The Super Rich

[malificent7]

I watched two tv programmes on them last week. Many living in one of their many opulent palaces all saying they didnt think they should be taxed more.
Then all the news about off shore tax evasion. If i dont pay my taxes i get a court order from the council while i sit in my tiny rental.
Aibu to feel a tinsy bit annoyed? Nothing will change though will it?
Perhaps i nedx to work harder.

The pint to he program was making was that the top 1% are buying up London properties that they have no intention of living in, thus not spending locally and using services, theatres, transports etc so some building are left 70% unoccupied

Imagine if your street/school/local businesses lost 70%?

Therefor they aren't creating the wealth they were meant to, but effectively earning money on overpriced river view properties.

The poor are poorer because the rich aren't creating the jobs and there for sharing the wealth they he scheme was meant to have

It also suggested that had they not invited the wealthy over to avoid take we would all be better off by 20%

They set up a further scheme where they suppprted business that either targeted the very rich, diamonds etc so the rich stayed richer or the very poor, it was interesting viewing

Yes Ess was dropped because no one liked using it that needed employee protection. It was poorly designed and didn’t do what it was intended to do in practice. But is there a difference between a fish person using a scheme and every day worker?

A fish person?

www.google.co.uk/amp/www.spearswms.com/panama-papers-legacy-of-tax-avoidance-began-with-blair-brown52923-2/amp/

An interesting view on who encouraged the super rich to buy London properties

Rich - bloody phone

I think there needs to be a massive review of all tax laws. Instead of starting from a place where this money earned by method A is liable for Y tax and so on, it should start from the premise that all money is taxed at X rate (where X rises when it reaches the next threshold).

Then you could have a system of exceptions: the first £12,000 of wages, money paid in pension contributions up to a certain amount, interest from ISAs/national savings, the first £350k of the estate of someone who's died etc. The onus would be on the company/individual to show that the exception applied, rather than on HMRC to show that the money was liable to tax.

DP's ex has her own business. It's run from a room in her house, she has one (very part-time) member of staff and negligible expenses. The last year they were together (approx 12 years ago), the business turned over £180k. She paid tax on what she paid herself as a salary, around £28k pa gross. The remainder, after expenses, was treated as a "dividend", but instead of paying the dividend to herself, she "lent" it to her company. Then, as the company repaid the "loan", it was tax free, because loan repayments aren't taxable.

Almost all her wining and dining (and there's a lot of it, especially "wining"), her car and related expenses, a chunk of her household bills and so on goes through the business so that it's offset against the corporation tax.

Her business? She's a tax consultant.

She reduced her "salary" massively a couple of years after they split up, so that she was eligible for working tax credit and their son would be eligible for help with fees at uni, or some such. Which is just taking the piss, imo.

Lakie, corporate entertaining is not tax deductible though is it? I think you are allowed £50 a head for a staff Christmas party but not meals. If I took a client out for lunch I could not set it against tax (I am a sole trader).

Also the Government changed dividend tax rules about a year ago as a result of which loads of people have given up their one person limited companies as the tax rules means there is not very much difference in tax depending on whether you take money out as dividend or salary or just take profits as a sole trader.

I am not saying there are no rule changes the state could still come up with but the Government has made massive recent tax changes. Eg if you own a residential property in a limited company now in the UK with the property worth over £500k you pay an annual tax on the property - ATED and you pay 15% stamp duty. As a result loads of people have stopped owning residential properties through companies. Similarly London house prices are dropping because of the extra stamp duty on second properties and the fact even if you make a loss on your letting you are still taxed on a profit you don't make because of interest rate changes.

I don't understand the loan example very well however above.
If you declare a dividend within a limited company then that is something taken by decision of shareholders and is then taxed in the hands of the recipient. So surely you either declare the dividend or you don't. If you do declare it then she will be taxed on it. If she then chooses to make a loan to the company that is a separate thing surely? Directors have to lend money to companies all the time to keep them going and it's a risky thing as they often lose their money.

But are we paying into pensions just to minimise our tax liability or to make provision for our old age? In my case it was the latter.

She paid tax on what she paid herself as a salary, around £28k pa gross. The remainder, after expenses, was treated as a "dividend", but instead of paying the dividend to herself, she "lent" it to her company. Then, as the company repaid the "loan", it was tax free, because loan repayments aren't taxable.

Complete garbage. The company will have paid corporation tax on the profits before dividends. There's a tax charge payable on loans advanced. Loan write offs are subject to tax/NIC. I could go on, but someone had been feeding you a lot of bull.

Lakie, corporate entertaining is not tax deductible though is it?

Correct it isn't.

I enrolled in my firm's pension scheme. At the time it was compulsory.

Or a system that ran out of money when the rich did the maths and worked out they'd be better off elsewhere?!

This is interesting. A lot of rich people are threatening to leave if Corbyn wins the next election (I think he will) but how many will actually leave remains to be seen.
If there is a mass exodus then Corbyn will have to put some sort of currency controls in place but a lot of money may have left the country by then.

I think there is a difference between the rich and the super rich there. The rich may or may not be able to up sticks and leave - bankers would be able to work anywhere; lawyers not so much, for example, plus issues such as family ties will get in the way - but the super rich can move anything and anywhere they like!

I believe Corbyn and mcdonnell would prompt a brain drain, and could set back investment in this country by decades. I also think that a fair number of the students that Corbyn has won over with tuition fees would then take their degrees abroad where there are better prospects. But then look at the current crop of incompetents. you'd need a crystal ball to know who the hell to vote for these days :(

Complete garbage. The company will have paid corporation tax on the profits before dividends. There's a tax charge payable on loans advanced. Loan write offs are subject to tax/NIC. I could go on, but someone had been feeding you a lot of bull

I concur. There are ways that high earners have used 'loans' to earn an untaxed income - Gary Barlow and Jimmy Carr being 2 famous examples of people that have been investigated - but it's far more complex than that.

I believe Corbyn and mcdonnell would prompt a brain drain, and could set back investment in this country by decades.

Look at all the wealthy celebrities, who threatened to move to Canada before Trump won the election in the USA. These are empty threats.

Ah, yes I agree with the analysis (most recent) on loans and tax treatment above. there are certainly areas the state needs to get to grips with. In my view as someone else just wrote too the more complex the state makes the rules the more people can twist them and use them to their advantage. Each relief they bring in then causes problems - eg the state said invest in films, we relaly want you too, special tax break for films. People invested in films (and then some schemes went too far). Then we had Patent Box tax relief - and now I see the state is trying to row back on relief it gave for R&D (I saw an ad or had an email the other day - you may not think you invest in R&D but you may well do and we can get you tax relief - it was accountants trying it on in my view but taking advantage of the extra tax break).

"On everything no matter the amount earned" - someone said why not tax at lower rate everything you earn. That is very hard to do. Eg if I bought chairs as my business for £100 and sold them for £101 then you would tax me £1 profit presumably and could not take some of the turnover. Someone else's business they might have very very few expenses instead and most of the £100 they receive in is profit. (And we already have to add 20% to all we charge to the state anyway in VAT (those of us who have to pay VAT).

I think if we reduced all income tax and NI to one flat 33.3% rate and had that as the corporation tax and capital gains tax rate we would have much less tax evasion and probably receive more tax revenues. If we coupled it with abolition of a heap of allowances and tax reliefs we might be quids in as a nation. We could at the same time make those richer pensioners who actually earn more than the single person allowance pay 33.3% tax on the pension not the current 20%+ then it would also help with inter generational unfairness,.

Ah but trump wasn't hitting them in their pockets. People tend to move for money rather than principles!

Laki the woman should know better being a tax consultant. If the dividend was declared she would have been taxed on it. If she waived the dividend she wouldn’t have received it. If the company loaned her money the company would have paid about 25% tax (repayable on repayment of loan) depending on amount of loan she would have paid tax on an amount equal to interest on the loan and taxed on full value in a write off. A loan to the company would have been out of her own taxed income. I think she was talking a load of crap to big herself up to ex! Or not very good at her job

Well if the rich wont contribute they may as well bugger off. I guess they create jobs. Last year i worked for a company where the CEO warned 250,000 pa whereas some of us (me) were struggling to eat. I worked hard too.

Boards aren't in the market to pay more than they need to to fill a role.

If they need to pay £250k to attract the calibre of CEO they want, a CEO with sufficient experience to satisfy the markets and their shareholders, then they'll pay it but their contract will stipulate what they're expected to achieve or they're out.

At the other end of the scale, if they get a dozen applications for a minimum wage job, well then they won't pay more than minimum wage because why would they.

Shareholders, which may well include anyone who has a pension, wouldn't let them do anything else.

Imagine if your street/school/local businesses lost 70%?

You don't need to imagine. Rural communities have experienced that due to second home and holiday let owners buying up properties in their villages making them virtual ghost towns and causing rural amenities to close down. Then the same property owners whinge that the last pub has closed and they/their guests have nowhere to buy a pint on the odd day they fancy one!

This is interesting. A lot of rich people are threatening to leave if Corbyn wins the next election (I think he will) but how many will actually leave remains to be seen. If there is a mass exodus then Corbyn will have to put some sort of currency controls in place but a lot of money may have left the country by then.

You mean like pop starts such as Shania Twain who left Canada and beggared off to Switzerland to avoid high Canadian taxes on her mega earning world tours and album sales? She got out before she earned her money, so currency controls etc weren't an issue. (But of course, it wasn't tax motivated (ha ha), it was for "creative reasons" - not that Canada doesn't have mountains, lakes etc similar to Switzerland!).

Yes, people do leave and most people who are not well off would prefer everyone had less than the rich had so very much - which is a perfectly defendable position (although not my view). I can work anywhere there is email.

However I like England. However it is not so great that if the state started taking more than half my income in tax (which is about the current rate ignoring all the indirect taxes we all pay (insurance premium tax for example keeps going up and up and up and no one complains)) I would consider moving now the youngest children are teenagers so almost out of education here.