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IT CONTRACTING, SHOULD YOU TAKE THE PLUNGE?

Risk and Reward Have you ever thought about making the move from permanent to contracting?  If so, you are not alone.  More and more IT professionals are switching to contract work due to the undeniable perks such as greater flexibility, better career development and more money in your pocket.  In fact, there are now almost 2 million contractors in the UK today, a 36% increase compared to 2008. Being able to quickly place highly skilled, flexible professionals who are able to deliver specific results is increasingly important for businesses and their development. This means that as a contract worker you are often able to demand a higher wage than your permanent counterparts. Typically a .NET Developer in a permanent role can expect to be paid around £60,000 annually however the daily rate for the same role would be around £500. It’s not just a more attractive salary that lures people into IT contracting; you can also enjoy flexible working conditions with hours to suit. There may be the option to work remotely or have selective choice over which of your client’s locations to work from. As a contractor worker you also have the freedom to work on projects that interest you, structuring your working day to suit. As you move around, the experience gained increases your skill set and industry knowledge as you are exposed to a variety of professional environments. Changing projects on a regular basis gives you a chance to add some great company names to your CV, giving your career a welcomed boost. Factor in the networking opportunities available to you as you move companies and departments and you begin to appreciate the benefits that contract working can bring. There is of course a downside. As a contract worker you accept a greater degree of risk and responsibility. One such responsibility is the decision whether to operate as a limited company or through an umbrella company.  Working under an umbrella company means you simply submit your timesheet and expenses and get paid in the same way as a PAYE employee.   Operating as a limited company requires you to spend time managing your tax payments and expenses claims, however doing it yourself can increase your tax efficiency. If you decide to operate as a limited company, you will also need to establish if your contract is IR35 friendly. Read more about IR35 and umbrella versus limited company advice here. Should you choose to make the move over to contracting, the higher rate of pay should make up for the loss of sick pay and paid annual leave but don’t forget to ensure you make provisions for all eventualities.  You will no longer be in receipt of additional permanent employee benefits such as bonuses, pensions, health insurance and car allowances, therefore remember to factor in the value of these perks when considering the move. Overall changing your role from permanent to contract can be hugely rewarding if not challenging, but only you can decide if you are ready to make that move.  There are pros and cons to both sides which need careful consideration. If you want to know more about contracting, speak to Fiona Eddy, Contracts Director, to talk through the options available to you.