back to article Buoyant tech sector bucking the UK trend, says consultancy

The UK's technology sector is continuing to hire and to bump up salaries despite the deteriorating economic outlook, at least according to accounting and consultancy outfit RSM. RSM said that its Middle Market Business Index (MMBI) survey showed that fewer organisations in all sectors plan to increase recruitment during the …

  1. elsergiovolador Silver badge

    Atrocious

    The salaries are still atrocious, as the high taxes often eat half of it anyway and then you get very little in exchange for the fortune tax man takes.

    Corporations should still at very least double what they are paying now to attract talent.

    1. TonyJ Silver badge

      Re: Atrocious

      Common misconception with taxes.

      For your first chunk up to you tax code you pay zero. So someone on a tax code of 1257L will pay no tax up to and including £12,570pa

      Anything you earn between £12,571 and £37,700 is taxed at 20%

      Anything you earn between £37,701 and £150,000 is then taxed at 40%

      And anything over £150,001 is taxed at 45%

      Which means for someone on £60,000 a year it would break down as:

      0% of £12,570

      20% of £25,129 (£37,000 - £12,571) = £5,025.80 tax paid

      and 40% of £22,299 (£60,000 - £37.701) = £8,919.60 tax paid

      So the total tax paid for someone on £60,000 is £13,945.40 or just over 23%

      Yes, I know that doesn't take into account National Insurance etc but this idea that you pay half of everything really is wrong and it's always disappointing to hear people say things like "I can't do any overtime otherwise it all gets taken in tax".

      Edit: By the way, I didn't downvote you. Seems a tad harsh for a common misunderstanding.

      1. elsergiovolador Silver badge

        Re: Atrocious

        I know that doesn't take into account National Insurance etc

        It's a tax you pay too, no?

        but this idea that you pay half of everything really is wrong

        It's not wrong. If you work Inside IR35 you also pay Employers NI and Apprenticeship Levy which takes your effective tax rate above 50%.

        "I can't do any overtime otherwise it all gets taken in tax".

        Some people try to minimise their tax by working only 6 months. I mean if you work in scope, then essentially half of the year you work almost for free - you pay a ton of money in tax, but you don't get a better service than someone who pays nothing. For instance if you report a burglary police will ignore you the same way as they ignore anyone else.

        1. JamesTGrant

          Re: Atrocious

          On top of NI, there is Council tax (you have to live somewhere!!), and if you have a car (which is still required for many people) car/road tax. Then tax on fuel/petrol/diesel then and also MOT. The tax we pay on gas (for cooking/heating) and electric for our homes (even in a small flat) isn’t small change. So by the time you work out what your unavoidable tax burden is as a U.K.-based employee (even before 20% VAT on goods and services) it’s a LOT.

          Not grumbling but it’s one of the reasons people get so annoyed with government spending choices like when there’s some IT contract worth 100s of millions goes to Fujitsu or IBM or (etc etc) (who will mess it up) when folk like my wife (Community Occupational Therapist) in the NHS got a hard won… 1% pay rise last year. Or the apparent inability to tax massively profitable companies like Amazon in any fair way compared to any other businesses making money in the U.K.

          Actually, maybe I am having a grumble.

      2. The Original Steve

        Re: Atrocious

        Whilst you maybe right technically, on £100k* a year you take home £66k after HMG has taken their total deductions and that's before pension contributions.

        Rewarding people who do the education, work their way through the lower paid roles (servicedesk -> admin -> consultant -> architect etc), do extensive training both paid and in their own time and obtain related certifications is perfectly reasonable in my view.

        I don't agree that taking 44% off their renumeration is reasonable however. When I was getting paid for servicedesk or IT admin roles I was losing 21% of my renumeration. I kind of thought the point of percentages was that it scales by it's nature...

        Whilst I'm sure some people may think I'm being ungrateful or pompous, on my generous (but hard earned) salary, should my employer offer me a one off £1k bonus for passing a rigorous or particularly tricky exam that may take me weeks of study in my personal time I just wouldn't really bother now. When I was earning in the 20% bracket then I did. Mainly because as a 40%'er my time is more valuable yet I'd be earning less per hour for the studying effort than when my time was less valuable when I was more junior.

        For example:

        50 hours of study to take home £800 (20% rate) is £16 an hour.

        50 hours of study to take home £600 (40% rate) is £12 an hour.

        And of course you're more likely to be paying 40% if you are older and thus have a family to spend time with or have wealth to spend on holidays and probably more advanced in your career so career development is likely to be less essential. Arguably this could make your free time as a 40%'er more valuable, and thus earning even less per hour than a junior fresh out of collage even more perverse.

        .

        .

        *I do appreciate that £100k is a great deal of money. But I think it's reasonable for people who did well in their education, have done extensive training, work very hard in technically demanding roles and worked their way up the career ladder to be paid a good chunk more than someone in a less skilled or challenging role.

        Let's say an office manager is paid around £33k who does valuable work but is internal, non-technical and not particularly highly skilled. Then I don't object to a cloud architect being paid 3 times that to be honest (I'm biased of course) - mainly as the higher paid role is customer facing, has extensive deliverables they are solely responsible for, requires extensive and regular training, is highly technical and is ultimately a specialist role.

        The office manager loses out on 21% of their renumeration vs. 44% for the cloud architect. That doesn't seem that reasonable to me given the work required to become a cloud architect and maintain that role, particularly when the pay gap is tens of thousands, not hundreds.

        1. Cederic Silver badge

          Re: Atrocious

          100-66 used to be 34, not 44.

          It's ok, we guessed your head's in the cloud..

      3. Cederic Silver badge

        Re: Atrocious

        You forgot the gap between 100k and 125k, where for each £2 above 100k you earn you lose £1 off your tax free allowance.

        Add in NI and that means my bonus this year is being taxed at 63.5%

        Or would be. Instead I'm going to forgo my bonus and open a new pension fund instead, as that way in a few years I can have almost all of that money, instead of a pitiful 36.5% of it.

        No, tax isn't half my income. It's well over half of any additional income I make, whether through working hard at my current job or from additional sources - e.g. book sales.

      4. werdsmith Silver badge

        Re: Atrocious

        Anything you earn between £37,701 and £150,000 is then taxed at 40%

        What year was this?

        2022 is: Anything you earn between £50,271 and £150,000 is then taxed at 40%.

        The £37,701 is the amount remaining after the personal allowance, so £13k ish of that is still at 20.

        https://www.gov.uk/income-tax-rates

  2. TonyJ Silver badge

    At no point did you mention contracting, let alone being inside IR35.

    And the flip side is also true - how many contractors have minimised their tax payments over the years so that they pay *less* than those employed at the same numbers? Even taking into account operating costs, no sick pay, no holiday pay etc, it was still very much in the favour of the contractor.

    1. elsergiovolador Silver badge

      Inside IR35 is deemed employment.

  3. Electronics'R'Us Silver badge
    Holmes

    New skillsets?

    RSM UK economist Thomas Pugh said that labour shortages in the media and tech sectors are due to the relatively new skillsets the industries require.

    In my experience, it is older skill sets that are in demand especially in electronics.

    There is a worrying trend at some universities to minimise lab time and teaching analogue electronics, both of which are critical skills.

    If someone is really skilled in analogue they can deal with digital circuitry quite easily [1] but the other way around not so much.

    It is an analogue world (at least until you get to the Planck energy level) and it is necessary to interface to it, which has many pitfalls for the unwary.

    [1] Designing a modern piece of kit with anything resembling fast edge rates (and that is a lot of stuff) requires a decent knowledge of transmission line theory which is as analogue as it gets.

    1. elsergiovolador Silver badge

      Re: New skillsets?

      This is a fault of the industry.

      Why would you spent time learning analogue stuff, if you can make easily twice as much money writing essentially boilerplate code?

      I've been looking at jobs in the electronics space and the money on offer is not worth the bother.

      So young people when looking at their career path and what to put energy into see they won't be able to raise family on electronics engineer wage, they'll look for something else.

  4. G R Goslin

    So?

    So? So, only 80% of the ship is sinking. So, why did the passengers of the Titanic, take to the boats. The lights were still, on, the band was still playing. The horizon might have been getting closer, but the sea was a long way down, from the promende deck.

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