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> This is news to me. It's definitely the case, in UK, that contractor pay can be significantly higher than regular employees' pay, because a) it lowers the ta
by toyg 3y ago
> This is news to me.
It's definitely the case, in UK, that contractor pay can be significantly higher than regular employees' pay, because a) it lowers the tax burden for the hiring company, so they are willing to allocate some of that saving into pay, and b) it allows the contractor to optimize costs in tax-efficient ways.
- midasuni 3y agoThe U.K. taxes income from work more than any other income. If you got paid 150k gross you’d end up with 80k net in your bank account after paying both parts of NI (23k) and income tax (46k) If you “earnt” 150k from renting out a property you only pay the income tax, so net 96k. If you made 150k capital gains you net 108k.
- codethief 3y ago> a) it lowers the tax burden for the hiring company, so they are willing to allocate some of that saving into pay Is it really the tax burden or the social security burden? > so they are willing to allocate some of that saving into pay Sure, but as a contractor you will also have to take care of social security etc. yourself, which adds to your costs. > b) it allows the contractor to optimize costs in tax-efficient ways. I'd be interested in hearing what that would look like exactly! In Germany you have a bit of leeway but your overall taxes (at the LLC & personal level together) will still be comparable.