Tax..
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So, what a company might pay a person doing job "X" as a permie, is relevant to a person considering going perm and doing job "X".
The company will not feel that it has a duty to keep him in the style to which he has become accustomed; and the worker will have to consider the value, to him, of pension, paid holidays, sick pay, benefits such as car and health insurance, potential paid training and career advancement, and any degree of security that he hope a permie will have. And deduct losses from in-house politics and team building.
Contracting is not being in business its just temping by another name, If you want to make real money you must be prepared to make a real loss with your own money.
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I suspect the information hasn't been presented properly. The umbrella company will be doing more than just making a margin on the work. They will be dealing with payroll and billing, insurance and offering the end client contingency if it doesn't work out. They may also be dealing with recruitment etc. in the first place. If the contractor doesn't like it he can set up his own and undercut the umbrella company, subject to any contractual commitments.
Contractors do get a funny idea of what they are worth. They are paid more, because they are temporary. They can usually deduct more expenses than those on PAYE and have the ability to push assets to their company and lease them to themselves or dispose of them to themselves cheap. Someone earning £182k will not pay more than 50% of their income in tax and NI. The contractor is confusing his billable rate with his worth. To know what he's worth, he looks for alternative employment.
Contractors do get a funny idea of what they are worth. They are paid more, because they are temporary. They can usually deduct more expenses than those on PAYE and have the ability to push assets to their company and lease them to themselves or dispose of them to themselves cheap. Someone earning £182k will not pay more than 50% of their income in tax and NI. The contractor is confusing his billable rate with his worth. To know what he's worth, he looks for alternative employment.
The umbrella companies effectively offer jobs for contractors or call them temps. All sorts, people for specific technical areas, bank nurses, secretaries, clerks even labour. There are a number of other effectively umbrella companies about that do less - just place adverts all over the country and pass work on. That mostly applies to some trades.
Companies contact sources of contractors and ask for what ever they need. They look after the payroll aspects etc and provide the people.
What the gov might have stopped is what the husband of one of my cousins did. He didn't directly employ anyone. He employed a number of people purely as contractors rather than as permanent staff. They had a secure income and looked after the detail themselves. He started the business while at university. Didn't take long for him to apparently become a millionaire. He had some interesting ideas about what to do with any spare money he had. It seems these days he mostly networks.
Companies contact sources of contractors and ask for what ever they need. They look after the payroll aspects etc and provide the people.
What the gov might have stopped is what the husband of one of my cousins did. He didn't directly employ anyone. He employed a number of people purely as contractors rather than as permanent staff. They had a secure income and looked after the detail themselves. He started the business while at university. Didn't take long for him to apparently become a millionaire. He had some interesting ideas about what to do with any spare money he had. It seems these days he mostly networks.
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