to pay ERS NI of 13% on top of your salary.
They will also have to pay you holiday pay and sick pay
So they will drop your freelance rate to an equivalent extent.
When DH was doing supply and stuff, we found out that the standard formula was
Freelance day rate x 200 = salary
so in your case its £70k
which is about what it looks like you were coming to from other directions.
Thanks, does anyone know what a years take home would be as a ltd co on an £80k turnover (assuming I take a low salary and the rest in dividends....
that depends entirely on your profit ......
because you will have substantial overheads as a freelance (won't you ....)
but you should be able to clear around £50k after tax
No real overheads as I'm mostly based from home and work from a laptop... £30k from £80k seems like a lot to pay in tax though... Maybe I'm crazy!
You'll pay more tax and NI than that if you are either self employed or an employee
of course you'll have lots of overheads - you need to read my Ebay page ....
I don't think you pay NI on divs...
Are you an accountant talkin?
yup - for my sins - 20 years experience
if you have no overheads you leave yourself open to an IR35 check by HMRC which will be expensive
and those overheads are not always new ....
if you are turning over £80k, you'll be VAT registered which opens up a whole new can of worms....
If you were to look at a Ltd. Co. with £80k of profit you could take home a bit over £58,800 after tax.
Comparable figures as self employed with £80k of profit a bit over £54,000 and employed on a salary of £80k £53,100. However as TiP says your expenses (including for instance the amounts you can claim for use of your home and car) are different in each case.
You have remembered to include the costs of your pension, holiday pay, sick pay, training, professional subscriptions, life assurance, expenses and non-earning periods?
When I was in business on my own I used to make 20% pension contributions.
I was off work for a year after a bad accident and very pleased that I had 50% PHI which is quite expensive.
You will probably not get a permanent disability or life-changing illness but nobody else will look after you.
Be very wary of trying to avoid NHI by going for big dividends. You will not want to be challenged or investigated by HMRC.
Piglet - fair point - its easy for us accountants to forget that just because our work is not physically tiring and most of us keep working part time till we drop, that our clients' line of work may not be the same.
I have no extra insurances, but then again DH and I have equal earning capacity and the chances of both of us being able to work at all are a very small "black swan"
PigletJohn said "Be very wary of trying to avoid NHI by going for big dividends. You will not want to be challenged or investigated by HMRC."
HMRC have no right to challenge remuneration/dividend policy, and given that this is what most owner-managed companies do there would not be much point in using this as a flag for investigation.
On the other points:
Pension contributions are normally paid out of your before-tax income but NOT before NI contributions (unless you are an employee on a salary sacrifice scheme). If you are an employee of your company the company can pay pension contributions without any NI charge.
PHI or any other personal insurance is paid out of your after-tax income, however the company may be able to pay for key man insurance as a taxable expense.
what I had in mind is that an empoyee will get salary plus (some kind of) pension plus (some kind of) sickness and disability cover; whereas an independent has to cover those out of the daily fee. These are ways where (daily fee x 220 days) is not the same as annual salay
Oh yes absolutely PigletJohn, you do need to factor in everything in the package.
One other factor is holidays - if you are your own boss you can in theory take as much holiday you want, but in practice client commitments may mean that you can't, or the loss of earnings may mean that you don't want to so you may actually end up enjoying less time off with your family.
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Does it not boil down to - 'How much more would I want to be earning to give up my freedom?'
or is that just me
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