The UK has always lagged well behind America in dev pay and has only been accelerating in pay for the last 5 years. 5 years ago a senior dev position outside London was around 35k. Now it's up to 45k and I'm starting to get emails with 50ks mentioned.
To make '20k' you would have to earn £900 per day, when the going rate outside London is £300 p/d, and even as recently as a year ago it was £250 p/d.
You earn £900 p/d consulting, not developing.
I've always blamed the 'BBC micro' effect for our lower pay, we had a lot more exposure to computers as kids in the 80s and so reached 'peak developer' a lot later than the Americans did. Also in the UK the idea that the peons could be worth more than the managers was anathema until the last decade, a class divide throwback.
Some of those posts are not even real roles - new guys in agencies need to collect a lot of CVs, so they post bogus £600 contract and collect your CVs as "stuffing" for their "portfolio"
£700 are rates for an experienced core Java developer with investment banking or FX experience.
Occasionally, there are much higher rates (1k-2k) for very short urgent roles, but not that common.
My most well paid contract was awarded to me after the job was open for 3 months - Thales e-Security HSM API specialist.
Compared with consulting rates and salaries in specialized niches (SAP etc), 45k for experienced and competent developers is way too low.
But what I will agree with is that the disparity of contractor pay and permanent pay in UK is staggering.
To give an example, I live in Seattle in the US (which is relevant as many states in the US apply additional taxes on top of those applied federally). My effective tax rate is probably somewhere around 35-40% of my gross income. I'm curious if devs in the UK are looking at a similar deal, or if more than half of that 20k per month is going to evaporate into taxes... also how does that vary for contract versus permanent work (in the US it would cause an immediate 7.5% bump in my tax rate, I believe).
Contractors have a different set of rules from regular employees but they end up paying more or less the same tax (often less, if they have a smart setup -- corporation tax is lower than income tax); there are other disparities (it's harder to get loans/mortgages etc) but not tax afaik.
How? Start with the 20k. Pay yourself a 10k salary (tax free, pay £232.80 in national insurance). Pay 20% corporation tax on the remaining 10k (£2000). Pay the remainder to yourself as a dividend (which already has a tax credit applied and results in a 0% liability up to a certain limit).
Now, this does make the assumption this is either the first month of your tax year or the only income you make ;-) If you were to make 20k EVERY month, you would start to increase through brackets and pay more tax on the dividends.
By my calculation using ContractorUK's dividend tax calculator, at 20k every month and assuming no deductions at all, you'd pay around £53k on the total £240k for an effective tax rate of 22%, but I could be wrong. You would also be likely to pay more tax since you'd probably pay yourself a salary despite the loss of personal allowance in order to keep your state pension privileges.
Broadly speaking, direct taxation on income is generally lower than many situations in the US. It's the consumption taxes like VAT (20%) and fuel duty (the majority of the price of fuel) that bump things up a lot. I should also note that if you merely happen to be self employed rather than own your own company, your taxes are actually LOWER here than if you're employed - no equivalent to the "self employment tax" I've heard of in the US.