Depends where you live, in the UK I pay a flat 20% (after income and expenses). My monthly costs in London add up to about $2k. So that leaves me about $15k. Not quite as much as the OP but give me a couple more years of experience and I'll be able to put my rates up.
It'd be about £400/month where I am as well, and I'm guessing you're not in London/Cambridge/Oxford.
Also since you're in the UK don't forget about rates (local property taxes that businesses pay in the UK). Once you're beyond a certain size this tax will jump from £50 a month to over £1000.
From what I've seen, I think that's possibly a touch low for experienced contractors. At least in the financial world, the £500pd upwards mark seems to be quite common - which is around £115k GBP/$185k USD assuming 11 months work a year (500 * 232).
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.
London based contractor here. It's sort of hard to say since rates keep going up. My gut feeling is 700 outside/850 inside would put you in the top 10%.
That would be around £1700/month, if you setup a company for the money to go through your takehome pay will probably be around 70-80% of your company's income (so around 1200-1360). That'll be fine if you get a flatshare, if you want to get a one bed flat to yourself it'll be tight.
Also see if you can find a business reason to be in london (i.e. that's where clients are, etc.), because if you have a legit business reason for it then you can claim the cost of your rent as a business expense and pay for it out of pre-tax income for upto two years.
To add another data point:
I'm a contractor in the London charging day rates from 300 GBP (in the beginning) to 1100 GBP (today) over the past eight years. Net worth has just crept into the seven-figure GBP range with profits being mostly invested in global equities ETFs.
In my experience, a company that pays 400-500£ per day for a contractor, will pay 80-90K£ per annum for a permanent employee. Once you account for VAT and corporation tax, the only difference comes from not paying NI and income tax. Inside IR35, if my calculations are correct (and they may not be), 500£ per day are equivalent to 90K£ per annum.
£20k of income(sans VAT) per month is barely possible. If you're at the level of being paid £45k - you will not earn £20k per month during first year. £20k per month is ~ £900 per day @ 22 days per month, and that is paid to very well known consultants.
But what I will agree with is that the disparity of contractor pay and permanent pay in UK is staggering.
Senior/Lead UX designer at a big corp in London: making ~£115k/yr (~€130 at mythical exchange rates), salaried, before tax.
Actually took a pay cut, used to be a contractor with a day rate ranging from £600-750 which had me averaging approx £150k/yr and paying much less tax. Considering going back to that soon, although a bit worried about Brexit uncertainty, but right now I'm seeing plenty of contractor roles offering that much, a few up to £1k/day.
I wouldn't say more in line necessarily, unless you work at the big banks in a profit center. Contractors can make anywhere from £300 to about £750 a day unless they land on an extremely profitable niche, which is great money for the UK but not the kind of insane rates SV engineers can get. Of course, cost of living is lower too, especially up north where I am.
I think regardless of the tax benefits discussed in this thread, even with an equal playing field you will earn significantly more than your permie peers.
You can get 50k if you're lucky in London, but you can earn 500 a day as a contractor.
500 * 230 conservative work days per year = 115,000 NET
I've seen mid-level tech jobs in London banks for £146k which come with 34 days off including state holidays like new years day, christmas, etc
£146k for a full time contractor on 226 days a year isn't that much at all - £650 a day, which is in the "Senior developer" range [0]
With 30% tax in the US and the cost of health insurance, that would be $68,400
For a staff employee on £146k (which is quite achievable in finance), taxes would be 39.5%, or $79k in tax [1] (there's also local property tax, but that's in the ballpark £1k-3k a year depending on the size of your house). Tax could be potentially lower as a contractor if you're clever about distributing your income, but I know they've been clamping down on some avoidance schemes.
No idea what a HSA account is, I guess some form of pension plan? That tends to come off pre-tax.
If you are in the UK, 50k a year (above average but honestly, if even remotely close to London, not that much) will bring you a tax bill of around 38% (19k) if you consider employee NHS contributions ( data from http://www.listentotaxman.com/50000? ). So you are already at 38% and you have council tax (probably another 2k or more a year) plus VAT (21% or something?) on stuff you buy. I don't remember other taxes I paid while in the UK but these were the big ones. It isn't hard to get to the end of the year and see that you(+ employer) paid around 50-60% in taxes.
I live in Portugal, and if I consider VAT+income tax+social security contributions (self employed so I pay both parts or approx. 33% in social security) and ignoring other extra taxes (property, road tax, etc) 62% or so of the money I earn goes to the government (this was for 2014, my accountant did the math). I could probably get this lower with some creative accounting I guess.
Devops contract rate seems to be around £450/day (at the low end). Assuming 21 days per month and 2 months off per year, you'd be looking at £94500 revenue. As a contractor you could expect to pay as little as 25% total tax, but if we assume 30% you're looking at taking home £5.5k per month. Which is a grand more than an £80k salary (with an extra month off).
If you're married and have your SO as a shareholder, thus splitting the tax load you can almost match a £200k salary on a day rate of ~£700 (I have seen a few devops type roles getting up towards that figure).
So, I agree that £250k salary is very top end, but there are certainly contracts in the finance industry that pay enough to get you close if you change the way you're paid.
It's not that hard really in the UK. Salaries are shit, and my advice to anyone looking for work into the UK is to be a contractor. I was effectively on £100'000+ at 23 in the UK as a contractor.
British and American companies are structured quite differently. As a contractor in the UK, you effectively have the same rights as an American employee.
If you look on the job boards for contract work, hardly any of it (prior to corona) was under £500pd.
Depends where you live, in the UK I pay a flat 20% (after income and expenses). My monthly costs in London add up to about $2k. So that leaves me about $15k. Not quite as much as the OP but give me a couple more years of experience and I'll be able to put my rates up.
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