If you are so rich, you don't work, how do you pay taxes to support the economy?

[Palmtreesandsand]

If you are unemployed and have DLA, I get that it's right you don't pay taxes.
If you work, you automatically pay tax.

However, if you don't work because you don't need to because of inheritance or you can retire at 50. How do you pay to support the economy? You still get to use public services? How do you contribute to these?

Good question, although I suppose they do pay VAT, road tax, council tax etc

Income tax isn't the only form of taxation. VAT, tax on savings interest, capital gains tax, council tax, etc etc. P.s I'm sadly not wealthy enough not to work.

You still have to pay income tax on a personal pension ……….. 🫣 xxx

Income tax on interest in money in the bank, investments, dividends. Capital gains on disposals. VAT etc the list is endless…

Retired people still pay tax if their pension is high enough.

Also income from investments is also taxed.

There are taxes on savings
Rich people probably spend more on clothes, cars, holidays etc at20% vat that is a lot
Probably buy a lathe house and pay a lot of stamp duty

Because the government is a big, bloviating entity with vast amounts of overreach. As with everything in life, if something exists, it's being taxed. And if it's not being taxed, the tax will be applied and backdated. Everything you own is being taxed in some way, shape or form. I see why tax havens are so attractive.

Everyone pays taxes of some sort - tax is more than just Income Tax.

Every time you buy a bar of chocolate there is tax in the price.

Value added tax
Fuel tax
Council tax
Capital gains tax
Inheritance tax

Plus, they actually DO pay income tax. Income tax is based on your INCOME (the clue is in the name). There's plenty of ways of getting an income without working.

You do a tax return and pay tax on the income above the threshold. Same as any self employed person.

DH is retired with no pension but with money in investments. I also have money in investments. We release enough every year to live on and submit tax returns. We try to avoid releasing too much which would take us into paying corporate gains tax which is 40% I think. But we do pay tax!

I'm not rich but I don't work and pay tax on my private pension similar to if I did work, you don't pay NI on a pension though.

Thank you for the replies. That makes total sense!

The thread about how to improve the economy got me thinking. Lots of people said to tax the rich more and it made me wonder.

They still pay tax on income. So any income on their capital/investments will be liable for tax, but you're right, if they're just living off a nest egg, there will be no tax due, although they will argue that tax was paid on it as it was accumulated.

My salary is too low for me to pay tax. I don’t feel at all like I’m not contributing to tax. This is partly because I think the job I do is a valuable public service that should be properly tax payer funded but currently isn’t. I have a low hourly rate, low hours and do a lot of unpaid overtime every week, so I am contributing to society but in a different way.
Also, I can only afford to do this because of past earnings and my partner’s job. If I earned more, my partner would cut their hours so our take home income was the same. If we did that, we’d end up paying less tax overall than we do now because my tax allowance isn’t being used.

Council tax, VAT,
Income Tax (over £12,570 allowance) on private pension
Capital Gains Tax on selling shares, (over £12,300 allowance)
Stamp Duty Reserve Tax on buying shares
Insurance Premium Tax

Income tax on dividends too

I retired in my 40s, no inheritance

I think the only "tax"you don't have to pay when drawing your pension is NI, unfortunately everything else still applies.

Whilst there is income tax on "income", it's possible to have an "income" of £25k-£30k without paying income tax. Just a matter of planning.

The first £12.5k is tax free due to the personal allowance.
The first £2k of dividends is tax free as it's within the 0% dividend tax band.
The first £1k of interest is tax free as it's within the 0% interest tax band.
The first £1k of casual self employed work is tax free due to the trading allowance.
The first £1k of casual property income is tax free due to the property allowance

No NIC on any of that either (currently).

If you've an investment portfolio, you can sell shares each year to produce a capital gain (i.e. profit) of £12.5k covered by the annual capital gains tax exemption. (So you put your investments in capital growth funds rather than income funds to "create" a capital gain and "sell" a portion of your portfolio each year to hit the £12.5k!).

That's £30k completely tax free. And that's before investments/savings held within ISAs which are also tax free in terms of both income and capital gains.

(I'm deliberately not mentioning the additional £5k personal savings allowance because of the complexity, but basically, someone could have an income of £35k if their "split" of income/gains is properly planned out so optimised into the different categories of income).

Obviously people also pay other taxes, such as VAT, fuel duties, tobacco/alcohol duties, etc etc. but I'm just talking about income tax.

The additional £5k personal savings allowance is very complicated, I guess some might be wanting to use that as savings interest rates go up a bit.

Any income was taxed when it was earned originally also which is why the argument against huge inheritance tax is that it is double taxation (eg I earn 10k and pay tax on that.. I then save it away and give it to my child .. who then has to pay tax again?)

If you simply earned a lot of money for a few decades you paid a lot of tax and if you then live off that for the rest of your life, it’s yours to do with as you wish isn’t it? - you’ve already paid the tax on it.

That's not true though because almost all of these big estates come from property gains, which haven't been taxed at all.

If you sell there is capital gains payable on any second / third / fourth etc home.
If you’re talking about huge estates like in the past I don’t actually think many people live like that anymore. They have significant inheritance tax bills and often struggle to even fix the huge homes they have inherited hence why they are rented out for expensive weddings etc. With a few notable exceptions I really don’t think it’s the aristocracy that live in estates who make up the mega rich anymore. Just walk around Mayfair … surely that’s who we’re talking about …