Contracting Payment Example

Let's look at a simple example and say you found a contract paying £400 a day. This is how the stats would stack up (as of 2016):

• Your net take home income per month would be £4,663.
• Your gross revenue would be £82,500.
• Deducting any expenses you have for the year e.g. £11,000 would result in a profit of £71,500. (This profit is 86% of your revenue).
• On your company profit you have to pay 20% corporation tax which would equate to £14,300.
• You would also need to pay your personal taxes on your dividends which based on the income above would be  £9,240.

*The tax man will fund up to 46% of a pension for you! This would mean you can efficiently contribute up to £4,166 per month into a pension, of which the tax man pays £1,545. However, for each £100 contributed, your take home pay reduces by £54 and the tax man will pay the rest :) 

To command the same salary in a permanent role you would need to earn an annual gross salary of £83,610 to match £400 a day as a contractor.

To look at other rates you can use this free take home pay calculator that is provided by timesheethours.com here: http://timesheethours.com. Just select the free calculator.