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Comment by dogma1138 | Hacker News Reader

So rough calculation here..

$100K first job which is around £74K in the UK… you aren’t likely to get anywhere near that as a grad masters or not here but after taxes and student loan payments (which are deducted from your income in the UK) and all other deductions you’ll end up with £42,908.26 per year, that’s $56K.

And this is where this breaks down for people in tech outside of the US at least.

In the UK the path was at least until IR35 kicked in was to slave for about 10 years and become a contractor at which point you’ll charge per day nearly as much as you used to get per week if not per month…

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I started out at £21k and in 10 years haven’t reached the author’s starting salary! The real advice should be for everyone to relocate to the US

You can do a lot of it without moving to the US or working as a small but niche consultancy outfit (I get 200+ euro/hour from and in the eu); wfh for a US company, as a company in a cheap EU country that has favorable tax for companies. Then optimize. For instance, a UK company can deduct a lot of things especially work from home, you just need to optimize for them. Works fine for programmers at least. I do not think people who 'work jobs' know how much they can optimize their position; which is comparable to the US in rights really in many EU countries.

That’s part of the issue, with consulting you’re forced to act and think like a company rather than an employee. It requires more research or hiring professional advisors. There’s potential tax benefits, but also corresponding legislation to ensure you and your clients aren’t dodging social security contributions. I’m sure once you have some experience it’s simple, but from the outside looking in, it seems slightly risky.

Well here in the EU you can have jobs with almost 0 risk but less than US money, or a bit of risk (which you would also have in the US; easy to fire people there I think?) and make US money with Healthcare etc intact even if you lose a client. No more stupid interviews (they are hiring a company, not a person; I never had to do one because of that) and you have a safety net in the EU whatever happens anyway... Maybe I should write something about it as I have been doing it for 30+ years.

Feel free to drop a link to your website

You should reconsider your worth and attempt to re-negotiate pay.

I started out 6-7 years ago at £30k and am now at £100k + options (worthless). Have only ever worked at startups. You can 1.5x that easily at a big tech (some FAANG jobs exist in London).

You then end up paying London rent… You won’t be able to afford to rent a luxury London flat on 100K or even 150K but a 2 bed in any decent area is £2-2.5K council tax and utilities would be another £200 p/m easily.

You are probably better off making £80K in Manchester as a senior dev than £100-110K in London. Newcastle has also a decent tech ecosystem tho it is very much focused around Sage.

What companies pay £80k in Manc?

(Not denying it, genuinely curious which sector/companies etc)

Maybe. We own our flat in Zone 1 (Soho, 48k down payment, 12k closing costs) after 5 years saving, mortgage is 2.29% ~ 1900 a month. Save about 2500 a month. The one thing I will say is that the "single tax" certainly exists in London, and I find my situation affordable because I have no kids, and my partner brings in an other £35k or so. If we wanted a 3 bedroom or something, forget about it. That's when it becomes absurd to live in central and totally prohibitive.

Also, my experience with London companies + recruiters in the last 3 months has been that permanant remote roles have been cropping up. I would say its about 50/50 of whether a job requires any on prem time, and about 90/10 that the job requires 1-2 days a week on prem.

What flat did you buy in Soho for 480K assuming that it was a 10% deposit, or a better question would be when…

I've said way too much PII already, but it's on HMRC/Land Registry if you want to look it up. Bought in 2019. Non-council.

For a 2019 purchase there is no way that’s more than a studio maybe maybe a tiny 1 bed, if I want to buy where I rent now (W2) I’m looking at 1M+ for any two bed that isn’t a 50sq/m lower ground closet, the non council is a given I don’t think there are any council properties in Soho…

The 2 bed flat I’m renting got recently evaluated at 1.7M it’s very nice and very large (for London)but the lease remaining on it is 68 years and the Victorian building it sits in would need a lot of work very very soon so the buyers are looking at 350-400K bill within a few years of buying the flat (leasehold renewal and building repairs) on top of that which also is why the current landlord is looking to sell.

As it stands now if you want to buy a property for £600K you are looking at £60K deposit, £20K stamp duty and probably another £20K for misc costs.

£600K is a below what an average new build in a Zone 3 would cost you these days outside of the few units they reserve for HTB. If you can save £3K a month you’re looking at 3 years of saving. Since most people / couples would struggle to save even £1K a month especially in their early careers they are probably looking at a decade of saving for a property or even more if the house prices keep on rising as fast as they are now.

I stayed at my ex's flat in W2 around twenty years ago, the estate was selling 2-beds for 240K then - are you suggesting those flats are over £1M?? I dare not look at prices.

Edit: Reader, he looked at the prices

Found almost identical flat at 499,999K, so coming in at less than Millbank flats were going for in 2016. Those flats are only £25K more now. This seems perfectly doable for software engineers who have a good permanent job or are contracting.

Which site are you looking at?

The only flats in my area around 600K all have a huge asterisk the leasehold on them is about to expire so you can only buy them in cash.

https://www.rightmove.co.uk/properties/114810275

https://www.rightmove.co.uk/properties/109851434

Zoopla. I was specifically looking at the Hallfield estate, between Bayswater and Paddington.

Yeah that’s former council…

We lived in NW1, W1H and SW1 for fifteen years and it was totally doable with two earners even starting on a perm salary of 35K, and as the income increased we stayed, but within three years of kids arriving, it was clear that we needed to make a choice. Stay with a two-bedroom in Zone 1 - and pollution etc - or jet to Zone 4 and triple our space.

Five years later I think it's more feasible to stay in Zone 1 or 2 with kids as the air becomes cleaner and you should have saved up enough to find a bigger place. A friend travels from Zone 1 to 4 every on the train for the school run, so it's perfectly doable given flexible working.

Totally agree re; kids and air pollution etc, it's getting better every year.

The $$$ is the problem. 3 bedroom in Zone 1 is 1.5-2m

I see what you mean, five years ago there were still affordable three-bed flats in SW1P and W2, but those days are over.

It's the other way round. The London wage differential is much higher than the rent differential outside London.

Not any more I’m on £150K base and total cash comp of around £200K with bonus, car allowance and some other perks.

Whilst it’s true that I probably won’t find a pay like this outside of London it’s also quite hard to get it within London if I lose my job it’s more likely that I’ll have to take a pay cut than not.

In fact once you get to 6 figures in the UK outside of contracting it’s not uncommon to essentially bounce up and down by as much as 30% between jobs.

Looking at the more median salaries especially post COVID the pay gap has shrunk considerably.

Finance/Fintech is still very much London centric and those places pay the most in uk tech outside some senior FAANG roles but not everyone is lucky enough to land those.

It’s even not about being good or asking for more it’s really about just landing a job with an employer that is able and willing to pay that much and being able to justify that to them and it’s not as easy as it seems to be in SV.

In fact just before the pandemic I was looking to make a move and I went to a few recruiters and their honest advice was pretty much stay where I was (less than what I get now but 20% (5/15 split) pension and very very good benefits).

I did managed to move in early 2020 to my current role but that was through my network.

Overall considering it the loss of pension I probably came out even it was more of wanting to do something new in a different setting than the pay.

That's really good comp for the UK. Well done!

Do you mind me asking what industry you're in?

Data science, before that was finance.

I bought a 2 bed (750 sq ft) plus a large south-facing balcony (with a nice view) in E1 on less than £100k.

Not to mention the salary ceiling is so huge in London it's easy to be saving more than someone else is earning in another city.

Came here to say exactly the same thing (although it was more like £19k as it was the games industry).

At my last company we hired new computer science graduates at more than $100k per year.

A friend of mine has a son that just got a job offer right out of a medium tier computer science school with total compensations more than $200k per year.

IR35 hasn't really affected that path, you can find contracts that are outside of the legislation and as long as your working practices are also outside you're fine, there are also insurances now for these things.

A lot of companies don’t hire contractors under their own LTD anymore they only take those that come through an umbrella company that pays them under PAYE.

The people taking these roles arguably aren’t contractors anyway. The market in the uk for contracts outside the legislation is healthy.

Is there a difference in pay that you’d get if you billed an umbrella company? Or are you liable to pay more tax?

You are basically getting payed as PAYE that way so yes.

There is also nothing -- literally, nothing -- to prevent you from finding a remote work contract with a US company, and billing them at a rate appropriate for the US market. From your point of view, there is no VAT chargeable on B2B services supplied to a customer located outside the EU, and you can get paid easily using a Wise account. From the client's point of view, give them a W2-BEN-E and they can effectively consider you as 1066 status.

Do you mean 1099 status?

Yes -- thank you.

USA salaries are really unbelievable. That £74,000 which seems to be a poor salary in the USA judging the the OP would be a really very good salary in the UK

Are UK salaries quoted post-tax? USA salaries and wages are usually quoted pre-tax. Obviously not a 5-10x difference, but that still makes comparison more difficult with regions that usually discuss post-tax earnings.

Quoted before income tax and employee national insurance (50%ish) and after employer national insurance (13%). Most people seem to forget about that extra 13 since it disappears before the 'gross' number on the payslip.

Hahaha I wish these numbers were quoted post-tax... unfortunately UK numbers are in my experience all quoted pre-tax, just like in the US. So yes, that £74,000 really is before ~22% tax (income tax + national insurance).

Tax in the UK is absurd (for what most actually get out of it)

In the UK, the stronger drag on wealth accumulation for the poor is the absurd taxation on the middle incomes (50K+), especially given the very low level of service of public schools, healthcare system, childcare, etc…

Agree that the stronger drag is the cost of childcare, but the poor don't earn 50k+

In fact, if you earn 50k as a single without dependants (or if you are a couple with 2x50k income) you're definitely richer than the majority of folks.

Also, the UK tax system is incredibly generous to high income folks: 40k+ tax exempt pension contributions, 20k ISA allowance, 12k cgt allowance. It means that you can accumulate a good chunk of capital before you'll even have to start paying taxes

You start to lose your income tax allowance at £100K that more than offsets the CGT tax allowance and puts you in a hidden 60% tax rate.

Childcare is expensive as fuck and you lose your childcare allowance at £50K in fact if you share a household with anyone who claims it and you earn more than £50K they’ll deduct that from you…

Living on wealth in the UK is as easy as in the US I would agree to that perhaps even easier since there are no property taxes and probably even more tax schemes to leverage than in the US but getting to that point under PAYE even whilst earning well above the median wage isn’t easy especially if you want to have children and have to live in London for that pay.

The main issue is just how depressed many of the wages in the UK are and thus just how narrow the tax base is.

My point is that if you start your career owning nothing and work hard, you pay an insane amount of tax on it. Even if you make 100000£ per annum, it will take 20 years to accumulate as much wealth as a guy who inherited a 60 square meter flat. In the meanwhile this other guy hasn’t paid a pound of tax and is maybe receiving some benefit.

I should have specified that the problem is the taxation of work-related income (the main source of income of the poor) compared to the taxation of wealth. On this respect I find particularly egregious the NI hike (an increase of the income tax or the introduction of a property tax would have been more appropriate).

Not making a judgement call on which is better (its all trade offs), but this is what Americans don’t get - all those social benefits have a cost and a good portion falls on the middle to upper middle class.

I think a lot of Americans envision finding a European style social safety net by only taxing billionaires.

I don’t think the UK has a European style safety net, they don’t tax enough people for that the first £12.5K of your income (below £100K) are income tax exempt the UK has the narrowest tax base in Europe.

I think the UK managed to strike the worst possible compromise between the Europeans and the Americans. The NHS provides some basic service, but if you want a French or Italian style healthcare, you’ll end up spending thousands of pounds per year, assuming you are relatively healthy. Childcare is nonexistent, nurseries cost in the order of 1500£ per month per child. State schools are so bad that it’s normal to send your child to a private school. Unemployment benefits are offensive.

All this while everybody with a professional job faces a 40% marginal tax rate (plus NI).

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