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Comment by salaryFoo | Hacker News Reader

About three years after graduating I stumbled into some extra freelance work a school friend passed on to me. Then got lucky again by finding myself in a well-paid (for UK) devops niche.

- 2009: £1,000/yr Mostly depressed, unemployed and unmotivated. Some income from teaching English and arbitraging signup bonuses on gambling websites. Lived close to rent-free by subletting rooms in the apartment I was living in. (Spain)

- 2010-12: £8,000/yr English Teacher (China, full-time)

- 2012: £20/hour PHP dev (China, freelance)

- 2012-13: £16,000/yr Rails dev (China, full-time)

- 2014: £72,000/yr Rails dev (London, contracting)

- 2014: £102,000/yr Devops (London, contracting)

- 2015-16: £60/hr Rails+Go dev (SE Asia, some remote freelancing but mostly not working)

- 2017: £120,000/yr Devops (London, contracting)

- 2018: £158,400/yr Devops (London, contracting)

- 2019: £192,000/yr Devops (London, remote contracting)

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Any tips for pushing up contracting rates? I've been on pretty much the same since I started 4 years ago, which isn't a bad rate, but from these numbers it seems like I should be asking for more.

Most of the work I've found had been from recruiters on LinkedIn. Do you just say "I want £800/day, what do you have?".

* I work with pretty niche enterprise devops software. My Linkedin profile is 100% oriented to selling my skills with that software (Note that there is a real risk that this software will be out-of-fashion in five years)

* I give a proper reply to everyone who contacts me on LinkedIn, even if the work they are offering is totally unrelated to what I can/want to do. The frequent spam is a small price to pay in return for being in everyone's database.

* I'm very upfront with my day-rate and get rejected by most of the recruiters/companies that get in touch with me because it's too high. This is fine and intentional because there is enough demand to get that rate anyway (so far).

I've never heard of those 18-19 London salaries. Woah! Finance though surely?

I have a few friends in London, contracting whilst working a Single Person Business (lacking the proper terminology). Super high wages £500 - £700 per day, whilst having an effective tax rate or 13%. Boom.

The effective tax rate is closer to 30%+ once you factor in corporation tax but the rest is correct. You incorporate a limited company and take a low salary and rest in dividends.

Though you'll get to higher tax brackets with that pretty quickly too, so will likely want to leave a fair share of revenue in the company (you still need to pay 20% corp tax on profit), or put it into your pension (tax relief on up to £40k/y).

Good to know, thanks on the correction. Didn't get the whole spiel from my mate but that makes sense.

Where are you getting 13% from?

If you pay yourself a salary from a ltd company there's ~14% Employers NI, 12%-2% Employee NI Depending on tax band, 20-40% Income tax depending on tax band. If you pay a dividend there's 19% Corporation tax plus 7.5%-32.5% Dividend tax.

So 46%-56% tax on salary and 26.5%-51.5% tax on dividends. Nowhere near 13%, unless you're talking about 'creative accounting' by running non-business expenses through the company to effectively get them tax free.

Yeah, by all accounts reading online indicates a 45% tax rate for a sole-trader[1].

I'll have to enquire with the few mates there -- don't see a reason as to why they'd bullshit me. Frankly I have nfi however, apologies for the cop-out of an answer.

1: https://www.highspeedtraining.co.uk/hub/sole-trader-tax/

> I'll have to enquire with the few mates there

Sole traders are different to one-person Ltd companies. As a one-person Ltd, you used to get a lot of tax breaks, but over the last 5-6 years they seem to have been steadily eroded.

Anyone paying a rate as low as 13% now is probably using a borderline-legal grey-area scheme, which is dangerous because HMRC not only hit those folks up for back taxes when they find them, but put fines on top too.

- create a company in the Man Island - You pay yourself the minimum to have ok life style (dividend allowance + progressive tax could make it somewhere around 15% + NI). You move for a year to Singapore, so you are no longer UK tax resident. You close the company.

I don't live in UK anymore and I could do something similar in my location, but I want to pay taxes and my effective rate is good.

I presume it's because they're contracting? It's the way to cash out in software in the UK, I believe in most companies, contractors get to sidestep the HR/salary budget hierarchy, usually because the company is really desperate, and they tell themselves "they're only temporary, so won't apply salary banding on them"

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