5 ms·

in the uk, everyone wants to work on daily rates. 600pd-650pd as a devops engineer. So, £75, or $86 an hour. This is 5 days a week, 40 hours a week. I bill aro

in the uk, everyone wants to work on daily rates. 600pd-650pd as a devops engineer. So, £75, or $86 an hour. This is 5 days a week, 40 hours a week. I bill around £14k a month and after taxes i walk away with about £7k a month.

sgjohnson 4y ago
> I bill around £14k a month and after taxes i walk away with about £7k a month. You should employ some sort of a tax-reduction strategy. Paying 50% of your gross in direct taxes is absolutely batshit crazy. I used to contract for £350-450 per day as a PHP backend dev and paid an effective 30% tax rate. Which is still crazy insane high, but it's not 50%. Does your 50% figure includes VAT? Because if that's not VAT inclusive, you're doing something horribly wrong. Inside IR35?
- tekkk 4y ago
  If that's net after pension and everything it's not really that surprising. In Finland for example the employee pension rate is 25% of gross. Then tax and employer insurance on top of that and you're left with about half of the total paid sum. Of course, as independent contractor you can set your own pension rate as low as you want but that's a different debate.
  - sgjohnson 4y ago
    Virtually all contractors in the UK are operating through a LLC and paying themselves in dividends, so there's no pension at all, and legally they are not even employees of their businesses (because board members can provide the business with whatever services without being employees). If you go through PAYE, you make yourself an employee, and you must pay yourself a pension. But going through PAYE is a net loss, because then you also have to pay national insurance not only on your side, but also on the employers' side. Paying NI if you can perfectly legally avoid paying it is stupid.
    - tekkk 4y ago
      The difference between taxation schemes between countries seems to be a wildly heterogenous bunch - thanks for the explanation!
    - mjfisher 4y ago
      That's not universally true. Most of the contractors I know are a mixture of PAYE and dividend (pension requirements don't apply to directors and paying nominal NI secures a state pension on retirement). It's usually the setup a good accountant will suggest.
    - Silhouette 4y ago
      Virtually all contractors in the UK are operating through a LLC and paying themselves in dividends This hasn't been entirely true for a long time and it's almost the opposite of true today. The vast majority of contract work in the UK today is now forced under umbrellas where you'd be an employee of your umbrella firm and not working through your own Ltd. There is still outside IR35 work around but close to 100% of larger (and typically better-paying) clients don't want to get near it because of the risks since the recent changes in the rules. If you go through PAYE, you make yourself an employee, and you must pay yourself a pension. But going through PAYE is a net loss, because then you also have to pay national insurance not only on your side, but also on the employers' side. Paying NI if you can perfectly legally avoid paying it is stupid. I urge anyone considering working as a freelancer or contractor in the UK to take the time to talk to a real accountant before trusting this advice. The above paragraph is all kinds of wrong.
      - sgjohnson 4y ago
        > There is still outside IR35 work around but close to 100% of larger (and typically better-paying) clients don't want to get near it because of the risks since the recent changes in the rules. I left the UK about 2 years ago, and I still get recruiters emailing me about all kinds of contract opportunities. Not a single one of those opportunities were inside IR35. Sure, for an IR35 work you're better off with an umbrella company, but it's definitely not the case for outside IR35.
- eatYourFood 4y ago
jokethrowaway 4y ago
I'd recommend stashing the money inside a ltd and investing them from there paying only corporate tax. Then in 20 years move to Dubai for a year, withdraw as dividends at 0% and close off the company.

sgjohnson 4y ago

> I bill around £14k a month and after taxes i walk away with about £7k a month. You should employ some sort of a tax-reduction strategy. Paying 50% of your gross in direct taxes is absolutely batshit crazy. I used to contract for £350-450 per day as a PHP backend dev and paid an effective 30% tax rate. Which is still crazy insane high, but it's not 50%. Does your 50% figure includes VAT? Because if that's not VAT inclusive, you're doing something horribly wrong. Inside IR35?

tekkk 4y ago
If that's net after pension and everything it's not really that surprising. In Finland for example the employee pension rate is 25% of gross. Then tax and employer insurance on top of that and you're left with about half of the total paid sum. Of course, as independent contractor you can set your own pension rate as low as you want but that's a different debate.
- sgjohnson 4y ago
  Virtually all contractors in the UK are operating through a LLC and paying themselves in dividends, so there's no pension at all, and legally they are not even employees of their businesses (because board members can provide the business with whatever services without being employees). If you go through PAYE, you make yourself an employee, and you must pay yourself a pension. But going through PAYE is a net loss, because then you also have to pay national insurance not only on your side, but also on the employers' side. Paying NI if you can perfectly legally avoid paying it is stupid.
  - tekkk 4y ago
    The difference between taxation schemes between countries seems to be a wildly heterogenous bunch - thanks for the explanation!
  - mjfisher 4y ago
    That's not universally true. Most of the contractors I know are a mixture of PAYE and dividend (pension requirements don't apply to directors and paying nominal NI secures a state pension on retirement). It's usually the setup a good accountant will suggest.
  - Silhouette 4y ago
    Virtually all contractors in the UK are operating through a LLC and paying themselves in dividends This hasn't been entirely true for a long time and it's almost the opposite of true today. The vast majority of contract work in the UK today is now forced under umbrellas where you'd be an employee of your umbrella firm and not working through your own Ltd. There is still outside IR35 work around but close to 100% of larger (and typically better-paying) clients don't want to get near it because of the risks since the recent changes in the rules. If you go through PAYE, you make yourself an employee, and you must pay yourself a pension. But going through PAYE is a net loss, because then you also have to pay national insurance not only on your side, but also on the employers' side. Paying NI if you can perfectly legally avoid paying it is stupid. I urge anyone considering working as a freelancer or contractor in the UK to take the time to talk to a real accountant before trusting this advice. The above paragraph is all kinds of wrong.
    - sgjohnson 4y ago
      > There is still outside IR35 work around but close to 100% of larger (and typically better-paying) clients don't want to get near it because of the risks since the recent changes in the rules. I left the UK about 2 years ago, and I still get recruiters emailing me about all kinds of contract opportunities. Not a single one of those opportunities were inside IR35. Sure, for an IR35 work you're better off with an umbrella company, but it's definitely not the case for outside IR35.
eatYourFood 4y ago

jokethrowaway 4y ago

I'd recommend stashing the money inside a ltd and investing them from there paying only corporate tax. Then in 20 years move to Dubai for a year, withdraw as dividends at 0% and close off the company.