How to calculate a permanent salary of £45k into a daily rate

[pilsbury]

Hi there

I'm trying to work out how to calculate what a permanent salary of £45k would work out as a daily rate, can anyone help me? There are 253 working days in 2016, so do I simply do £45k/253 = £178 or is that too simple? Also do contractors never include holidays in their daily rate?

Thanks!

 

[Jon Neale]

A contractor wouldn't just split the salary in this way.

There are many different ways to do things but you may need to consider employers NI, corporation tax, pension contributions, holiday costs etc.

What exactly are you trying to get a handle on?

Jon

 

[pilsbury]

I am employed on a contractor basis with a daily rate - everyone at my level (they are permanent employees rather than contractors) is going up to a salary of £45k, so I'm trying to work out what I need to invoice as my daily rate...

 

[Jon Neale]

Are you inside or outside or IR35? Given you are potentially tracking a permanent employees salary it would sound as though you were inside IR35 therefore you would need to pay normal PAYE and NI plus employers NI.

Do you have fixed costs, assuming you have public liability and indemnity insurance, accountant costs etc?

A basic figure can be got from somewhere like here: http://www.thesalarycalculator.co.uk/salary.php

but I personally wouldst use this as a means to calculate my daily rate.

If you invoice for £173 a day (based on the £45k) then you will actually be around 10-20% worse off than the actual employees based on holiday, employer ni, CT, pension, fixed costs etc.

 

[pilsbury]

I do not pay NI or PAYE and I invoice purely based on the days I work (usually 3 days per week). I appreciate that I do not get paid for holidays, nor receive pension, but I only pay myself a minimum wage from my company and so only pay corporation tax on the profit that I make each year.