High earner leaving UK because of tax

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Hi all,

I'm well aware that I'm highly likely to be utterly slaughtered for this (thus the name change) but having read the thread about Corbyn and seeing several people saying that the theory that taxing high earners would make them leave the economy is a myth, I thought I'd share.

I'm British and was bought up on the breadline, went to state school, have a disability - just to pre-empt the "privileged" comments.

I started a business not that long ago (fortunately selling a service globally, and not registered in the UK as its main market is the Middle East) in the first few months it became obvious it was going to do well and I hired an accountant.

To cut a long story short, if I remained UK resident then my tax bill for my first year would have been approximately £120,000. This would have been just under half of the money I bought in.
Year 2 - tax bill would have been £230,000.

My family are not well off, so I was supporting a fair few people on this plus I started with nothing, so my first priority (after my family) was to save for a house as I was living in rented accomodation.

I am well aware that I am earning a high salary, and would never argue otherwise. But reading on here, people seem to think that a 6 figure salary means that you buy yachts for a laugh and eat diamonds for breakfast.

Good size family houses in my area started at about £500k.

For us, it made sense to move abroad for 5 years or so, save the money otherwise spent on tax, come back with that lump sum and buy a property outright.

And that's what we've done, it was insanely easy.

Now, the current plan is to come back to the UK in a few years time and settle down. We'll have a nice house then, and the tax bill we'll just suck up because we like the UK.

I keep seeing people harp on about raising taxes for the wealthy...if this happens, I know that we won't end up moving back. Because paying out half of my earnings is galling enough.

The top 10% of earners pay 60% of the tax bill.
The top 1% of earners pay 28%.

These people will also be privately funding their own medical care and schooling for their children. They'll also be heavily contributing in other taxes and of course pay VAT on the things they buy.

Raising taxes, abolishing private schools, penalising the wealthy in other ways is just going to drive them out of the country - leaving the tax pot far emptier, but the majority of people still relying on it.

AIBU to think that penalising the wealthy is not the solution?

There’s a difference between a backbench MP suggesting a policy and the shadow chancellor.

user
why not? they get 40% tax relief on contributions and the tories have had 10 years to rescind it, so they are happy to take the money too....

Always struck me as a regressive where the wealthy get 40% relief on pensions but poorer earners get 20%.

There’s a difference between a backbench MP suggesting a policy and the shadow chancellor

It was from a well regarded tory think tank, headed by IDS who is a very influential back bencher.... don't down play its significance, cons have already increased retirement age to 68.

I was allowing that OP was legit until I read the working 100 hours/week bit. Come on, OP, link us to your pyramid scheme or webcam porn. You know you want to.

Oh, that and she's moving somewhere with high welfare state standards but she'll get to keep 100% of her earnings. This special place can't actually be named. I wonder if anyone else is selling unicorns.

Always struck me as a regressive where the wealthy get 40% relief on pensions but poorer earners get 20%.

That’s because you get the tax you already paid as relief. Why should someone who paid 20% tax get twice that back?

Is your name James Dyson?

I’m amazed that the calculator puts it at around £10k for my NHS care. It doesn’t ask how many outpatient appointments I’ve had (as it only asked for missed ones) for example or the fact that I’ve had blood transfusions etc etc.

Anyway, I am a higher earner and my income alone puts us better off than 71% of the UK. I pay roughly 50% of my income in various deductions. Do I mind? Not especially. I am acutely aware that I earn a hugely comfortable salary, which means that my deductions are more than the salary of my colleagues and that we can have a SAHP without fretting hugely. That is a privilege. This country is fantastic (I’m an immigrant) and my children are growing up in a country that at least in principle looks after the most vulnerable.

jasjas1973

There’s still a difference... I think it’s dangerous to think that McDonnell won’t try to do what he says he wants to do.

Winesalot Normally I would say that corbyn wouldnt be able to but now ... not so secure. Either way, it is likely he is posturing to test how much support he might get for such a platform. It is not likely that he will ever be to ‘seize’ private or trust owned property or companies in peace time.

I think its posturing and softening people up for tax rises. One thing you can be sure of in the UK these days, the answer to all evils is always yet more tax rises.

I notice that CGT taper relief has been halved recently.

If you compare the lives of working people to those 20 years ago, a lot of the deductions and exemptions have been removed. Meanwhile, certainly in the last 9-10 years, salaries have stagnated.

Bye then

OP, please tell us what your business is, and where you have decided to live whilst saving up. I'd really love to know!
Your mother absolutely did receive family allowance, everyone did when you were born. And your calculation of the cost of your education is, as another pp has pointed out, much underestimated. The amount you quoted from the link you provided is how much it costs A PARENT.
You forget to mention the amount of interest your savings will generate. Much more than the average £25k a year earner can possibly hope to save. In other words, your money also makes money without you having to do anything!

Rhayader - Labour policy has to go through several hoops before it is approved, so if its in their manifesto, then yes may well happen but so far it is not, so it won't.

The tories introduced increases to the retirement age without reference to a manifesto.

Personally, i think its more than possible they will increase the retirement age, not to 75 but 70 or 72, they have the form for it.

So expect it in their 1st or 2nd budget.

jasjas1973

I guess we will just have to wait and see. Neither of us knows what will be in their manifestos but given the current state of politics it shouldn’t be too long until a general election...

I knew that this would get a beating, but can those calling me selfish, greedy, with no morals actually put their hands on their hearts and say that you would be happy with paying out level of money that you've directly earned yourself?

Errr, yes? Do you think other people don’t ‘directly earn’ for themselves? Or don’t pay tax?

Yes Rhayader we will!
i'll see what is in Labours manifesto but down here the choice is Con or LD and i don't support (or trust) the Cons anymore, haven't since the 90s.

NRTFT. In the US income is taxed at the federal and state levels. It's well documented that people can and do move from high tax states to states with lower or no income tax. I know it's not the same as moving abroad but people do respond to economic incentives. My own state has experienced this for years.

Population loss plagues New York

can those calling me selfish, greedy, with no morals actually put their hands on their hearts and say that you would be happy with paying out level of money that you've directly earned yourself?

You seem to think that just because you run this business, you've in some way 'earned' your money in a more deserved way than anyone else who has a job and receives income for their work. Your income is no more worthy of being kept in your pocket than anyone else's.

Also, your logic surrounding the top number of people paying the most tax is skewed. You pay more tax because you have more income to be taxed, therefore you also have more leftover income to play with. You are absolutely not hard done by here. And I say this as someone who will likely also be hit by increased tax rates under Corbyn (upper middle earner but in Corbyn terms probably 'super rich!')

I'm with you OP.

If the tax bill is too high, it will push people to move elsewhere.

Fact.

Less tax for the U.K. Doh!

Sensible tax rates please for the comfortable/wealthy. Imagine how much tax the wealthy pay via VAT with all the goods they buy. Do not push them away!

Anyone mentioned Laffer curve yet? If I remember correctly high level or taxation at some point reduces total tax collected by government as more people try to avoid it by cheating/moving to other places/reducing their earnings. However I think the tendency is that countries first have low taxes to encourage development but once they reach certain level they can increase them. so ME countries in the future may increase taxes too. Also AI advances and improved collaboration between countries mean that the tax avoidance will be more difficult-> it's safer for government to raise taxes. so I think whenever you stay you may have to pay more taxes in the future.

Wow some jealousy on here OP.

I suspect many want you to earn £250k, pay 60% in tax, another 35%to charity, so 5% left to you to pay your rent, groceries and maybe have £100 a month left to buy yourself and the kids a treat.

Now there's an incentive to do well at school, be an entrepreneur and work your socks off without any employment rights. Bingo!

I totally understand why you have chosen to do this. It makes perfect sense. But I also think it is morally questionable to move abroad to avoid paying tax. I'm not saying it is wrong or that being morally questionable is wrong. It works for you and your family. Unfortunately the general population in Britain won't have benefits form it.

Jealousy? Lazy, lazy argument.

Have you noticed what a state this country is in? Everything has been cut to the bone with an increasingly bad, selfish attitude towards the vulnerable. And I'm sick of it.

Love the way OP thinks she magically called all this money she earns into existence completely independently of the society and economy in which she operates!

OP, your business does not exist in a vacuum. It depends on social structures like legal rights and the institutions to protect those rights, and shared infrastructure like roads, water, public transport, electricity etc.

It has customers and probably employees and they are also only able to perform those roles to your benefit because they benefited from public services like education, healthcare, infrastructure, police etc.

And while your customers and employees probably don't claim benefits (I assume you would have the self awareness not to whinge about tax while paying staff such low wages they have to claim benefits!) your staff and customers almost certainly do benefit indirectly from the other business (supermarkets, coffee shops, cleaning services etc) who pay low wages to keep their costs down, forcing their employees to claim benefits which are basically an indirect subsidy to the customer.

No man, or woman, is an island. And certainly no 21st century business exists without directly or indirectly leveraging a lot of tax-funded public services.

Honestly, I would love a way to let people like you opt out of society, as long as society is allowed to opt out of you as well!

"The latest figures show the highest earning 10% paid about a third—34%—of their income in tax."

"Only the bottom 10% buck the trend: they pay about 47% of their income in tax."

fullfact.org/economy/what-do-wealthiest-pay-tax/

Sorry if I don't cry for the 10%.

You lose your tax free allowance when you earn over 120k. It starts going down as you reach 100k. I’ve only got through the first couple of pages so someone might already have mentioned that.

YANBU OP. I think it’s unfair to take such a high % of people’s earnings, no matter what they’re earning.