One of the many perks contracting offers is the chance to earn more money than permanent employees. But just how much do contractors earn?
While it’s true that your pay depends on your hourly rate and level of expertise, there are a couple of things you can do to keep more of your money.
For example, you can claim for legitimate business costs and expenses you incur as a result of the assignment. This may reduce the tax and National Insurance you’ll have to pay on your remaining income – potentially saving hundreds of pounds each month. The types of costs and expenses that can be claimed and reimbursed are dependent on the type of assignment you’re working on and whether it’s subject to supervision, direction or control (SDC).
To give you an idea of how much you can take home, we’ve developed some handy calculators. These essential tools show what you could earn, and highlight if you’d be better off setting up your own limited company – something our sister firm ClearSky Contractor Accounting can help with.
Dave’s secured an assignment as a data analyst earning £26 per hour. The contract is for 37.5 hours per week and Dave will be paid on a weekly basis.
Our calculators show that Dave could expect to earn £730.05 per week (£3,163.54 a month) if he chooses the umbrella route with Parasol. However, this would increase by up to £117 a week (£509 per month) as a limited company director as Dave earns £847.71pw and £3,673.40 per month working in this way.
The above calculations are based on a number of assumptions, which are explained on our calculator page .
Get the best advice
Although our calculators provide a snapshot of what you could earn as a contractor, we recognise that all assignments are different. That’s why we’ve assembled a specialist team dedicated to giving you the best advice about which route to take – all tailored to suit your individual circumstances. What’s more, we’ll be with you all the way through your career, leaving you free to concentrate on future assignments.