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How Much Can I Earn as an IT Contractor?

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How Much Can I Earn as an IT Contractor? - Freestyle Accounting

You’ve probably been attracted to IT Contracting as you have heard that you can earn more than you can as a permanent employee, but how much more are we actually talking about?

Pay Rates

The table below shows the average daily rates for the top 10 most popular IT Contract jobs in the UK, for the 3 months leading up to November 2014.

Contract Job RolesAverage Daily Rates
Developer£400
Finance£425
Analyst£370
Agile Software Development£425
SQL£375
Windows£325
Microsoft£351
Java£450
HTML£375
Oracle£425

* Source – www.itjobswatch.co.uk

As you can see these daily rates are pretty attractive with an average daily rate of £392!

Compare these figures with the table below that shows the equivalent daily rates for permanent employees in the same positions based on current salaries.

Permanent Job RolesAverage Daily Rates
Developer£163
Finance£201
Analyst£153
Agile Software Development£182
SQL£163
Windows£146
Microsoft£153
Java£192
HTML£153
Oracle£192

* Source – www.itjobswatch.co.uk

These rates are significantly lower for permanent employees with an average daily rate of £169, under half that of the Contract jobs!

Take Home Pay

A further thing to take into consideration, when looking at how much you can earn as an IT Contractor, is how much of your pay you can expect to keep after tax. For a permanent employee, dependent upon your earnings, you will generally be taxed either 20% or 40% of your income.

As a Contractor you are responsible for paying your own tax, compared with a standard Pay As You Earn (PAYE) employee who is always taxed at source. There are a number of trading options available to Contractors, but the most tax efficient option involves you trading through your own limited company. This enables you to keep up to 90% of your Contracting income.

So, not only do IT Contractors earn more than permanent employees, they get to keep more of their income as well!

For further information on Contracting through a Limited Company please Click Here.

Freestyle Accounting – Limited Company Contracting Made Easy!

0800 954 2101

tax@freestyleaccounting.com