> after about £160k you're going to struggle without moving into some kind of management type of position
Or being a fairly experienced / niche contractor who can get £600+ a day - although that obviously forfeits the job security and benefits (but then is an actual £160k+, not £N+ with intangibles to bring it up.)
If you want a high salary with minimum fuss (i.e. no management, no clawing your way up a corporate ladder), this is way to do it. I've been contracting in London for 5 years. Rates are in the range of £500-£700 per day, never had a problem getting work, post-tax salary equivalent to £200k PAYE. You can often take several months off over the summer too, if you like that sort of thing.
Sure. I just did a 12 month stint at £650/day. Assume 220 working days/year = £143K. Now you have a silly dance to minimise your tax.
- Pay yourself minimum wage (0pct rate) ~£9K/year.
- You can probably write off around £10K against tax (lunch, transport)
- Pay 19% corporation tax on the rest
- Pay yourself a dividend up to upper rate, end up paying around 7.5% tax on that
- ...probably some other tricks
Leads to a total tax rate of around 20-25% as long as you can survive on £50K a year. So net income something like £115K after tax. Say £9.5K/month, would require a gross salary of £194K [0].
This is why the government is trying to clamp down on IR35 abuse, but still plenty of contracts outside, at the moment.
> Now you have a silly dance to minimise your tax.
Although there is a risk here that HMRC will come after you at some future point when this has been ruled an invalid scheme. Personally I don't think it's worth it and don't tax dodge/minimise/optimise (also a moral stance.)
Or being a fairly experienced / niche contractor who can get £600+ a day - although that obviously forfeits the job security and benefits (but then is an actual £160k+, not £N+ with intangibles to bring it up.)