I’m a tax adviser to millionaires and billionaires. AMA.

[LetsTalkTax]

I advise rich people on their tax affairs. With all the posts today of people outraged by Vinted being taxable, I thought it might be a good time to do an AMA and dispel some of the myths posted about the tax that rich people don’t pay.

Do you deal with any US expats with assets here and in the US? Do you think it's likely the US tax rules may change in the future?

(The US requires all nationals to submit their taxes, even if they've never lived three - like myself. I don't earn over the threshold to be double-taxed, but it's a bloody pain and I don't know whether I should just give up my US nationality or if the rules may change in the future..!)

You could sell tickets to see the panda, and then your expenses would be offset-able.

You’d probably need bespoke VAT advice on buying the panda though.

Sadly, child benefit is for human children only. I think the registry office would notice it was a panda in a onesie when you tried to register the birth.

Well you don't pay 45% on ALL of your income

Can I ask what you did to qualify and specialise in this area? I’m thinking of retraining and accountancy, particularly tax, is an area I’m really interested in.

I deal with many clients in your situation (I am a tax advisor who specialises in UK taxes for Americans)

No I can't see the US changing the rules any time soon

Do you think it’s morally acceptable that earned income is taxed more than income from capital gains, inheritances and other unearned sources?

Yes, I deal with a lot of US citizens (most aren’t even American enough to be called expats!).

It is a nightmare with very little way around it. The best tax advice is to give up the US passport, and I have clients who have done this if they don’t intend to live their in future. It’s actually one of the tax positions that gets much much worse the richer you are.

I doubt the rules will change (but I’m not a US expert, so who knows - but my US colleagues don’t think so either), but the US is only one of two jurisdictions in the world to levy taxes this way (and the other is some obscure tiny country).

Could you suggest to one of them that they send a bit of spare cash my way?

What are the most commonly used lucrative methods that you advise your clients use?

Inheritance is taxed similarly to earned income (40% tax rate), so I don’t really have an issue with this.

My career is too invested in capital gains tax and income tax being different rates for me to have an unbiased opinion on this though! I do think that raising CGT seems to be an obvious way to go, it is particularly low. The 28% rate (or even 30% because I love a round number) does seem more ‘fair’.

You can have the space right behind me in that queue 😂

Put the wealth you don’t need into a company and invest it there. Maybe give some shares to the kids.

Or move to the Channel Islands/Monaco/Dubai.

I trained in audit as a grad, then did a stint in corporate tax and now in personal tax. All at top 10 accountancy firms.

My degree was unrelated and I have two professional qualifications that I’ve obtained while being employed.

Do you believe there is an unjust gap between the rich and everyone else/the poor in the UK or do you believe that the high net worth individuals/ultra rich people you advise work that much harder than everyone else so deserve it?

Do you believe that the government deliberately and intentionally "turns a blind eye" against companies like Google/Amazon (or did in the past) not ensuring they pay the correct tax because they want their operating presence in the UK?

Thanks for the reply, and i agree with you on CGT needing to go up. But I think your view of IHT is coloured by the fact that you work with UHNW individuals who likely have estates above the threshold. For the 96% of people who aren’t liable for IHT, it’s obviously taxed less than earned income.

If someone works to earn the median salary of about £30,000pa, they pay way more tax than if they inherit £30,000 or sell an asset for a £30,000 profit. That seems grossly unfair, and reversing it would seem to me to be the best thing possible in terms of incentivising the right kinds of things.

To be fair, by comparison my effective rate of tax last year was also 30.3% and I’m entirely PAYE so not much different.

I’d start again with inheritance tax as it’s quite antiquated.
I’d get rid of corporation tax entirely and increase tax on dividends (so there’s an incentive to reinvest).

I’d keep domicile rules as they are (the Rishi’s wife rules), as I don’t think it’s fair to tax visitors to the UK on their non-UK income when they’re not staying here permanently.

I’d get rid of the personal allowance taper and childcare removal at £100k as those people aren’t that wealthy and it’s a very expensive tax rate (for some people up to 99%).

Interesting idea re encouraging reinvestment.

I think the tax bands are way too low & agree that 100k earners are heavily penalised. I would also make child benefit universal.

Can you tell us more about the non-dom rules? How does Sunak’s wife count as a visitor if she lives here? Is it possible for someone who holds a non-UK passport to be based here indefinitely but still not pay tax on their whole wealth (ie the bit they are earning in another country gets ignored)?

Not a question from me, but I have seen mention of loopholes. Loopholes aren't like boxes you can tick to exempt someone from something. When it comes to taxes and loopholes, Gary Lineker springs to mind. Lineker does not get paid directly for what he does as he takes dividends from numerous shell companies in operation. It looks like the HMRC have investigated him before if this article is anything to go by: https://www.theguardian.com/football/2023/feb/27/gary-linekers-lawyers-say-hmrc-tax-probe-looking-in-the-wrong-place

Yes but I don’t think there’s a good argument for increasing the scope of IHT in this way. The inherited £30k was likely post tax income anyway. I think the £325k threshold is about right, as is the residential nil rate band to be able to pass down the generations. Maybe it could be reduced a bit but it would be a political death wish. All it would encourage is spending or lifetime gifting, perhaps to the detriment of the lifestyle of the parent.

(and you’re right, sometimes I forget about those who aren’t UHNW and that lower tax rates/allowances exist!)

How about morally dubious does that have a better ring to it?

Regarding Gary Linnekar I read somewhere that his tweets about refugees and other politic issues were all part of him proving that he wasn’t a direct BBC employee and so wasn’t liable to pay that nearly £5 million tax bill.

I wouldn’t say following the law is immoral. It’s probably difficult for a layperson to understand though.

You would be surprised at the amount of people who actually end up paying more tax by engaging with a good tax adviser.

Of course someone can act legally and immorally at the same time.

Short-term or occasional visitors, sure, but don’t some people deliberately register a lot of wealth to people or companies nominally outside the UK to avoid UK tax ?