To ask for your opinion on my day job vs contractor work dilemma?

[fourtriangles]

Any views on my work dilemma would be gratefully received. These are the two options-

Option one: Normal work contract, four days per week, all of it in the office 9 to 5 with no wfh option. Office is a 45 to 55 minute commute each way. Contract has the usual annual leave, bank holidays, pension etc.

Option two: Work as an independent contractor doing similar role. Work from home except for one day per week on site. Average income across the month would be same/ a bit higher depending on how much I take on but no bank holidays, annual leave etc. There is no chance of work drying up.

From a family point of view, option two would mean that most of the week I would be home in the morning when DC (early secondary age) leave and afternoon when they get back from school. I absolutely love wfh and hate feeling trapped in an office all day, hate commuting and with winter coming this will involve driving in dark mornings and evenings. I feel with option two I will have much more flexibility in how I use my time across the day/ week, can be there more for DC, will be much less tired from commuting. The only drawback is being out of the "comfort" of a work contract with paid leave. My DH has as secure full time job that pays less than mine but we could survive on if we had to.

Any thoughts?

I'm a contractor, outside IR35, on a high day rate, taking short to medium term contracts. I love it and will never commute again. I work remotely with the odd day in an office but only when I need to, for example to meet people 121. Some key points:

• Ensure your day rate is high enough. I was recently offered what sounded like a huge amount a day inside IR35 but it wasn't enough because although I work for less than that now I am working outside IR35 and so my take home is higher
• You need a professional accountancy practice specialising in contractors. There are plenty of them about. They calculate all your corporation tax, VAT, payments and manage all your pay, invoicing etc. They will tell you what to pay to HMRC and when and will complete tax returns on your behalf for a fee. I pay about £200 a month for this
• You need insurance. I have employers liability, indemnity insurance and also have insurance against an HMRC investigation around IR35
• My CEST determination shows I'm outside IR35, not all companies will go for it though, although I never have trouble getting work - I have a niche skillset though too. You can find the template on the HMRC website
• You need to keep savings as you can be let go at any time. Likewise, you need to factor holidays in - if you don't work you don't get paid but it's easy to therefore never take time off and that leads to burnout. Make sure you take time off as often as you need to
• If you need private medical cover, pay for it. We pay £360 a month for 2 adults

I never want a perm job again and I never want to commute again and never will. Secondary school aged children need you just as much if not more than little kids and so it'll be good to be around more for them, even if you are WFH.

You are in a great position to do this as your dh has a perm job and you could survive on his salary.

Check also that any agent isn't taking a huge margin - a friend found out recently that although she was being paid £500 a day her agent was getting an extra £200 - the client was paying £700. She renegotiated direct with the client and the agent reduced his margin and increased her pay.

Good luck!

Am not a contractor but those I know charge roughly double their hourly rate as a contractor compared to their rate as an employee. So you should be charging your projects on the same basis, with as accurate an estimate as to the hours needed as you can.

Thank you everyone. This is all really useful. Again it’s a somewhat niche situation but I definitely am outside of IR35, I will be getting further advice in relation to tax. In terms of the day rate, would anyone be able to share what they consider high? Based on the actual hours of work it would take me, my rate would be about 30% more but I won’t be paid for filler employee stuff like meetings. And I’m actually fine with that because I want to be at home and to not be captive in an outside office all day.

Maybe if you say what your salary is roughly, then others can give you some guidance as to what to charge per day (or the hourly equivalent of a day). I'm on £70k and if contracting I'd expect to charge £500 to £700 a day depending on role if that helps.

I was once told to take a couple of zeros off the salary and that gives you your day rate equivalent, it seems not far off for me. There's some stuff here about day rates www.ipse.co.uk/policy/freelance-confidence-index-hub/freelancer-confidence-index-q1-2022.html - I thought I'd seen a whole report about day rates in different sectors by them but I can't find it now.

Option 2 but make sure you get paid ‘enough’