Total compensation in the UK: what to compare and negotiate

Base salary

The guaranteed part, and the figure future raises, bonuses and pension contributions are usually calculated from. That makes it the most valuable thing to negotiate, and often the most constrained by pay bands.

Bonus

Ask for the target percentage, what it depends on (company results, team or individual performance) and what was actually paid in the last two or three years. A 15% target bonus that has paid out at 40% of target is worth far less than it sounds. Check whether it's pro-rated in your first year and whether you must still be employed on the payment date.

Pension

Under auto-enrolment, the legal minimum is 8% of qualifying earnings, with at least 3% from the employer. Many employers pay more, and some match extra contributions up to a cap. The gap between a 3% and a 10% employer contribution on a £60,000 salary is several thousand pounds a year.

Salary sacrifice means you give up some salary in exchange for a bigger employer contribution. It saves income tax and National Insurance, and some employers pass on their own NI saving too. The government has announced a cap of £2,000 a year on NI-free salary sacrifice pension contributions from April 2029, but income tax relief is unaffected.

Equity

• RSUs (restricted stock units) are shares in listed companies that vest over time, often over four years. They're taxed as income when they vest, so value them close to cash, minus tax.
• EMI options are common at UK start-ups and scale-ups. If granted at market value, there's usually no income tax or NI to pay on exercise, only capital gains tax when you sell. Their value depends entirely on the company's future.
• Ask for the number of shares or options, the vesting schedule and cliff, the strike price, the latest valuation, and what happens if you leave.

Holiday

Full-time workers are entitled to 5.6 weeks of paid holiday a year, which is 28 days for a five-day week and can include bank holidays. 25 days plus bank holidays is common for professional roles. Each extra day is worth roughly 0.4% of base salary.

Other benefits worth valuing

• Private medical insurance (usually a taxable benefit in kind)
• Life assurance, often a multiple of salary
• Income protection
• Car allowance or electric car salary sacrifice
• Remote or hybrid working, which can save commuting costs
• Training budget, professional fees and study leave

Tax thresholds that change the maths

In England, Wales and Northern Ireland, 40% income tax applies to income above £50,270. Between £100,000 and £125,140 the personal allowance is withdrawn, an effective 60% rate. Scotland has its own bands. Near these thresholds a pension contribution or other salary sacrifice can be worth more to you than the same amount in salary, which is a useful card to play when base salary won't move.

Which parts are easiest to negotiate?

1. Signing bonus: a one-off cost that doesn't change pay bands.
2. Start date and working pattern: often free for the employer.
3. Holiday: a few extra days is a common concession.
4. Pension contribution: sometimes fixed by policy, sometimes not.
5. Base salary: the most valuable and usually the most constrained.
6. Equity: negotiable at start-ups, usually banded at listed companies.