Freelancer's Question: My client has offered me a permanent position

Q - Niki, a freelancer, I have a regular client that has offered me a permanent position. This would mean becoming PAYE. I need financial advice to weigh up whether this is change of status is worthwhile and beneficial. A - Simon Dolan, SJD Accountancy , There are many implications to consider when thinking about going back to permanent work after having been a freelancer, some of them financial and others lifestyle., Let's consider first the financial implications., As a freelancer you would receive all of your income before having any tax or National Insurance deducted. This means that if you earn say £4000 a month as a freelance you would actually receive payment of that £4000. As a PAYE (permanent) employee you would have the tax and National Insurance deducted £4000, leaving you with around £2435. An immediate benefit of being a freelancer then is from a cashflow point of view., As a freelance you do of course still need to pay tax, but with the right policies, and the right structure you would pay tax of only around £640 on that £4000 example above, leaving you with £3360 as opposed to £2435 - a monthly saving of £925., That is not the whole financial picture of course. As a permanent employee you get holiday pay, and usually sick pay, along with other benefits such as maternity leave. As a freelancer you won't get any of these benefits. Let's then assume that your permanent package leaves you with 20 days holiday, 12 days public holidays and you have 5 days sick per year. , That means you get 37 days a year paid absence. As a freelancer doesn’t get these paid for absences you have to factor them into the pay package you get in order to make a fair comparison. For e.g. a freelance earning £4000 per month equals an annualised income of £48,000. You then subtract from this the 37 days you will not be working. The proportion to use is the number of days you don’t work divided by 260 (the number of working days in the year), so 37/260 = 0.1423. The annual salary of £48,000 multiplied by that figure gives you £6830, leaving you with an actual annualised salary as a freelancer of £48,000 less £6830 = £41,170, or £3431 a month. kamagra, Take away tax from this and you are left with around £2882 a month, compared with £2435 as a PAYE employee, a saving of £447 or £5364 a year. Still worthwhile, but not as great as it first appears., You then have to look at lifestyle implications. Whether or not the following are important or not is of course entirely down to the perspective of the individual. The ones to consider though are:, 1. Security. Arguably being a PAYE employee gives you more job security, although these days the job security is really only as good as then notice period in your contract. Some would argue that by being a freelancer there is more "job security" as you stand and fall by your own efforts;, 2. Socialising. Being freelance can sometimes be a lonely business, particularly when you are between assignments. The upside of course is that you get to avoid office politics!, 3. The buck stops with you. As a freelancer you've no-one to pass the buck to!