Tech/Design Salaries US vs UK & How Far the GBP Goes

It might be worth pointing out that this type of set up is designed for consultants and other people who are genuinely running their  own businesses.  It's not a tax dodge and is part of a larger structure of contracting.  For example, I pay less personal tax on the money I make, but have no paid vacation or sick days. 

It might be worth pointing out that this type of set up is designed for consultants and other people who are genuinely running their  own businesses.  It's not a tax dodge and is part of a larger structure of contracting.  For example, I pay less personal tax on the money I make, but have no paid vacation or sick days.

Absolutely.

Thank you to everyone for your incredibly helpful insight! I'm feeling more grounded now. I thought I'd loop back and share some of my thoughts for anyone who is working through similar questions...

DH and I especially appreciated the tips on contracting and the alternative tax set-up for UK businesses. Eventually, we'd like to move into a self-employed scenario anyway. Coming back to the UK would definitely enable that transition (thanks NHS!) I shared this info with DH and he remembered his dad (a tech contractor in England) filing with the low salary + dividends method when DH was a kid. Great tip and thanks for jogging DH's memory!

I've done a lot of research on tax implications of porting a US salary to the UK and I think I've got a pretty solid grasp on that now. Not nearly as bad as I was expecting. We wouldn't have any US tax liability in addition to our UK tax liability. The threshold for owing additional US tax is surprisingly high. Additionally, there are ways to become exempt from US withholdings and social security tax on the US income of UK residents, which makes things a little easier.

I did the financial computations as closely as I could - took into consideration taxes, NHS vs insurance, and certain savings (like UK Council Tax being shockingly less expensive than US Property Tax.) If we moved to the UK and kept our US jobs we'd end up worse off by 15k-30k USD every year; but that's not so bad for what we'd gain by living in the UK.

On the other hand, if we moved and took UK jobs (assuming 60k GBP each, which sounds like a stretch!) we'd lose the equivalent of one 6-figure salary for the same amount and quality of labor. I just can't even. I didn't even bother factoring in additional losses from having to commute in the UK, the stress and time commitment of which isn't easily translated to $.

I haven't worked out a UK contracting scenario for comparison yet, but I suspect that would be somewhere in the middle and would include significant non-monetary benefits like being able to continue working from home, selecting our own hours, and generally having more autonomy. As I mentioned above, I'd like to see us in this position at some point.

It was helpful to know what is considered a really good salary in the UK. DH and I had a look at the average UK income and UK income by percentile. Don't know why I hadn't thought of that before, but it helped contextualize the pay rate.

So it looks like coming back to the UK might be worth it, but we wouldn't want to give up our US incomes (just yet). The risk and cost associated with currency exchange is something we'll have to keep in mind too.

Again, thanks to everyone. Additional input is definitely welcome!

I know it's very dependent on industry, but one thing I haven't mentioned is my absolute, complete lack of work/life balance in the UK.  Everyone says you work crazy hours in the US - my experience is much much different.  I've asked large groups before and it seems those who work in government or university jobs are the ones who feel they have a better balance than the US.  Again, I'm in the southeast of England, which could be very different to expectations in Scotland.  But I know I am not the only expat who feels this to be the case.  I could give you lots of names and numbers of people who feel exactly the same.

No, double taxation isn't anything to be worried about.  As UK taxes are higher, your entire salary should qualify for Foreign Tax Credits.  I do think this can change when self-employed, especially if you are taking dividends.  As those receive tax breaks in the UK that do not translate to tax breaks in the US.

Ultimately though, there are many more reasons to settle in one place or the other than financials.  It sounds like you would be financially stable (even if it's a different quality of life that you are currently used to).  What would you gain from a UK move (that isn't quantifiable)?

I know it's very dependent on industry, but one thing I haven't mentioned is my absolute, complete lack of work/life balance in the UK.  Everyone says you work crazy hours in the US - my experience is much much different.  I've asked large groups before and it seems those who work in government or university jobs are the ones who feel they have a better balance than the US.

I'm in a government job (civil servant) and although I work shifts, I get extra time off to make up for it, which means even though I work 50 hours over 4 days, I get 3.5 days off afterwards to make up for it, so it averages to 37 hours/week (and that's all I'm paid for). Due to the way my shifts work, I end up being at home in the daytime 5 days a week (of course, that means I do have to work weekends, nights, and over the holidays as our office is 24/7, 365), so it feels like I'm barely working .

When I go overseas, I work many more hours (70 hours/week in the Falklands with 1 day off per week, and up to 90 hours/week here in Antarctica with no days off when there's only one of us here), but I get compensated for it with higher pay, difficult posting allowances, being able to claim overtime and extra time off when I get home.

KFDancer, I wonder if work life balance isn't different for each job?  I've had some contacts where they expected you to be available constantly, others with perfect life balance.  In not sure this is uniformly different between US and UK.

What about holidays?  I don't think anyone believes that you get more holidays in the US.

What about holidays?  I don't think anyone believes that you get more holidays in the US.

Lots of tech companies in the USA offer 'unlimited holidays' 
Not the norm across any industry of course, but it does it exist. 

Ahh, looks like some UK companies are doing this as well!
http://www.stylist.co.uk/life/year-of-you/may/the-uk-companies-with-unlimited-holiday-policy-virgin-richard-branson-wandisco-expand-netflix-vacation-days

That's a massive scam that sounds nice but is even more exploitative for the worker.  Netflix gave their workers so much work that they could never take any of that holiday anyway.   The corporate culture was that if you were sick or took too much holiday, they would sac you.  When Netflix fired or layed off somebody, no holidays had been accrued, so there was nothing to pay as severance. 

I'd prefer the statutory amount garunteed here.

I LOVE holidays.  Seriously, I am a vacation whore and save my aha to be used for something really awesome and fun.

In the US, I had two main jobs after my dancing days were over.  I worked for Orlando Police and had five weeks holiday per year, plus I could work overtime and take pay at 1.5 my hourly rate or as comp time (again at 1.5 times).  But it was a 24/7 job with shifts, weekends, and holidays.

My other job was for a big tech company.  Same company that brought me to the UK.  In the US, we worked a 9/80 schedule (80 hours in 9 days v 1).  Every other Friday off, three weeks holiday, plus a shut down for a week at Christmas (not using vacation time).

Here I do get good holiday pay.  But I work at least 12 hous a day, usually 14.  But it's accepted to have my phone out in meetings, hence my UK Yankee distraction!   

That's a massive scam that sounds nice but is even more exploitative for the worker.  Netflix gave their workers so much work that they could never take any of that holiday anyway.   The corporate culture was that if you were sick or took too much holiday, they would sac you.  When Netflix fired or layed off somebody, no holidays had been accrued, so there was nothing to pay as severance. 

I'd prefer the statutory amount garunteed here.

Like Zero hours contracts. Helpful for students or someone who isn't dependent on their job for a living.   Hideous for anyone else. 

Thankful that my company has a culture of making sure you get all your annual leave (even if you have to carry over some of it)

I have a friend in that place just south of San Francisco (Palo Alto?). The companies all have these really cool sounding "on site" perks. I asked him about it, and he said that translates to "never can leave".

I haven't worked out a UK contracting scenario for comparison yet, but I suspect that would be somewhere in the middle and would include significant non-monetary benefits like being able to continue working from home, selecting our own hours, and generally having more autonomy.

This scenario is true for some very lucky contractors, but the more common situation is that you're contracted to do a set number of hours, have a standard working week and are very often required to be on client site.  Many employers treat contractors as temporary or back-fill staff now and although they may pay a reasonable day-rate they expect similar working practices to those of their full-time employees.  If you can establish yourself as 'consultant' instead of 'contractor' you may have more of the autonomy you've described, but not always.  I walked away from contracting and back to permanent employment several years ago due to instability in the contract market, falling day rates and the increasing difficulty in landing a meaningful (read:  bearable) contract role.  I was chasing the 'consultant' dream but the reality of the situation was very different.  My career (and income) has progressed much faster since I returned to permanent employment.

Hope things work out for you, whatever route you choose!

The average salary in the UK is around £26,000, with the average household income around £31,000. About 90% of the UK population earns less than £40,000 per year.

I'm not sure where you got your figures, ksand, but they make me feel a whole hellofalot better about my working situation!  I make less than the average UK salary here, and took a SIGNIFICANT pay cut/position cut here - I make about 35% of what I did in the US. But for our household, we are well over. Now I just need to figure out why we're struggling every month!

I do agree that basics here like milk, good bread, veggies and fruits (in season), staples, are cheaper, but specialist products are more expensive and there's not nearly the variety that they have in the US. Second hand cars are SO much cheaper, which I wish I'd realized before we bought a 1 year old car (3-5 years old would have been probably half the price). But housing is significantly higher. Especially for rentals.

Now I just need to figure out why we're struggling every month!

Recently May said she was going to focus on helping the JAMs (just about making it). It turns out that can be just about anyone.

Peeking at some studies, it looks like housing takes up more income than across the continent.

The thing is, though, if you are porting US salaries over you have a fabulous option of "giving it a good try" with almost zero risk. Can you rent out your US home for a year or so and try out living in Scotland, see how you like it? Form some relationships/networks and really get the skinny on living here. Do you like the weather, the housing, etc? Will the pay honestly set you back or do you find you are actually quite comfortable on what you are earning? Especially now given how strong the $ is.

My salary here isn't much above what I made in the US but is significantly above the UK average, as is the Other Half (in the SE). We are still able to sock away a lot of money every month in UK retirement plans, US based investment accounts, general UK savings, etc and still be able to easily go out with friends, to concerts, and rather enjoy ourselves without working insane hours. I think what helped most was adjusting our style of living to the local area (our flat is tiny compared to what we had in the US!) and making some tradeoffs that were acceptable to us (living smaller further in with a good commute vs cheaper further out with more space).

About contracting - Im not in tech but I have no idea how some people manage it because the goddamn recruitment agencies are horrifically bad at what they do. A friend in tech just went through a 9 month period without a contract (though when he has one hes definitely rolling in the money) and was jerked around plenty by agencies.

On the other side we have a data tech friend who was hounded for a year by an agency for one specific company who needed his skills and he said no... until they got to £120K annual, 3 days work from home, company car etc etc etc.... in CHESTER.  Ive also heard stories of folks spending years as contractors at ludicrous day rates because the parent company couldn't get their act together.

I would say take the salaries on Glassdoor etc as a good baseline for the market but understand that you can very easily end up in a much higher paying position simply because an employer is desperate for skills for whatever reason.