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Comment by ownagefool | Hacker News Reader

So in UK pay goes like this:

Salaried Developer @ £40K £3,333.33 Gross £2,512.89 Net

Contract Developer @ £350 per/day using a trust £7350 Gross £6027 Net

Contract Developer @ £350 per/day using an umbrella £7350 Gross £4,333.68 Net

Contract Developer @ £350 using Ltd £8820 Gross using flat-tax scheme You'll need an accountant to tell you what you can actually get net, if you have a wife that doesn't work it'll closer to a trust, if you don't, it'll be closer to an umbrella, but you can defer to bring it closer to the trust if you're patient.

I'm not sure what people actually get paid in SV, but £350 is fairly low end, you can pull £600 a day in London which'll earn you $250,000 assuming you never take a holiday or are inbetween jobs, which isn't a good idea.

P.S. The salaried developer probably costs the company more too.

FYI you don't need to be in the UK to contract, I just don't know the tax structures elsewhere.

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According to http://www.listentotaxman.com/ the net income for £350/day is actually £4,993.48 if fully employed (i.e. an umbrella).

Good catch.

I used an umbrealls calculator. Umbrellas do have fees but the difference is probably the changing in tax-free allowance in recent years, I'd hope at least.

Overarching point is though, you can earn SV wages in European countries, just not typically as a salaried employee.

Would you mind explaining the trust/umbrella/Ltd schemes? Probably not familiar for folks from outside the UK.

umbrella = you become an employee of them. they pay your taxes as if you were a typical pay-e employee, thus you'll hit the 40% tax bracket fairly quickly.

trust = tax avoidance structure, a trust is just one type, there are many others. http://www.contractoruk.com/ebt/

Ltd company[1] = starting your own offical company. Reason to do this is corp tax is only 20%. You need to pay that on your companies profit[2], but if you're patient it's pretty much all you need to pay[3]. Reason: Dividens are essentially tax free upto 31,865, if you have a spouce that's not earning, double this amount. Add in your tax-free allowance on income tax and a married couple can pull between £70-80k a year "tax-free" and you can defer anything else until later years. Your still paying your 20% corp tax on that income, but you also get resonable expenses. Your laptop, travel, maybe a phone for the most part is what is deemed resonable.

[1] This is the way the .GOV.UK wants you to avoid tax. If you have a non-working spouce, it's pretty much the best way until you start earning > 500 p/d and even then some would debate this is the way to do it.

[2] Profit = your companies income - your salary (not dividens) - expenses.

[3] OK so you'll probably want to set aside ~£1000 a year for accountant fees and ~£500 for insurance. Of course these are expenses, so come off your before your 20% corp-tax.

Also people should probably note:

Contractors do not have: > job protection > holiday pay > sick pay > easy access to finance

Just like in SV, those getting the high rates get it because they're cocky enough to ask for it. If you do not feel confident you can stay employed at those prices based on your skillset and, more importantly, your personality, you should probably deeply consider the risk vs reward. Essentially, don't come crying to me if you can't make rent, but believe me, those rates are available, just check jobserve.

On the other hand, I'm a contractor, I don't do overtime without getting paid based on my daily.

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