10 ms·

My Guide to Software Engineering Contracting in UK

137 points by codedeep 3y ago

codedeep 3y ago
My experience and tips for being a software developer contractor, in the UK
- Dayshine 3y ago
  You mention you get to learn new skills and technologies; but if they only want to hire people who can immediately do what they need, how does that happen? Does it involve a bit of stretching your experience?
  - OnlyMortal 3y ago
    Freelancer here. Yes, you have to sell yourself. If you’re smart, you’ll pick it up on the job or read a little about it before the interview.
  - petepete 3y ago
    I'm a UK contractor and I'd say I've learnt lots of new skills and tech in my periphery while on Ruby on Rails and database contracts. In the last few years I've been exposed to enough Kubernetes, Terraform, Docker, Azure, Google Cloud, Dataform and BigQuery to feel comfortable putting them on CV. Microsoft Dynamics and SharePoint too but I don't think I could face any more.
  - vidarh 3y ago
    Clients often just ask if you can do X in Y time and Y is often more than large enough to learn X because often the estimates are set by full timers who really want to make sure they are not burdened by it. I have said yes to being able to deliver projects in languages I'd never even seen before, because the timeline was long enough that I was (rightfully) confident I could figure it out within the estimated time. Often they just want to outsource uncertainty. Of course you then do need to take on the risk and make sure you deliver, or you won't get hired back and if it's a referral it can get ugly, but in the years I did contracting that was never an issue. Knowing your limits is important, of course.
mp05 3y ago
> When hiring contractors it is a little like hiring a plumber. This comparison is more true than a lot of devs want to admit.
- deleted 3y ago
  [deleted]
- sirsinsalot 3y ago
  It is true at some level. If that's how you want to present yourself. You can be a plumber or a safe cracker. A person who does, or a person that knows. The latter pays better day rates.
- UK-Al05 3y ago
  Self employed Plumbers can earn about the same as developers in the UK.
  - toyg 3y ago
    And likely don't need to master a new type of plumbing every other year.
    - mp05 3y ago
      Yeah the useSolder method is pretty straightforward and hasn't changed in quite some time.
    - bdjsiqoocwk 3y ago
      Sounds great for people who don't want to keep learning!
      - toyg 3y ago
        Continuous learning is fun, but the related ability naturally decays in humans.
T-zex 3y ago
> Contractors can get a new role almost immediately... Perhaps inside IR35 and perhaps for a low rate. Big corps mostly do umbrellas these days.
- sirsinsalot 3y ago
  Don't touch umbrella setups. Don't go inside IR35. Businesses either hire contractors for a liquid and expendable workforce... Or they hire high skill people who take on more liability and charge for it accordingly. Be in the second group. They don't use umbrella setups.
  - jacobp100 3y ago
    I found inside IR35 can be much more lucrative. It's big companies that have more money, can't hire enough perms, and just need stuff done
    - sirsinsalot 3y ago
      You have to ask why they feel the need to spend on contractors. Also if you're inside IR35 then you're an employee for all intents and purposes but without the perks of a perm position. Be a business, not an employee. If you look like an employee, regardless of the legal layout, you'll be remunerated like one. Be a business. They make more money.
      - danw1979 3y ago
        > If you look like an employee, regardless of the legal layout, you'll be remunerated like one. This just isn’t true. I’m currently with a FTSE100 financial institution and inside IR35 contractors make way more than perms at the same level of experience. They just don’t want headcount on their books, and still have work that needs doing, and they will pay to get it done. The problem is job security at the moment. If you don’t look like an employee, you’ll not get treated like one… > Be a business. They make more money. Completely agree, but most business owners make money by exploiting someone else’s labour.
sirsinsalot 3y ago
This is good entry level stuff. As a contractor in the UK exclusively for the past 20 years tho, it doesn't paint a very full picture. The most inaccurate bit is day rates. They're underestimated by quite some way in my experience. What I would say is contracting in the UK is a game with different layers. This is the basic "coder for hire" layer. There's levels above that, with contracts spanning 10 years+ and higher day rates, but it is much more like dark magic.
- sirsinsalot 3y ago
  Also your number one skill is communication. If you're not liked, your services are less valuable. Number two skill is negotiating. The technical stuff starts much further down the list.
  - codedokode 3y ago
    Does it mean that UK companies are in need for likeable people who are good at negotiating rather than have good technical skills?
    - questinthrow 3y ago
      Without a doubt, most people I know in this business optimize for networking and communication. The actual coding is done by eastern europeans and indians. Technical knowledge is more commodifiable than relations.
- hankchinaski 3y ago
  Rates have dropped significantly over the past year or two
aussieguy1234 3y ago
Remember, with GPT-4 around its alot easier to work with a language or technology you only have minimal exposure to. It's like having a Principal Engineer around 24/7 that you can ask questions to unblock you. So dive right in. You can also use it to practice the interview before the actual interview.
- sirsinsalot 3y ago
  If your principal is like GPT-4, I'd consider this a red flag. Your comment is an advanced version of "fake it till you make it". That's another red flag when I'm hiring disgustingly highly paid consultants.
  - aussieguy1234 3y ago
    If the person writing the questions is a Senior Engineer already and knows how to evaluate the answers properly for correctness, you probably would not be able to tell, even if they've only had minimal exposure to let's say, Ruby or Python as opposed to JavaScript/TypeScript. Or writing advanced SQL queries when they don't do this very often.
    - sirsinsalot 3y ago
      You're assuming the red flag relates to technical correctness. It doesn't. It's a red flag about mindset and diligence. Using genAI is fine, using it to bolster a lack of underlying knowledge as I read it, is a red flag.
      - aussieguy1234 3y ago
        Most engineers will come across something they haven't used before in most roles. Perhaps some legacy system in some dying language, for example. Previously, they might have spent hours on Google. Now, GPT-4 can unblock them in seconds. It cant replace the mindset of a human, but what I'm basically saying here is with GPT-4 and good prompting skills, you can be alot more brave when it comes to new unfamiliar tech. That's an advantage in a fast changing tech landscape.
jacobp100 3y ago
I found the yearly take home for outside IR35 contracts is around 220 * day rate, inside is 200. I did find recently that the contract rates have gone down a lot, and the full time salaries increased - so I'm back perm after about 8 years, and am better off having done so. I found jobserve.co.uk good for contract roles though
- sirsinsalot 3y ago
  Edit: I can't read. If only my client knew! £220/day?! I've not paid a developer less than 600/day since like 2015 and that is outside London too. Some people are being taken for mugs.
  - jacobp100 3y ago
    No - take your day rate, multiply by 220. That's what you'd expect to make a year
    - sirsinsalot 3y ago
      Ah yes that sounds about right.
      - aiqq 3y ago
        [dead]
- ukoki 3y ago
  The benefit really depends on the rate. When you get near the 1000/day range outside becomes far more lucrative than inside due to the flexibility it gives you for tax planning, as you can defer personal income to a future date where it can be taken in a more tax-favourable way (eg via SIPP or BADR).
lbreakjai 3y ago
It's depressing to see that the average day rate in London is still at around 500 pounds. I made as much in my first contract 7 years ago. Sky was offering 650 pounds a day for your average frontend react role. I thought the times were good, but even then the old timers were talking about the good old days with some nostalgia.
- sirsinsalot 3y ago
  650 a day is still common. It just isn't as visible because the government injected fear in to the market.
  - lbreakjai 3y ago
    I'm out of the game (Even out of the UK) but I work for a British company, with about 30 contractors on board. We're starting to wind the project down, and I think there's a genuine sense of fear that the market has considerably dried up.
    - danw1979 3y ago
      It has. Unless you are willing to take a reduced rate, there’s not a lot out there. I’m just about to go perm again after 6 years contracting because I’ll be better off !
- nly 3y ago
  Well, real median full-time wages in the UK are lower than 15 years ago. Why would contracting rates be any different? UK labour market is dire. UK GDP growth is stagnant and border line non-existant
ksahin 3y ago
With a limited company generating £100k/year in revenue, I’m curious how much a contractor would earn after salary tax? (assuming no admin/accounting costs)
- PaulRobinson 3y ago
  Put it through a limited company and you’ll pay a lot less than as salary (and PAYE). It’s a weird quirk, but it’s about half the tax roughly. Means you’ll net about £80k minus some small costs. It’s been some years since I did this but an accountant can advise you and help you deal with any national insurance payments need to be dealt with.
  - sirsinsalot 3y ago
    Also the typical setup is to PAYE a small wage and take the rest as dividends and other tax saving mechanisms.
  - vidarh 3y ago
    The current dividend rates + IR35 means the gap is much smaller than it used to be.
    - Silhouette 3y ago
      There are a variety of situations where you can end up paying more tax working through a Ltd now. Just on naive marginal rates comparing income tax + employee NI with corp tax + dividend tax on the remainder you'll be looking (once the changes announced in the Budget come into force in April) at 28% PAYE vs. 26% Ltd for basic rate taxpayers but 42% PAYE vs. 46% Ltd for higher rate. The Ltd rates can also increase noticeably if your revenues increase and your corp tax rate starts sliding up from 19% all the way to 25% (and that's not a marginal rate - your entire profit gets taxed at the increasing rate as you make more). Of course as an employee you also get huge advantages like paid time off, employer pension contributions, a degree of automatic job security, and not having to file the paperwork and pay the fees for running an entire company. And via a Ltd you have a lot more flexibility to control both how and when you pay out your post-tax revenues that can sometimes be valuable. So it's never really an apples to apples comparison and there's always a lot that depends on your specific circumstances.
deleted 3y ago
[deleted]
madeofpalk 3y ago
I did this a bunch in another country for a few years, then moved to the UK and did contracting through a limited company for a few years. But now, I've switched to a perm role and I'm enjoying it a lot more. There's a lot less admin and tax stuff I need to deal with - I can focus fully on being a developer - plus I'm working on more fulfilling projects over longer periods, and making longer-term plans. Technically I guess I could be earning more cash, but that came at the cost of time and stress that I just don't worry about any more. I'd much rather be happy.
- simmerup 3y ago
  The problem is that house prices in this country are so damn high, I personally have to think more about maximising money income than about doing a job I’d enjoy
  - FirmwareBurner 3y ago
    >The problem is that house prices in this country are so damn high, Tell me a developed western country where that's not the same.
    - vidarh 3y ago
      I can literally buy a castle in France for what my 3 bedroom house in London costs. Not a huge one, sure, but an actual, real castle. OK, so France has ridiculous numbers of them, but anyway. Sure, it's expensive everywhere, and there are plenty of places in France too where the prices are UK level (I'd like to retire to the South of France, and e.g. Nice is near or even above London levels for some areas, and buying a house there also costs castle money if you want something central) and same for elsewhere in Europe, but UK house price growth has been something else.
      - FirmwareBurner 3y ago
        Sorry but that's relatively useless cherry picking. Wages and work opportunities in remote parts of France (and other such parts of southern Europe) are also much lower than in the expensive parts London, at least in tech, not counting minimum wage jobs. There's a reason London is popular for skilled immigration and why that makes it so expensive, and it's not all speculation and wealthy petro/oligarch money. Same reason why Google, Meta, DeepMind, NovoNordisk, etc have offices there instead of in a nice castle in France. Try looking at housing prices in Nice or Cannes and you'll see London prices with Southern-Europe wages. Same in nice parts of Austria near the Alps. At least in UK you can earn well in tech to actually buy a house close to the capital. UK can also be cheap if you go up north around Scotland or above, but there's probably a reason why you chose to live in London and not in the north of Scotland and that's probably pay and opportunities, hence your higher house prices.
harel 3y ago
I've been contracting for many years now. It's a good writeup, but as the top comment mentions - these are the basics. There is a lot of nuance. I'm exclusively Outside-IR35, and since this was rolled out to the private sector it dried up a lot of work as companies were spooked for no reason about this. There is still work out there but the market is not as good as it was a year ago. The rates mentioned in this article are 'bad market rates'. Good market rates are higher. I've seen some mention Inside-IR35 - there is a catch there. If you've done outside work, and then go inside, your tax gets bundled up and you can potentially end up paying top rate from the get-go, or finding your self with a higher tax burden than you expected. Talk to your accountant about that if you're planning to take on Inside gigs or a mix of both. I'd avoid umbrellas at all costs.
- ukoki 3y ago
  Mixing inside and outside contracts can be quite tax efficient but requires being diligent. For example, an inside IR35 contract that partially spans two tax years can be used to take the "reasonably cheap" first 50k of salary of each year, with any extra put in a SIPP. Then, outside contracts in the same tax years are used just to accumulate money in a limited company with a view to withdraw funds via BADR at some point, and potentially used to top up the SIPP as well.
  - harel 3y ago
    Interesting approach. My personal case is more complicated but this is still interesting. As an aside, my accountant raises a point that mixing might raise some flags with HMRC regarding status.
    - ukoki 3y ago
      Working with a different statuses for the same client should definitely be avoided as HMRC will be sceptical that the working practices are actually different between contracts. Working differnent statuses for different clients shouldn't be an issue IMHO
petesergeant 3y ago
> London software engineering day rates are around £400-500 Yikes, really? In that case they’re unchanged in the last 12-15 years.
- Silhouette 3y ago
  That looks low to me but at least the openly advertised rates do seem to have taken a hit since COVID and the recent IR35 mess. Both caused a rapid and industry-wide shock that seems to have overcome the upward pressure on rates (at least for the good people) that would exist in a normal competitive market.
- ashconnor 3y ago
  Moving abroad remains the best "increase your salary" hack.
  - badpun 3y ago
    Where "abroad" is pretty much US or Switzerland?
    - ashconnor 3y ago
      Singapore, UAE. Even Canada pays better than the UK.
      - petesergeant 3y ago
        UAE has the advantage of being tax-free too, which adds ann extra 30%ish to take-home, although many people work very long hours. Also the weather is phenomenal 8 months of the year (although unliveable the rest), and your employer is on the hook to pay for exceptional health insurance. For a professional couple without kids, it can be a great way to save money, although costs are comparable to London. I was doing well living there and doing contract work out of US EST.
karaterobot 3y ago
I was a software contractor in Seattle for 13+ years, pretty much all of this holds true for that area as well, and I assume most of the U.S. at least. > If you turn up and are rubbish, your contract will be terminated really quick. And if there are layoffs, contractors would (sometimes) already be well gone already. This is one piece of advice I haven't found to be the case. I have told the following lies as a contractor: "Sure, I know PHP", "Sure, I know Ruby", "Sure, I know Python". The reality is that most of the time you're working on the shit that no employees at the company want to do, so no one is paying the least attention to you. Yes, you have to deliver functioning code on time, but you can get away with tap-dancing for a while until you learn the stack you're working on. In 13 years, I was never fired, and usually got my next clients via positive referrals. The above explains why this statement IS true: > You are always seeing new companies, new tech, new tech stacks, and the job never gets boring That was the best thing about contracting: variety. Also the worst thing. I got about 3-6 months of experience on dozens of different technologies, but never mastered anything except the skill of learning skills quickly. But in my experience, if you only worked on things for which you were already hot shit, you wouldn't get that level of variety, and you probably wouldn't get enough contracts to sustain a business. People do specialize, but the tendency in contracting is always to be a generalist because you have more options. The two biggest skills in contracting are communication and faking confidence. They are paying you to deliver something, but really they're paying you to happily accept some of the stress they feel. If you practice saying "That shouldn't be hard, let me handle it" you are well on your way to being a success.
- vidarh 3y ago
  25 years ago or so, I got a contract doing Word Basic to update a bunch of code to maintain an ISO 9001 handbook using MS Help files. I had.no experience with any of those things. But as you say, you get the tasks nobody internally want, so I learned all of them, and still finished the work faster than the client expected and was hired back for another project later. I also had a brief contract to teach Excel where I stayed a chapter ahead of my students in class, and similarly got great feedback... So much contract work has a really low bar. But then on the other side of the difficulty, I also delivered a library to provide a reliable data transfer layer on top of GSM data for use between two ships in motion (just adding some retries and automated redial etc. the only hard-ish part was minimizing the time to catch up after a redial where you might be suddenly lagging 40+ seconds behind), one of which was tracking an unmanned submersible. That certainly involved taking in their stress - they were demoing the system for US Navy brass, and my part was what'd relay the demo data from the tracking ship to the workstation they'd show it on, and it was clear a large part of the pay was so there was someone to shift blame to if needed (thankfully everything went smoothly). But that variety was fun. I much preferred the short contracts like that - didn't appreciate the stress of finding new ones which came with the short projects though.
nerdawson 3y ago
There’s far more work inside IR35 than outside. If you’re going to work inside, just use an umbrella. The margin they take is minimal and they make life so much easier. If you’re going to run a limited company, you have to actually run a limited company. There are horror stories on the contractor forums where HMRC have taken a dim view of contractors whose companies are essentially run by their accountants. I can’t remember what the term associated with it is but definitely an area to be careful with.
- ukoki 3y ago
  The horror stories are from contractors who have attempted to cheat the tax system by eg making loans from their limited companies that they never intended to pay back, or who claim company expenses for personal benefit. You can stay well within the tax code and avoid any grey areas, and will still get more income by operating as a limited company. Yes running a limited company requires some admin work, learning about the tax system but a few of hours admin a month is well worth the extra £20k net income (or whatever the figure happens to be)
  - nerdawson 3y ago
    > The horror stories are from contractors who have attempted to cheat the tax system Some are, certainly. Many are not. The example I gave is people who setup a limited company in order to take on work as a contractor. They've gone to an accountancy firm who've told them we'll do all the work for you. HMRC have then turned around and said that the company is a sham. Again, I can't remember the name of that particular problem but it's well known on a popular UK contracting forum. The deeper you dig into IR35, the murkier it becomes. Contracts are dismissed for instance and it's actual working practices that are reviewed. There are absurd rules around control which are far too vague and subject to opinion that it could easily be argued either way.
aaronrobinson 3y ago
Well done for getting this out there. I contracted in the UK for over 30 years and will share my experiences as they’re different to yours in a few places. I’m also well versed in IR35. 1. Job security - you’re absolutely right. In my time I had 3 contracts that lasted longer than 6 years and I left 2 of them 2. Rates - you can earn north of £1000 a day with the right skills but there’s a big difference between inside and outside. Inside needs to be much higher to compensate for the additional tax. 3. Most contractors do 6 week to 6 month contracts - see above. And if you pitch your CV to me with a string of 6 month contracts I’ll assume you weren’t extended and look for reasons 4. All the stuff about choosing your hours, holidays, not being on call is not true. As a contractor your job is to fit in with the team and help them to deliver. If you’re swanning in at 10 when perms have to be in at 9 or going off in a long weekend when there’s a deadline looming you’ll be toast pretty quickly. 5. Mortgages - you usually just need 3 years accounts but some offer less but higher rates 6. Tax arrangements - don’t get sucked into schemes that offer you low single digit tax - HMRC will make your life hell. Stay above board and hire an accountant. 7. Insurance - I never had - complete waste of money. I know in some cases you may be forced to.
- shantnutiwari 3y ago
  > Rates - you can earn north of £1000 a day with the right skills bu yeah if you work for a bank and have some rare skill, plus knowledge of finance + expereince in the field. The rest of us get 4-500£ / day, like the OP mentions
- creativenolo 3y ago
  On 7, with personal insurance (say for phones, devices, car hire, etc) and my experiences of insurance companies trying anything to avoid pay out I have always been skeptical if business insurance would ever actually pay out.
dom96 3y ago
> No benefits. No insurance, no gym, etc. But you earn a lot more so its not a huge deal, except for the pension contribution. This really doesn't hold for many cases, and especially for the rates mentioned in this article. Are there any somewhat reliable sites that show median and other percentile contract rates? Something like levels.fyi but for contracting rates?
junto 3y ago
Spent many years contracting within the UK market but living abroad. After emigrating from the UK, I moved around in the EU (GMT+1/+2). It was the best of both worlds since IR35 cannot apply to non UK domiciled tax residents. Rates around £450-500 per day for that I was doing. Finally settled in an EU country and then moved to a permanent role after twenty plus years of being a remote contracting bum. If you have questions then ask away.
- vinibrito 3y ago
  Well, doing what, for whom and through which years approximately. Also anything in your marketing apart of the basics, which is portfolio, referrals etc?
  - junto 3y ago
    Mostly .NET for corporates sticking to banking, finance, insurance and energy. Familiar industries always helped me to hit the ground running and I got a great reputation for it. Started off working via recruiters but then just word of mouth. Ex colleagues would recommend me and they would move around. I’ve always been a good networker. I recently switched back to a “proper job” in a company who’s goals align with mine. Now climbing the “corporate ladder” so to speak.
- OnlyMortal 3y ago
  Belgium was always lucrative. The Netherlands less so. It’s where I spent most of my contracting life.
everfrustrated 3y ago
A useful resourse is ITJobsWatch which has historical trends and bands for contractor rates (as well as perm) Eg https://www.itjobswatch.co.uk/contracts/london/software%20engineering.do https://www.itjobswatch.co.uk/contracts/london/software%20en...
Charlie_32 3y ago
I would recommend Crunch's webapp accountancy software (which I used a lot) but also hire someone to handle it for you (which I did not and wish I did).

137 points by codedeep 3y ago

codedeep 3y ago

My experience and tips for being a software developer contractor, in the UK

Dayshine 3y ago
You mention you get to learn new skills and technologies; but if they only want to hire people who can immediately do what they need, how does that happen? Does it involve a bit of stretching your experience?
- OnlyMortal 3y ago
  Freelancer here. Yes, you have to sell yourself. If you’re smart, you’ll pick it up on the job or read a little about it before the interview.
- petepete 3y ago
  I'm a UK contractor and I'd say I've learnt lots of new skills and tech in my periphery while on Ruby on Rails and database contracts. In the last few years I've been exposed to enough Kubernetes, Terraform, Docker, Azure, Google Cloud, Dataform and BigQuery to feel comfortable putting them on CV. Microsoft Dynamics and SharePoint too but I don't think I could face any more.
- vidarh 3y ago
  Clients often just ask if you can do X in Y time and Y is often more than large enough to learn X because often the estimates are set by full timers who really want to make sure they are not burdened by it. I have said yes to being able to deliver projects in languages I'd never even seen before, because the timeline was long enough that I was (rightfully) confident I could figure it out within the estimated time. Often they just want to outsource uncertainty. Of course you then do need to take on the risk and make sure you deliver, or you won't get hired back and if it's a referral it can get ugly, but in the years I did contracting that was never an issue. Knowing your limits is important, of course.

mp05 3y ago

> When hiring contractors it is a little like hiring a plumber. This comparison is more true than a lot of devs want to admit.

deleted 3y ago
[deleted]
sirsinsalot 3y ago
It is true at some level. If that's how you want to present yourself. You can be a plumber or a safe cracker. A person who does, or a person that knows. The latter pays better day rates.
UK-Al05 3y ago
Self employed Plumbers can earn about the same as developers in the UK.
- toyg 3y ago
  And likely don't need to master a new type of plumbing every other year.
  - mp05 3y ago
    Yeah the useSolder method is pretty straightforward and hasn't changed in quite some time.
  - bdjsiqoocwk 3y ago
    Sounds great for people who don't want to keep learning!
    - toyg 3y ago
      Continuous learning is fun, but the related ability naturally decays in humans.

T-zex 3y ago

> Contractors can get a new role almost immediately... Perhaps inside IR35 and perhaps for a low rate. Big corps mostly do umbrellas these days.

sirsinsalot 3y ago
Don't touch umbrella setups. Don't go inside IR35. Businesses either hire contractors for a liquid and expendable workforce... Or they hire high skill people who take on more liability and charge for it accordingly. Be in the second group. They don't use umbrella setups.
- jacobp100 3y ago
  I found inside IR35 can be much more lucrative. It's big companies that have more money, can't hire enough perms, and just need stuff done
  - sirsinsalot 3y ago
    You have to ask why they feel the need to spend on contractors. Also if you're inside IR35 then you're an employee for all intents and purposes but without the perks of a perm position. Be a business, not an employee. If you look like an employee, regardless of the legal layout, you'll be remunerated like one. Be a business. They make more money.
    - danw1979 3y ago
      > If you look like an employee, regardless of the legal layout, you'll be remunerated like one. This just isn’t true. I’m currently with a FTSE100 financial institution and inside IR35 contractors make way more than perms at the same level of experience. They just don’t want headcount on their books, and still have work that needs doing, and they will pay to get it done. The problem is job security at the moment. If you don’t look like an employee, you’ll not get treated like one… > Be a business. They make more money. Completely agree, but most business owners make money by exploiting someone else’s labour.

sirsinsalot 3y ago

This is good entry level stuff. As a contractor in the UK exclusively for the past 20 years tho, it doesn't paint a very full picture. The most inaccurate bit is day rates. They're underestimated by quite some way in my experience. What I would say is contracting in the UK is a game with different layers. This is the basic "coder for hire" layer. There's levels above that, with contracts spanning 10 years+ and higher day rates, but it is much more like dark magic.

sirsinsalot 3y ago
Also your number one skill is communication. If you're not liked, your services are less valuable. Number two skill is negotiating. The technical stuff starts much further down the list.
- codedokode 3y ago
  Does it mean that UK companies are in need for likeable people who are good at negotiating rather than have good technical skills?
  - questinthrow 3y ago
    Without a doubt, most people I know in this business optimize for networking and communication. The actual coding is done by eastern europeans and indians. Technical knowledge is more commodifiable than relations.
hankchinaski 3y ago
Rates have dropped significantly over the past year or two

aussieguy1234 3y ago

Remember, with GPT-4 around its alot easier to work with a language or technology you only have minimal exposure to. It's like having a Principal Engineer around 24/7 that you can ask questions to unblock you. So dive right in. You can also use it to practice the interview before the actual interview.

sirsinsalot 3y ago
If your principal is like GPT-4, I'd consider this a red flag. Your comment is an advanced version of "fake it till you make it". That's another red flag when I'm hiring disgustingly highly paid consultants.
- aussieguy1234 3y ago
  If the person writing the questions is a Senior Engineer already and knows how to evaluate the answers properly for correctness, you probably would not be able to tell, even if they've only had minimal exposure to let's say, Ruby or Python as opposed to JavaScript/TypeScript. Or writing advanced SQL queries when they don't do this very often.
  - sirsinsalot 3y ago
    You're assuming the red flag relates to technical correctness. It doesn't. It's a red flag about mindset and diligence. Using genAI is fine, using it to bolster a lack of underlying knowledge as I read it, is a red flag.
    - aussieguy1234 3y ago
      Most engineers will come across something they haven't used before in most roles. Perhaps some legacy system in some dying language, for example. Previously, they might have spent hours on Google. Now, GPT-4 can unblock them in seconds. It cant replace the mindset of a human, but what I'm basically saying here is with GPT-4 and good prompting skills, you can be alot more brave when it comes to new unfamiliar tech. That's an advantage in a fast changing tech landscape.

jacobp100 3y ago

I found the yearly take home for outside IR35 contracts is around 220 * day rate, inside is 200. I did find recently that the contract rates have gone down a lot, and the full time salaries increased - so I'm back perm after about 8 years, and am better off having done so. I found jobserve.co.uk good for contract roles though

sirsinsalot 3y ago
Edit: I can't read. If only my client knew! £220/day?! I've not paid a developer less than 600/day since like 2015 and that is outside London too. Some people are being taken for mugs.
- jacobp100 3y ago
  No - take your day rate, multiply by 220. That's what you'd expect to make a year
  - sirsinsalot 3y ago
    Ah yes that sounds about right.
    - aiqq 3y ago
      [dead]
ukoki 3y ago
The benefit really depends on the rate. When you get near the 1000/day range outside becomes far more lucrative than inside due to the flexibility it gives you for tax planning, as you can defer personal income to a future date where it can be taken in a more tax-favourable way (eg via SIPP or BADR).

lbreakjai 3y ago

It's depressing to see that the average day rate in London is still at around 500 pounds. I made as much in my first contract 7 years ago. Sky was offering 650 pounds a day for your average frontend react role. I thought the times were good, but even then the old timers were talking about the good old days with some nostalgia.

sirsinsalot 3y ago
650 a day is still common. It just isn't as visible because the government injected fear in to the market.
- lbreakjai 3y ago
  I'm out of the game (Even out of the UK) but I work for a British company, with about 30 contractors on board. We're starting to wind the project down, and I think there's a genuine sense of fear that the market has considerably dried up.
  - danw1979 3y ago
    It has. Unless you are willing to take a reduced rate, there’s not a lot out there. I’m just about to go perm again after 6 years contracting because I’ll be better off !
nly 3y ago
Well, real median full-time wages in the UK are lower than 15 years ago. Why would contracting rates be any different? UK labour market is dire. UK GDP growth is stagnant and border line non-existant

ksahin 3y ago

With a limited company generating £100k/year in revenue, I’m curious how much a contractor would earn after salary tax? (assuming no admin/accounting costs)

PaulRobinson 3y ago
Put it through a limited company and you’ll pay a lot less than as salary (and PAYE). It’s a weird quirk, but it’s about half the tax roughly. Means you’ll net about £80k minus some small costs. It’s been some years since I did this but an accountant can advise you and help you deal with any national insurance payments need to be dealt with.
- sirsinsalot 3y ago
  Also the typical setup is to PAYE a small wage and take the rest as dividends and other tax saving mechanisms.
- vidarh 3y ago
  The current dividend rates + IR35 means the gap is much smaller than it used to be.
  - Silhouette 3y ago
    There are a variety of situations where you can end up paying more tax working through a Ltd now. Just on naive marginal rates comparing income tax + employee NI with corp tax + dividend tax on the remainder you'll be looking (once the changes announced in the Budget come into force in April) at 28% PAYE vs. 26% Ltd for basic rate taxpayers but 42% PAYE vs. 46% Ltd for higher rate. The Ltd rates can also increase noticeably if your revenues increase and your corp tax rate starts sliding up from 19% all the way to 25% (and that's not a marginal rate - your entire profit gets taxed at the increasing rate as you make more). Of course as an employee you also get huge advantages like paid time off, employer pension contributions, a degree of automatic job security, and not having to file the paperwork and pay the fees for running an entire company. And via a Ltd you have a lot more flexibility to control both how and when you pay out your post-tax revenues that can sometimes be valuable. So it's never really an apples to apples comparison and there's always a lot that depends on your specific circumstances.

deleted 3y ago

[deleted]

madeofpalk 3y ago

I did this a bunch in another country for a few years, then moved to the UK and did contracting through a limited company for a few years. But now, I've switched to a perm role and I'm enjoying it a lot more. There's a lot less admin and tax stuff I need to deal with - I can focus fully on being a developer - plus I'm working on more fulfilling projects over longer periods, and making longer-term plans. Technically I guess I could be earning more cash, but that came at the cost of time and stress that I just don't worry about any more. I'd much rather be happy.

simmerup 3y ago
The problem is that house prices in this country are so damn high, I personally have to think more about maximising money income than about doing a job I’d enjoy
- FirmwareBurner 3y ago
  >The problem is that house prices in this country are so damn high, Tell me a developed western country where that's not the same.
  - vidarh 3y ago
    I can literally buy a castle in France for what my 3 bedroom house in London costs. Not a huge one, sure, but an actual, real castle. OK, so France has ridiculous numbers of them, but anyway. Sure, it's expensive everywhere, and there are plenty of places in France too where the prices are UK level (I'd like to retire to the South of France, and e.g. Nice is near or even above London levels for some areas, and buying a house there also costs castle money if you want something central) and same for elsewhere in Europe, but UK house price growth has been something else.
    - FirmwareBurner 3y ago
      Sorry but that's relatively useless cherry picking. Wages and work opportunities in remote parts of France (and other such parts of southern Europe) are also much lower than in the expensive parts London, at least in tech, not counting minimum wage jobs. There's a reason London is popular for skilled immigration and why that makes it so expensive, and it's not all speculation and wealthy petro/oligarch money. Same reason why Google, Meta, DeepMind, NovoNordisk, etc have offices there instead of in a nice castle in France. Try looking at housing prices in Nice or Cannes and you'll see London prices with Southern-Europe wages. Same in nice parts of Austria near the Alps. At least in UK you can earn well in tech to actually buy a house close to the capital. UK can also be cheap if you go up north around Scotland or above, but there's probably a reason why you chose to live in London and not in the north of Scotland and that's probably pay and opportunities, hence your higher house prices.

harel 3y ago

I've been contracting for many years now. It's a good writeup, but as the top comment mentions - these are the basics. There is a lot of nuance. I'm exclusively Outside-IR35, and since this was rolled out to the private sector it dried up a lot of work as companies were spooked for no reason about this. There is still work out there but the market is not as good as it was a year ago. The rates mentioned in this article are 'bad market rates'. Good market rates are higher. I've seen some mention Inside-IR35 - there is a catch there. If you've done outside work, and then go inside, your tax gets bundled up and you can potentially end up paying top rate from the get-go, or finding your self with a higher tax burden than you expected. Talk to your accountant about that if you're planning to take on Inside gigs or a mix of both. I'd avoid umbrellas at all costs.

ukoki 3y ago
Mixing inside and outside contracts can be quite tax efficient but requires being diligent. For example, an inside IR35 contract that partially spans two tax years can be used to take the "reasonably cheap" first 50k of salary of each year, with any extra put in a SIPP. Then, outside contracts in the same tax years are used just to accumulate money in a limited company with a view to withdraw funds via BADR at some point, and potentially used to top up the SIPP as well.
- harel 3y ago
  Interesting approach. My personal case is more complicated but this is still interesting. As an aside, my accountant raises a point that mixing might raise some flags with HMRC regarding status.
  - ukoki 3y ago
    Working with a different statuses for the same client should definitely be avoided as HMRC will be sceptical that the working practices are actually different between contracts. Working differnent statuses for different clients shouldn't be an issue IMHO

petesergeant 3y ago

> London software engineering day rates are around £400-500 Yikes, really? In that case they’re unchanged in the last 12-15 years.

Silhouette 3y ago
That looks low to me but at least the openly advertised rates do seem to have taken a hit since COVID and the recent IR35 mess. Both caused a rapid and industry-wide shock that seems to have overcome the upward pressure on rates (at least for the good people) that would exist in a normal competitive market.
ashconnor 3y ago
Moving abroad remains the best "increase your salary" hack.
- badpun 3y ago
  Where "abroad" is pretty much US or Switzerland?
  - ashconnor 3y ago
    Singapore, UAE. Even Canada pays better than the UK.
    - petesergeant 3y ago
      UAE has the advantage of being tax-free too, which adds ann extra 30%ish to take-home, although many people work very long hours. Also the weather is phenomenal 8 months of the year (although unliveable the rest), and your employer is on the hook to pay for exceptional health insurance. For a professional couple without kids, it can be a great way to save money, although costs are comparable to London. I was doing well living there and doing contract work out of US EST.

karaterobot 3y ago

I was a software contractor in Seattle for 13+ years, pretty much all of this holds true for that area as well, and I assume most of the U.S. at least. > If you turn up and are rubbish, your contract will be terminated really quick. And if there are layoffs, contractors would (sometimes) already be well gone already. This is one piece of advice I haven't found to be the case. I have told the following lies as a contractor: "Sure, I know PHP", "Sure, I know Ruby", "Sure, I know Python". The reality is that most of the time you're working on the shit that no employees at the company want to do, so no one is paying the least attention to you. Yes, you have to deliver functioning code on time, but you can get away with tap-dancing for a while until you learn the stack you're working on. In 13 years, I was never fired, and usually got my next clients via positive referrals. The above explains why this statement IS true: > You are always seeing new companies, new tech, new tech stacks, and the job never gets boring That was the best thing about contracting: variety. Also the worst thing. I got about 3-6 months of experience on dozens of different technologies, but never mastered anything except the skill of learning skills quickly. But in my experience, if you only worked on things for which you were already hot shit, you wouldn't get that level of variety, and you probably wouldn't get enough contracts to sustain a business. People do specialize, but the tendency in contracting is always to be a generalist because you have more options. The two biggest skills in contracting are communication and faking confidence. They are paying you to deliver something, but really they're paying you to happily accept some of the stress they feel. If you practice saying "That shouldn't be hard, let me handle it" you are well on your way to being a success.

vidarh 3y ago
25 years ago or so, I got a contract doing Word Basic to update a bunch of code to maintain an ISO 9001 handbook using MS Help files. I had.no experience with any of those things. But as you say, you get the tasks nobody internally want, so I learned all of them, and still finished the work faster than the client expected and was hired back for another project later. I also had a brief contract to teach Excel where I stayed a chapter ahead of my students in class, and similarly got great feedback... So much contract work has a really low bar. But then on the other side of the difficulty, I also delivered a library to provide a reliable data transfer layer on top of GSM data for use between two ships in motion (just adding some retries and automated redial etc. the only hard-ish part was minimizing the time to catch up after a redial where you might be suddenly lagging 40+ seconds behind), one of which was tracking an unmanned submersible. That certainly involved taking in their stress - they were demoing the system for US Navy brass, and my part was what'd relay the demo data from the tracking ship to the workstation they'd show it on, and it was clear a large part of the pay was so there was someone to shift blame to if needed (thankfully everything went smoothly). But that variety was fun. I much preferred the short contracts like that - didn't appreciate the stress of finding new ones which came with the short projects though.

nerdawson 3y ago

There’s far more work inside IR35 than outside. If you’re going to work inside, just use an umbrella. The margin they take is minimal and they make life so much easier. If you’re going to run a limited company, you have to actually run a limited company. There are horror stories on the contractor forums where HMRC have taken a dim view of contractors whose companies are essentially run by their accountants. I can’t remember what the term associated with it is but definitely an area to be careful with.

ukoki 3y ago
The horror stories are from contractors who have attempted to cheat the tax system by eg making loans from their limited companies that they never intended to pay back, or who claim company expenses for personal benefit. You can stay well within the tax code and avoid any grey areas, and will still get more income by operating as a limited company. Yes running a limited company requires some admin work, learning about the tax system but a few of hours admin a month is well worth the extra £20k net income (or whatever the figure happens to be)
- nerdawson 3y ago
  > The horror stories are from contractors who have attempted to cheat the tax system Some are, certainly. Many are not. The example I gave is people who setup a limited company in order to take on work as a contractor. They've gone to an accountancy firm who've told them we'll do all the work for you. HMRC have then turned around and said that the company is a sham. Again, I can't remember the name of that particular problem but it's well known on a popular UK contracting forum. The deeper you dig into IR35, the murkier it becomes. Contracts are dismissed for instance and it's actual working practices that are reviewed. There are absurd rules around control which are far too vague and subject to opinion that it could easily be argued either way.

aaronrobinson 3y ago

Well done for getting this out there. I contracted in the UK for over 30 years and will share my experiences as they’re different to yours in a few places. I’m also well versed in IR35. 1. Job security - you’re absolutely right. In my time I had 3 contracts that lasted longer than 6 years and I left 2 of them 2. Rates - you can earn north of £1000 a day with the right skills but there’s a big difference between inside and outside. Inside needs to be much higher to compensate for the additional tax. 3. Most contractors do 6 week to 6 month contracts - see above. And if you pitch your CV to me with a string of 6 month contracts I’ll assume you weren’t extended and look for reasons 4. All the stuff about choosing your hours, holidays, not being on call is not true. As a contractor your job is to fit in with the team and help them to deliver. If you’re swanning in at 10 when perms have to be in at 9 or going off in a long weekend when there’s a deadline looming you’ll be toast pretty quickly. 5. Mortgages - you usually just need 3 years accounts but some offer less but higher rates 6. Tax arrangements - don’t get sucked into schemes that offer you low single digit tax - HMRC will make your life hell. Stay above board and hire an accountant. 7. Insurance - I never had - complete waste of money. I know in some cases you may be forced to.

shantnutiwari 3y ago
> Rates - you can earn north of £1000 a day with the right skills bu yeah if you work for a bank and have some rare skill, plus knowledge of finance + expereince in the field. The rest of us get 4-500£ / day, like the OP mentions
creativenolo 3y ago
On 7, with personal insurance (say for phones, devices, car hire, etc) and my experiences of insurance companies trying anything to avoid pay out I have always been skeptical if business insurance would ever actually pay out.

dom96 3y ago

> No benefits. No insurance, no gym, etc. But you earn a lot more so its not a huge deal, except for the pension contribution. This really doesn't hold for many cases, and especially for the rates mentioned in this article. Are there any somewhat reliable sites that show median and other percentile contract rates? Something like levels.fyi but for contracting rates?

junto 3y ago

Spent many years contracting within the UK market but living abroad. After emigrating from the UK, I moved around in the EU (GMT+1/+2). It was the best of both worlds since IR35 cannot apply to non UK domiciled tax residents. Rates around £450-500 per day for that I was doing. Finally settled in an EU country and then moved to a permanent role after twenty plus years of being a remote contracting bum. If you have questions then ask away.

vinibrito 3y ago
Well, doing what, for whom and through which years approximately. Also anything in your marketing apart of the basics, which is portfolio, referrals etc?
- junto 3y ago
  Mostly .NET for corporates sticking to banking, finance, insurance and energy. Familiar industries always helped me to hit the ground running and I got a great reputation for it. Started off working via recruiters but then just word of mouth. Ex colleagues would recommend me and they would move around. I’ve always been a good networker. I recently switched back to a “proper job” in a company who’s goals align with mine. Now climbing the “corporate ladder” so to speak.
OnlyMortal 3y ago
Belgium was always lucrative. The Netherlands less so. It’s where I spent most of my contracting life.

everfrustrated 3y ago

A useful resourse is ITJobsWatch which has historical trends and bands for contractor rates (as well as perm) Eg https://www.itjobswatch.co.uk/contracts/london/software%20engineering.do https://www.itjobswatch.co.uk/contracts/london/software%20en...

Charlie_32 3y ago

I would recommend Crunch's webapp accountancy software (which I used a lot) but also hire someone to handle it for you (which I did not and wish I did).