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?

Stop thinking of it as a penalty and think of it as a contribution to society you’re lucky to be in a position to make.

I am happy to contribute when it's equal and fair. When it isn't, then it is a penalty.

If I was part of the super rich, everything would be in various trusts and schemes and I would pay even less - I can't even blame them. But how having to pay a higher RATE is neither fair nor acceptable.

Put everybody on the same rate, the ones with more pay more, but it's fair. How difficult would that be.

Grimbles
why don't you if it's that easy?

Because I'm not really into exploiting other people?

As it is, I am happy to 'get by' on the close to £5k monthly net income we and counting myself lucky that we can have a decent lifestyle despite paying a higher rate of tax.

Fact is if we have a no deal brexit, rich people probably will leave or at least squirrel money away even more than they do already, taxes will unavoidably increase in order to fund all the additional bureaucracy and pay for bjs promises re infrastructure investment

I honestly don't think that I make any difference whatsoever.
That said, 99% of my clients are abroad, so I am bringing currency and all my tax are paid on income received from abroad. I am not sure that pushing people like me away is such a great idea.

I think my kids benefit from being in an English-speaking school at the moment, theirs are really good, and international schools abroad are very expensive. I am still on the fence about moving away and if things don't improve and I keep being penalised, I will relocate and I won't be the only one- many businesses have already gone.

Penalise people who earn more than you and get rid of them? Doesn't seem to make much financial sense. It's not about how much I have left at the end of the month, it's about how much I have to give away compared to others and if the country is fair.

@ thatoldpinkumbrella - completely agree

Bert - at no point did I say that low earners did not work hard

OP, if you are not living here for 5 years, you aren't obliged to pay tax. I dont have a problem with this at all.

Labour will raise taxes on the rich enough to please their voter base without scaring off so many rich people/corporations that they damage the economy (because that would obviously not please their voter base). It's quite simple. And they have experts and advisors who know much more about how to do that than the average mumsnetter. So no, it's not something I would worry about even if Labour did somehow win the next election.

I would happily see OP move her made-up income to her made-up country too.

Your OP sounds so greedy and vile I don't think it is even worth entering a conversation with you.

Most UK high earners won't be able, or won't want, to move to low tax jurisdictions

I can set up business pretty much anywhere in the world. Dp works for an international company with offices in most countries.

When you have a much higher taxation a lot of countries that don’t seem feasible atm become attractive

jasjas1973 Not everything can be put down to the fact that there was an oil crisis

According to many on here we just need to pay more tax to get better services.
But as you agree during the 70s everyone was paying far more tax but public services were even worse than we have now.

There was a reason why services were privatised.

Run by the government they were shit.

Memories of demanding alternative transport with the rest of the passengers who when we got on the train expected to be pulling into London at around 9pm on a Friday night instead of being told to disembark and find alternative transport at Stoke station at gone 11pm because the driver had walked off the job.

We think he lived in Stoke and didn’t want to do the return journey from London so dawdled till he hit stoke at the end of his shift.

I know people who closed their businesses down and moved to the US, Spain, Italy and Switzerland.

Not everyone would you describe as rich fat cats.
Everyone we knew who left had earned every penny of their money from in the beginning cleaning toilets and holding down multiple jobs to getting in before everyone else and staying late into the night to keep a company above water

One lady my gf knew came to our house on the way to the airport.

The straw that broke the camels back was she was left in the offices of her factory the previous night (she always worked late into the night) trying to pay bills and do her tax return and was worrying over how she was supposed to buy more raw materials and the demands of the strikers and coming to the realisation that the only people who were benefitting were those that had gone on strike for more money. The work force she considered as family and them going on strike was a kick in the teeth

She was trying to keep everyone with a wage but the profit she made either went on buying in raw materials, the wages and then tax.

She was in her 60s and the factory had been her life. Her husband and her had started it when they first married. They had slept in the factory because they didn’t have a house. She had worked at every piece of machinery when they couldn’t afford to hire workers

Her realisation was why should she bother. The hours were long (regular 14-16 hour days) Any money she got in went straight out and what was left went to the government

To clear the picketers she brought them in to the office and agreed to their demands and told them to come back Monday then brought the estate agents and auctioneers in and after packing a suitcase handed them the keys to her house and factory and told them to sell the lot and send her a cheque

Those that leave are not only fat cats in suits who earn telephone number salaries. They are also the ones who have worked hard and long at their business and have 20 -30 employees who are out of jobs.

Multiply that across the country and you have an employment crisis

It's quite simple. And they have experts and advisors who know much more about how to do that than the average mumsnetter.

Yes, Labour’s top people are well known for their numeracy!

I think that tax rates need to be regularly reviewed to make sure that they are still working. All brackets.

As someone who has moved between countries a couple of times, I must say that I rarely meet someone who leaves solely for 'tax' reasons if they are living in the country that they grew up in. There is always other factors at play although, there are people who are totally financially motivated of course. (even moving to a 'low tax' country like Singapore, it may be a desire for the expat lifestyle as well. And how many actually retire there?)

I have seen positives in this exchange of people as these roles are then taken up by others with slightly different skills and enriched experiences (maybe even someone who had previously left and now returned with experience they would not have had if they did not leave). Either way, the roles will be filled, new companies will be established in the mid to long term. Is it optimal? no. But not always all bad either. Particularly since the UK does not necessarily invest in training like it should.

Yes, Labour’s top people are well known for their numeracy!

Politicians may be idiots but they're still much smarter than a bunch of mumsnetters!

@Oliversmumsarmy

As sad as your tale is, that ladys business was obviously not viable anymore which wouldn't have been anything to do with having to pay a high rate of tax on her income...

And they have experts and advisors who know much more about how to do that than the average mumsnetter.

Gordon Brown didn't with some of the crazy changes to tax/benefits he made.

He was apparently genuinely shocked when the likes of window cleaners converted into limited companies to benefit from the zero rate of corporation tax! He didn't think people would convert to limited companies just to save tax. His motivation was to encourage people to start businesses.

He didn't think that his draconian tax laws change re pension fund dividends would cripple pension schemes and virtually cause the collapse of most final salary schemes.

Or what about his tax credits which needed drastic rule changes for several years running after he introduced them due to them being badly conceived with some crazy practical problems.

All of that was entirely foreseeable to anyone with half a brain. Obviously Brown and his experts/advisors didn't have half a brain between them.

Labour will raise taxes on the rich enough to please their voter base

If Brown's disastrous years were anything to go by, they'll say and do all the right things to appease the masses, but then ensure there are plenty of loopholes so that the "rich" don't actually need to pay that much tax, as a sop to ensure that they stay in the UK.

Tax avoidance/evasion rose massively under 13 years of Brown, obvious loopholes weren't closed, he decimated HMRC by closing huge numbers of local offices and making experienced staff redundant. So there weren't enough tax inspectors to tackle the ever increasing evasion/avoidance. It was as if that was what he wanted!

How much do you need to live on? £500k a year? What do you even spend that on?

You think you should be able to buy a house outright each year?

You think rich people should be able to choose whether and how much tax they pay?

On your bike

OP it’s all very well you and your wealthy friends opting out of state education and healthcare, it’s doesn’t because you don’t need it anymore other people don’t. Those people who work for you, who buy your products, who clean your offices, educate your children and serve your lattes, they all need state healthcare and education. If it wasn’t there you would have a lot less customers to buy from because they would all be scratching around to pay their medical bills and educate their children. Ever even considered that?

Stop thinking of it as a penalty and think of it as a contribution to society you’re lucky to be in a position to make.

We are almost approaching peak do-as-I-say-not-as-I-do on this thread. I do remember reading a comment on here once lecturing us on how taxpayers were lucky to be able to work. Just remember that, while standing at a rainy bus stop, waiting for the next bus because the first one didn't turn up. Remember how lucky you are to pay your own way in this society.

This is such an inspirational site at times. Those times obviously vary though, because outwith standard working hours, the posts tend to become more realistic.

You think rich people should be able to choose whether and how much tax they pay?

On your bike
She has chosen not to live in this Country for 5 years, therefore I dont think she is obligated to pay tax here. When people from abroad live here, they dont pay tax in their country, why is it different for the op?
I think what she is saying is..the more high earners are taxed here, the more they will look to live abroad.

www.gocompare.com/health-insurance/the-bill-of-health This is amazing - according to this, I have had 187,139 spent on me by the NHS (lots of surgeries and hospital stays)

@Kazzyhoward universal credit

I've come to the conclusion due to who I've worked with that politicians are stupid

A bunch of mumsnetters would be better as they would realise that their specialise advisor has missed something with the policy they think is a good idea.

Good tool. £16k here - so every year I pay more tax than the whole of my life I have taken out of the NHS! i want a tax refund.

Perhaps Labour should give people a third off their tax bill in return for not using the NHS that year.

Some ex-pat athletes refused to come to the London Olympics unless they received special dispensation from HMRC that they'd have no UK tax to pay on their earnings whilst in London. That's appalling. Just shows how "the rich" deliberately leave the country just to avoid UK tax and go to live in tax havens.

Just like pop stars who plan their world tours carefully so that they're never in one country long enough to be liable for tax there, and then go back to their tax haven country afterwards.

Then you have that guy who registered his yacht in the Isle of Man to avoid paying UK VAT on it.

If UK taxes weren't so high, that kind of people wouldn't feel they have to go offshore in the first place and the UK would get a shed load of extra tax revenue from them.

When people from abroad live here, they dont pay tax in their country,
Actually that isn't always true - it depends on the Country. It certainly doesn't apply to Americans, just as a random example - their government taxes their income wroldwide.

From their IRS site -

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.

www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad