The OP is in the UK so thankfully health insurance is not an issue as it is state-provided out of your taxes (although some companies do provide subsidised private healthcare, which some people might value highly).
You're very right about the other things though - pension contributions, paid sick leave etc. which freelancing doesn't cover, so it's important to compare them carefully.
Healthcare is public, yes (although a private insurance is a popular benefit) but the tax that pays for it (up to 13% I think) is deducted separately. Ie. for your employer to give you a salary of £10000, he has to pay £11300. If you're self employed, you have to pay this, so it can bite you when comparing salary and contracting rates.
Thats not correct. PAYE (Pay As You Earn) tax for employed people and the equivalent Income Tax for self-employed, along with similar rates of National Insurance for both, go into the general tax pot which pays for healthcare and other government programs. Employers advertise pay rates from which the tax is deducted, so in that way they are the same as contracting rates (the tax is deducted from both). Employers also pay a small National Insurance contribution on top, which doesn't come out of your wages.
Yes, it goes in the general tax pot, but it's still called national insurance. Although you don't have to worry about coverage, you very much still have to pay.
> Employers advertise pay rates from which the tax is deducted, so in that way they are the same as contracting rates (the tax is deducted from both).
Yes, this is correct for income tax and the employees portion.
> Employers also pay a small National Insurance contribution on top, which doesn't come out of your wages.
The problem is that it's not a small contribution on top, it's 12.8% above a low threshold. For a £35k salary, it's just under £3,800 - see http://www.listentotaxman.com/. And as a contractor, you have to pay that for yourself.
National Insurance contributions are slightly more complicated than that, but the upshot is you generally won't be paying more personally as a freelancer than as an employer.
When you're employed, both you and your employer pay NI rates. If you're self-employed, you pay £2.65 a week plus 9% on profits over about £8k, which should work out fairly similarly to the rates you pay (out of your gross salary) when employed.
Not all companies in the UK will provide paid sick leave and many will impose a strict maximum number of sick days per year which crossing means automatic disciplinary.
Comments
The OP is in the UK so thankfully health insurance is not an issue as it is state-provided out of your taxes (although some companies do provide subsidised private healthcare, which some people might value highly).
You're very right about the other things though - pension contributions, paid sick leave etc. which freelancing doesn't cover, so it's important to compare them carefully.
Healthcare is public, yes (although a private insurance is a popular benefit) but the tax that pays for it (up to 13% I think) is deducted separately. Ie. for your employer to give you a salary of £10000, he has to pay £11300. If you're self employed, you have to pay this, so it can bite you when comparing salary and contracting rates.
Thats not correct. PAYE (Pay As You Earn) tax for employed people and the equivalent Income Tax for self-employed, along with similar rates of National Insurance for both, go into the general tax pot which pays for healthcare and other government programs. Employers advertise pay rates from which the tax is deducted, so in that way they are the same as contracting rates (the tax is deducted from both). Employers also pay a small National Insurance contribution on top, which doesn't come out of your wages.
Yes, it goes in the general tax pot, but it's still called national insurance. Although you don't have to worry about coverage, you very much still have to pay.
> Employers advertise pay rates from which the tax is deducted, so in that way they are the same as contracting rates (the tax is deducted from both).
Yes, this is correct for income tax and the employees portion.
> Employers also pay a small National Insurance contribution on top, which doesn't come out of your wages.
The problem is that it's not a small contribution on top, it's 12.8% above a low threshold. For a £35k salary, it's just under £3,800 - see http://www.listentotaxman.com/. And as a contractor, you have to pay that for yourself.
National Insurance contributions are slightly more complicated than that, but the upshot is you generally won't be paying more personally as a freelancer than as an employer.
When you're employed, both you and your employer pay NI rates. If you're self-employed, you pay £2.65 a week plus 9% on profits over about £8k, which should work out fairly similarly to the rates you pay (out of your gross salary) when employed.
More details on gov.uk.
That's not the point. The point is that you have to charge more than your salary number to break even as a contractor.
Not all companies in the UK will provide paid sick leave and many will impose a strict maximum number of sick days per year which crossing means automatic disciplinary.