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?

No, I mean estates left by "ordinary". Most people don't pay tax unless they leave more than £1m and much of that will be profit on their home, which won't have been taxed at any point.

You still pay tax on any savings income or dividends from investments 🙄
Of course if you have millions in a bank account/s bearing no interest then you won’t pay income tax.

Through VAT. It's 20%.

Yup, all income is taxed, not just working for an employer.

'Tax the rich' they all cried!!

'Oh.. the rich seem to be quite effortlessly mobile and they've now fucked off to other countries.. now the total tax revenue is lower than before because it appears they were paying in a rather large % of the national pot.. damn this problem just got worse..'

😉

The kind of rich you are talking about generally speaking use public services less, as they pay for private.

For example, my parents live on an unadopted road that they pay to maintain, the local bin service won't come to them but they get no reduction in CT, my husband and I have private medical care etc. They won't typically commit crimes that cost the taxpayer money, etc.

I personally don't avoid/evade tax, but having worked on government contracts, I'd be able to come up with far better ways to help society than to voluntarily give it to this shitshow of a government.

@alwaysmovingforwards yes I suppose many of the rich will always find ways to pay less tax. They can move, get a good accountant, tax lawyer. Have off shore accounts.

@Badbadbunny thanks for the break down. It looks like the more affluent will have good tax lawyers to advise them and will know where to put their money.
Let's face it, most of us would if we could...

There aren't enough "rich" to tax to raise the significant amounts needed for public spending that actually makes a difference.

Incoming money isn't just from working for an employer. People have to fill in a tax return and show any money that's come in, such as interest on investments, rent from tenants, etc. They are then taxed the same as anyone else would be who was working.

Income tax is only one form of tax, there's plenty others

There are taxes on dividend income, capital gains, pension income etc. However, taxes on wealth do tend to be lower, and easier to legally avoid, than taxes on income in this country. We could much better when it comes to taxing wealth IMO.

The point at which you become a net contributor to the economy is around £38k, I think

Assuming an average number of medical appointments, usage of roads, children to be educated etc, anyone earning less than that is probably taking more from the system than they are putting in

So if someone has made so much money that they can retire in their 50s and live off their savings, they probably paid well above average tax during their working life and have ‘paid it forward’

Plus as lots of others have pointed out, will still be paying tax on interest and dividend income, plus on any investment returns

If you can afford to retire at 50, you've probably been paying 40% tax for quite some time, plus more in NI contributions and will pay tax on your pension.
Appreciate there are ways of dodging some inheritance tax, but some will pay that.
Most of the people I know who retired early (late 50s) do a tremendous amount of voluntary work, all unpaid so giving back in another way. Or provide free childcare for their grandchildren.
Obviously still a nice position to be in but it's not like they aren't paying/haven't paid in some way.

Although it's been mentioned upthread, inheritance tax is a big way that these people will contribute to the economy (when they die). Obviously as with any tax there are ways to plan around that with clever lawyers (whose income will be taxed...)

Council Tax
VAT
Insurance premium tax
Road tax
Fuel duty
We still pay income tax
As mentioned previously, less likely to use public services, we have private medical insurance, don’t use things such as libraries, local sports centres/swimming pool for example

Genuinely rich people don't pay IHT, they use trusts.

The wealthier you are, the more likely it is that you will have an accountant who sorts out your tax avoidance for you.

This.

Your average moderately well off person will likely pay a fair bit of income tax on their investment income and their estates will be liable to IHT. Whereas HNWI use Trusts, corporate structures (some of which will likely be offshore) and other tax planning methods to minimise their tax liabilities and legally avoid IHT to a large degree. You can't put both groups in the same category at all.

I'm so rich I don't work. I still pay income tax , VAT on goods and services, road tax, Council tax fuel duty, and tax on the wine and beer I drink. I paid Land and Buildings Transaction Tax when I bought current home.

They pay income tax on investments, vat, excise duties etc.

@Octomore you pay tax on trusts though, you can often end up paying more tax through trusts than through IHT. The benefit is the tax is spread out over time so it is easier to pay rather than having to liquidise assets to settle the tax bill.

I know someone who has a small private pension & state pension so doesn't pay much tax. Made about 1m in property gains though so will be paying tax on investments I assume.

The truly rich aren't paying as much tax % wise as someone reasonably well off.

Yes, agreed that trusts pay tax, but upthread people were suggesting that HNWI pay lots of IHT, whereas the reality is that they don't.

HNWI can also really maximise on things like the ability to give large sums of money to their descendants tax-free provided it's regular gifts out of income, not capital.

And offshore corporate structures are still as popular as ever! They can be complicated and expensive to set up, so there's a reason people still do it.

Yes, that was me, and you're absolutely right! OP asked about people who are rich through inheritance and also those who've retired early, and I think that a lot of people in the latter category (wealthy but not super-wealthy) do get clobbered for IHT. Sorry to muddle both groups together.