If you are a employee, supposing a gross salary of 6000 gbp for 12 months, excluding taxes and NI, you could earn monthly about 4200 gbp (according with a tax calculator https://www.moneysavingexpert.com/tax-calculator/ ).

Why is not the VAT calculated in the employee salary?

If I'm a contractor and I would like earning the same money, do I need "to ask" 6000 + VAT?

For the same company, am I more expensive like a contractor or should be the same cost?

  • 1
    There is a calculator at contractorcalculator.co.uk/… designed for comparing contractor and permanent rates, and taking some other factors into account.
    – timday
    May 31, 2020 at 22:05

1 Answer 1


At £6,000 per month your employer pays £6,000 plus about 13% employer national insurance contributions, plus your holidays (31-33 days per year usually), sick days and some other days, like jury service.

At £6,000 per month your employer pays a contractor exactly £6,000. No holiday pay, no sick pay, nothing. And the contract can be cancelled any day. So a contractor for the same money would be an awful lot cheaper.

However, no contractor will do your job for £6,000. According to my rule of thumb, a contractor should charge at least £500 to £600 a day for the same job.

VAT doesn't matter, because the company deducts the VAT it pays to the contractor from the VAT it has to pay to the government. Say they have a VAT bill for £100,000 and paid £10,000 VAT to a contractor, then they only have to pay £90,000 to the government. The VAT costs the company nothing.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .