Equivalence yearly salary (perm) and daily PAYE (contract) in UK

Question

I have a permanent role in UK that pays £130,000 base salary plus a car allowance of about £6,900. I also receive a bonus (£20,000 per year). Finally my company contributes 10% to my pension plan,I have medical/dental insurance and 25 days of holidays (on top of bank holidays).

Should I decide to move to a contract role PAYE, what day rate would correspond to my current package?

The total cash I get is about £156,900 per year + £13,000 contributed to my pension. Is there a way to take into account all this plus the 25 days holiday and the other benefits to come up with an equivalent daily rate that would give me the same overall treatment assuming I can keep the contract role for 1 year?

UPDATE:

I just read that contractors with PAYE day rate have also the following benefits, more similar to what you get as permanent.

Source: https://www.24-7staffing.co.uk/blog/2018/04/paye-vs-ltd-company-contracting-which-is-really-better-for-you

Paid annual leave – this means that agency workers on PAYE can rest assured on getting the same paid annual leave as many of their permanent counterparts, meaning they don’t have to save up extra money to cover nearly six weeks of annual holidays.

Statutory Sick Pay for 28 weeks if the assignment remains open. A major stress factor for the self-employed is “what if I’m ill?” and whilst SSP isn’t as much as you’d normally earn, it is something, and again puts you on a par with most full-time employees nowadays.

Pension contribution. The Government’s pensions auto-enrolment legislation does not apply to contractors, and can provide a significant advantage.

Answer 1

If you figure that there are about 210 working days in the year, after deducting 33 holidays and an allowance for sick leave, then you can just divide the total package value by that number to get a daily rate. It would be about £850 in your case. If you want to add in the value of the medical insurance and other benefits in kind, you should find them on the P11D form that your employer gives you annually.

Answer 2

What your employers pays will be more than what you've specified, as there's also the Employers' NIC of 13.8%. I'm not sure how your bonus is paid and calculated, but at the least that would mean your base salary is paid from a "salary pool" of another £18k on top of the £130k you're describing. It depends on your point of view whether this should also be taken into account or not (but one of the company's primary benefits in moving to a contract role would be in reducing this sum they're paying to HMRC).

From a different aspect, it would be unlikely your holidays would be honoured on the same basis unless you write these into the contract. It would be a lot tougher to get these approved on the same basis as you do right now (or at least in the same amount), however, as for one there would be no need from the company to give you holiday or to "keep the days" you don't spend in one year, etc.

I'd not be as worried about the holiday allowance itself as much as the process of getting specific time off approved. This would be unregulated, and depend heavily on who you'd be in contact with in the company. I imagine that right now you need the approval of your direct supervisor, but in a contracting case, you might need to deal with a contract manager and/or an accounting & billing person in addition to the direct supervisor.

Re the holiday allowance forming a part of the payment, as it is a part of your contract while you are a permanent employee (i.e., your holidays are guaranteed paid days off) they form a part of your working year. In other words, right now your holidays are part of your compensation. If you take this compensation package and spread it out across a "contracting year", you'd be paid for days actually worked, i.e., you'd be including your "holiday allowance" as a small extra for every day actually worked and not be paid for the days not worked. Of course, this might depend, but that's the way I would treat this calculation.