To contract or not?

[Simon_m]

After looking at whats on offer in my industry I have come across an opportunity to go into a contract role at £250 per day. I don't know the fine details as yet but will need my own transport and to pay for fuel, potentially £50 per day on average. In my current role my basic is £24k plus overtime and other extras, bringing my earning potential upto about £32k. The job I have is as stable as it can be in the current climate, the contract role is for 12 months with a possible extension.

I have contracted before and earned some good wedge, but understand that contracting can be hit and miss. Having spoken to other guys who are contracting, one of which worked for the same company as me, they seem to be doing alright, in so much as they have a few slack weeks and are busy the rest of the time.

So, worth taking the plunge? Having two kids has made me a bit concerned about the risks.

Thanks in advance

[theboss]

It sounds like it could be a good move Simon - do you think there is any prospect of getting the rate up or at least some expenses paid though? As it seems like a high proportion of your day rate to spend on travel expenses, and if thats fuel alone then you can factor in some fairly substantial secondary motoring costs such as depreciation and servicing.

I typically bill about 240 days in the year so on that basis it's a £60k turnover, take £12-15k expenses off and you are still left with quite a bit more than your salary + overtime, plus you have the flexibility to take on extra work for other clients potentially, or find a higher paid contract.

I took my first contract in late 2008, the economic climate was dire, I left a very safe permie role for a 3-month contract (which lasted a year), the wife was heavily pregnant and I also forced a house move on the family at the same time. A lot of people said I was barking mad at the time - but it's the best thing I ever did career-wise.

Good luck.

[hornetrider]

£50 a day in fuel? I don't spend that doing 240 miles a day in a petrol 7 series. I'd be more concerned about the lack of home time with your children.

[Olivera]

You have to weigh up if £200 per day (£250-£50 fuel) is worth it given other expenses such as accountancy fees, employers NI, employers liability insurance, professionally indemnity insurance, funding your own pension, no holiday pay e.t.c. I don't know what industry you work in, but in my opinion £250 per day is quite a meagre rate. You could try and negotiate higher, then again you may just want a foot in the door with future progression in mind.

[Simon_m]

hornetrider said:

£50 a day in fuel? I don't spend that doing 240 miles a day in a petrol 7 series. I'd be more concerned about the lack of home time with your children.

Just my estimate, where I work currently I can easily do 400 miles a day, as I said I don't know the full details of the job, so am budgeting for the worst. Odd as it sounds, I can be 200 miles away from home, do the job and be back for 3pm, so still get time to see the kiddies. Do have to leave the house at 5am though.

[rog007]

I'd stay where I was; I'm conservative like that unless the rewards for a move are compelling. Good luck!

[Liokault]

Factor in 40p a mile for the first 10k miles and 20p (I think) thereafter, and you are not going to be paying much tax.

[hornetrider]

Simon_m said:

Just my estimate, where I work currently I can easily do 400 miles a day, as I said I don't know the full details of the job, so am budgeting for the worst. Odd as it sounds, I can be 200 miles away from home, do the job and be back for 3pm, so still get time to see the kiddies. Do have to leave the house at 5am though.

Ah ok - I thought that was purely to/fro commuting costs. In which case - crack on.

[jimslops]

Olivera said:

employers NI, employers liability insurance, professionally indemnity insurance, .

Don't think the above would be required for all types of contracting work as far as I am aware. Depends how it is set up I believe. Perhaps someone can confirm?

[Podie]

The Contractor's Handbook is a useful, if a little dry, read. Amazon sell it for £30ish, IIRC.

[BluePurpleRed]

I wrote this on my blog.

I hope it maybe useful!

http://financialraddeveloper.wordpress.com/2010/03...

[robmlufc]

jimslops said:

Don't think the above would be required for all types of contracting work as far as I am aware. Depends how it is set up I believe. Perhaps someone can confirm?

Insurance is not required for all contracting work, depends on the industry, company, agency and your own set up(Umbrella or ltd etc)

I did 6 years contracting and dont regret it one bit.