Contractor Money Problems – A Personal Account | IT Contractor

contractor money problems
contractor money problems

Contractor Money Problems

It happens so often that contractor money problems cripple a contractor financially. Contractors can get these problems when they are out of work with bills to pay. Then the taxman wants his money while the contractor is using it just to keep his, or her, head above water waiting for the market to turn.

This is an entirely genuine personal account of the current contractor money problems facing so-called mercenary contractors. It’s sobering stuff, for that reason the author will remain anonymous.

Mercenary Contractors v Mercenary Employers

I just wanted to add to the comments about mercenary contractors and employers.

I’ve been contracting for many years, after leaving permanent employment to help look after my disabled son.

I offered to start on a low rate for the market, on a one week rolling contract basis, to prove myself. Within a month or so the client (Royal & Sun Alliance) offered me a £4 per hour pay rise and extended my contract for 4 months.

Anti-Contractor Behaviour

I noticed some ‘anti-contractor’ behaviour in those days, but I worked hard and got quite a bit of extra responsibility and appreciation by the managers due to my work and commitment.

I have had regular contracts (usually only a week or so break between contracts) every 6 months or so, all with extensions.

My rate has increased steadily, and my role has evolved from 2nd line support on hardcore msdos, then windows 3.x, win9x, through to third line support, including Novell NetWare ELS, 3.xx, and NT4, and now win2000.

I tend to perform 3rd line server support these days.

I believe that there have been a major negative influence on the contractor market since 1999, i.e. IR35.

Contractors Inside IR35 – Contractor Money Problems

I have met many contractors who have been with clients for over 2 years, and some between 6 to 8 years.

In my experience many of these long term contractors realised that IR35 changes would ‘catch’ them, and accepted (reluctantly in many cases) the offer of a permanent job. That’s usually on lower salaries than previously. Many contractors caught by IR35 have taken permanent jobs.

I think employers realise that the increase in contractors looking for permanent employment means that they can drop salaries.

Uncertainty About IR35

Uncertainty about IR35 meant that many contractors began to worry about the tax implications (myself included in the later stages).

In my experience, things have never been so bad in the contract market, and I am traditionally a positive person.

I have seen my rate drop from £32 per hour to £25 per hour (and that was a miracle in the current marketplace).

Unable to Secure a Contract – Contractor Money Problems

I’ve had a number of contractor money problems.

I was unable to secure a contract for 17 weeks during the winter, and was almost bankrupt by this.

A number of my contractor friends were in exactly the same position.

I have had to close my limited company with a £5000 corporation tax bill unpaid. That’s because I had to use EVERY penny I had left just to keep my house.

Working Through Umbrella Company

Fortunately I am working again now, but through an umbrella company.

I commute over 60 miles each way to work and back.

I always used to feel more secure in contracting, as I always got good references and had never had a problem securing contracts.

Now I am very anxious, and keep looking at Jobserve regularly in the hope that the market will improve.

I have been renewed until mid May, and estimate my chances of securing another contract within a month of this one as probably as low as 30%.

Reluctant to Become Permanent Employee

I am very reluctant to become a permanent employee as I enjoy the flexibility and variety of contracting.

I have always said that I would always contract unless I actually earn LESS than in permanent employment.

Over the 17 weeks I was out of work this winter I estimate I lost a gross amount of almost £20,000. Plus I accumulated additional debts on top of my existing ones, now in the region of £ 30,000.

I believe the bubble has burst.

PS – I was offered a permanent job but the advertised salary was 28k. I had a very positive 2 hour interview, which indicated a possible higher starting salary.

Then the agency came back with 26k, 2 days of 7am to 7pm, 2 days of 7pm to7am, then 4 days off – rolling through all holidays inc. bank holidays.

Thanks but no thanks!

Have you had any contractor Money problems?

Let’s hear in the comments section below.

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