Moving from Toronto to London-things to consider (appointed, fit in)

[iwijeso]

Hi, I'm moving to London, UK from Toronto, Canada end of 2009. This is not a company move, so I'll have to move myself and look for a job there. I have a 3-year work permit, so can work for any one.
To how much GBP does a CAD 120,000 salary in Toronto translate to when adjusted for London cost of living?
Any clue as to whether housing prices has bottomed in the London suburbs? Or should I wait for another year or so?
Is it worth to move some furniture from here if I'm paying?
Thanks,
Ira

[njf63]

Hey Ira,

A Canadian salary of CAD120,000 converts to GBP68,705.80 (according to www.oanda.com today). This is a reasonable income for London - you won't be living in Mayfair*, but you won't have to live in Tower Hamlets* either.

Assuming you are going to be treated as a normal UK taxpayer (i.e. not as an ex-pat) there are 4 taxes you need to be aware of, as follows:

1. Income Tax
2. National Insurance Contributions (NICs)
3. Council Tax
4. Value Added Tax (VAT)

The first two go up relative to your own salary & income & personal circumstances, the third is a local property tax, the fourth is a national sales tax.

Income Tax & National Insurance Contributions (NICS)
UK tax law allows you a tax-free allowance before income tax takes effect. For current tax year (April 6th - April 5th), and assuming you are a single person with no dependents, this is GBP6,475.

The calculation of income tax on a gross salary of GBP68,705.80 is as follows:

Gross salary 68,705.80
Less allowance 6,475
Salary subject to income tax (68,705.80 - 6,475) = 62,230.80
Income tax @ 22% of 37,400 = 8,228.00
Income tax @ 40% of 24,830.80 = 9,932.32
Total annual deduction = 18,160.32

National Insurance Contributions (NICs) are in fact just another income tax, albeit for historical reasons called something else and calculated on a different basis, as follows:

Gross salary 68,705.80
Less allowance 6,475
Salary subject to NICS (68,705.80 - 6,475) = 62,230.80
Weekly pay for NICS purposes (62,230.80 / 52) = 1,196.75
NICable weekly pay (1,196.75 - 95.00) = 1,101.75
Weekly NICs @ 11% of 749.00 = 82.39
Weekly NICs @ 1% of 352.75 = 3.53
Total annual deduction ((82.39 + 3.53) x 52) = 4,467.71

The combined total deduction from your salary would therefore be 22,628.03, leaving you 46,077.77 per annum = 3,839.81 per month.

For more details, see HM Revenue & Customs: Rates and Allowances - Income Tax and HM Revenue & Customs: Rates and Allowances - National Insurance Contributions


Council Tax
This is a property tax payable by the owner and based on a nominal valuation of the property on April 1, 1991. The impact on a renter (Brit: "tenant") is that the landlord usually passes the tax on so if there are 3 of you sharing the house, you will be paying 1/3 of the total each.

In London, the amount of the tax in each band is set by the local authority so I can't work out exactly how much you'll pay, but it will be in the region of GBP1,800 per annum = £150 per month for the property overall.

Value Added Tax (VAT)
The VAT rate is currently 15%, but goes up to 17.5% in the New Year. As a consumer everything you buy already includes VAT in the sticker price, however in certain cases, if you buy something to export, you can somtimes reclaim the tax.

Rents
Be aware that the convention in the UK is to quote rents as either "pw" (weekly) or "pcm" (per calendar month). To convert between them, multiply pw by 52/12 (4.3333 for the digital age...) to get pcm. So GBP300 pw is GBP1,300pcm. You might get away with paying the landlord as little as 1 month's deposit, but it could be as much as 3 months. You get this money back when you leave (no interest though), less reasonable deductions for wear and tear on the property. I believe the law has been tightened up in recent years, but it will still pay to find a reputable landlord who won't rip you off on departure.

Don't forget to budget for your share of the Council Tax, plus utilities (electicity, gas, water) , telephone and perhaps cable and broadband, none of which are likely to be included in the rental price quoted.

Transport
Check out the official Transport for London website to get prices on period passes for travel: Adult Travelcard | Transport for London
but I guess you'll be paying about GBP100.00 per month.

If you have any further questions, let me know !

N

* Mayfair: richest neighborhood in the City; Tower Hamlets: poorest (by a mile).

[iwijeso]

Hello N,

Thanks so much for the detailed information. As a single, I got a shock when I moved to Canada from USA and now have to adjust to another tax and pay shock when moving to UK!
In Toronto, 120 k is a high end salary per person. So I'm wondering how much I should ask for in London. If I just adjust by the exchange rate, I won't be able to have any where near the same standard of living in London. I haven't been able to find a decent calculator on-line.

I like London, so that is some thing to look forward to!!!

Ira

[njf63]

Ira,

Don't get too excited. The UK economy is still bumping along the bottom, so finding a decently-paid job is no trivial task.

What line are you in ?

N

[iwijeso]

Hi N,

I can fit into Financial Risk mgmt or Financial software testing & implememtation - Statistician, Financial Engineer, Business Analyst. Mathematics/Finance is my background

Ira

[kkgg7]

Ira, congrats on the move. I supposed you are in the HSMP program. If you are moving for the new Europe experience, that's great; but if you are looking for a higher quality of life by moving from Toronto to London, you might get disappointed. London is an incredibly expensive city where salary do not commensurate the high cost of living. You always pay a premium to live in a truly world class city and there are not a lot of them. Compared with major European cities, Toronto is very affordable. I believe rent in London will be probably twice as high.

On the bright side, London arguably dethroned NYC as the world's leading financial center, and I am sure you will find more career opportunities in your area compared with the available positions in Toronto, which is only a national financial/banking center.

[njf63]

Ira,

Your best bet is probably to look for a work as a "contractor".

In the UK, this is not the guy who puts up interior walls, but a (usually) highly-skilled person who works on a fixed-term temporary basis. The rates can be very good indeed, depending on your skills and experience (GBP500 per day is not uncommon).

Have a look at Search for jobs in the UK. Online job search for an idea of the roles out there.

Important note: it is almost impossible to get a contract without going thru an agency (the ads on Jobserve are all posted by agencies), and it is completely impossible to sign up with an agency without proof of the right to live and work in the UK.

So if you don't have those yet, don't buy that ticket !

N

[iwijeso]

Any idea about whether the housing prices has bottomed already and picking up again in London suburbs?
I find Toronto boring career wise and don't want to move back to US as yet, hence the move to UK. I've worked in international companies mostly, so has had to travel to Europe for work. Getting a job won't be a problem. I can always move back if it doesn't work out

[MaggieZ]

to the OP,
it's great that you realize you have the option of moving back if it doesn't work out, that takes some pressure and worry off at least. If you don't try it, you may say 'what if...' so I say go for it!
I tried moving back to San Francisco last year and had to come back and so at least I tried and that's more than some do, and I'm not saying any of this to sound negative at all...just saying give it your best shot and see.. I am thinking of moving to London too and the only negative I see is the high cost of living. Otherwise London can't be beat as far as culture,especially music; I go every few months and absolutely love the city. Of course if you don't like citylife, it's not ideal and just like any major city, it has areas to be a bit more careful in but I always say use common sence and you'll be OK.
As far as furniture, depends on if you are emotionally very attached to it, it may be very expensive to move furniture and cheaper to just buy new here in Europe. That's up to you really, maybe new place, new furniture...

[ian6479]

I have lots of friends that make six figures and live in central London - but they ALL can only afford small 2/3 bed apartments. Most of the houses in Central London are now owned by foreign investors or the super rich.

You can still have a great lifestyle in London but you have to sacrifice on property. Owning a home with a garden in London is now only reserved for the mega money club. As long as your expecations are not similar to those you would have in the US or Canada then you will adjust OK.