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?

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

We don't have hi taxes and nor will we under Labour.

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

In an age where oil was so important to the global economy, a trebling of the oil price was 99% of it.

Public services are far worse now, be it social care, public transport, roads, schooling, health... billions have been taken out of the country by selling off former state owned industries with no safeguards.

Sure BR was poor but why? because they under funded it, made it unworkable and then said let's sell it and go back to a regional Victorian railway, they are doing this now with the NHS and in particular GP services.

We do have high taxes. 45% upper rate with 2% NI is 46% in direct taxes with none of the allowance or not as many as we had in the 1970s when my NHS doctor father paid up to 65%. His 65% is not too diffrent from the 49% today because he had mortgage interest tax relief, married man's allowance, cild tax allowances, right to covenant money to family members and get full tax relief, probably more generous pension tax relief than now when today doctors are stopping working extra time because their pensions are subject to massive confisctory penalties etc etc. He also did not have to fund student fees for his children whereas I am paying my children so they don't have student loans etc.

Also stamp duty in the 1970s was much less. Now it is collosal. My son is spending a third of his annual income just to move houses! That is going on stamp duty alone.

When people from abroad live here, they dont pay tax in their country,

I am British living in the US, one of the reasons for the move was high UK taxes. I am now a US citizen. If the UK implemented worldwide taxation and tried to come after my money here in the US I would renounce my UK citizenship as soon as I could.

@Greatnorthwoods Taking into account Healthcare and Federal, and any local State, School district etc and property and sales taxes, how much much tax do you think you are saving?

One thing I've got from this thread is that a lot of people really struggle to see things from another person's point of view is like, or imagine how they themselves would feel in that position.

I think the tax level is about right on my modest income.

But if things were different and the state were taking more than 50p for every extra £1 I earned, I certainly wouldn't like it!

I compared myself London lawyer with NY lawyer once - she and I paid about the same effective rate of tax at that time once local US taxes were taken into account - my council tax is £3600 and hers in the US was higher. It may be different now.

the UK has certainly gone back to being quite a high tax state without many of the perks of other high tax states - I know w Finnish lawyer who moved to London with his wife - both work full time and their children care bills in London for toddlers were TEN times what they were at home. Sweden by the way has abolish inheritance tax entirely. I think we have got left behind in the UK and some people have effective tax rates of 63% when they get to the income level of losing the single person allowance altogether - something lower earners don't seem to appreciate.

It is partly a London problem - just to pay childcare for 2 toddlers is about £20k each so that's £40k of after tax income so about £65k before tax. Then your rent might well be £3k a month so about £57k of before tax income.
So that's £122k of before tax income for our dual earning London couple just to pay rent and childcare. No one is of course going to cry for them of course. Let us assume they have a student loan then they each pay a 9% graduate tax on most of their earnings which could be say £8k each person. so I have got us up to £138k gross just to have zero. Then we add in their travel - not too much probably as I am assuming they are farrly close to London and work and the toddlers.. If they decide to buy a £600k flat they get no first time buyer stamp duty relief as they are over the limit because they live in London.

Not only do people move if tax rates get too high but they also sometimes do less work. I definitely do less now the state steals half in idrct taxation and a lot jmore in indirect taxes like CAT which is far too high, insurance premium tax, stamp duty and I pay student fees and rents for my sons wihch currently costs me about £50,000 a year in after tax income. As many students willn ot be paying back any of their student loans perhaps Labour should give those parents who do fund the children the right to set the student fees and maintenance laon amount against the parent's tax because we have been so good as to relieve the state of what is a huge burden. So big a huge burden are these basically free student funding arrangements the state now provides for many that national accounts have just had be redone and the UK budget is not as good as thought because of the ticking timebomb of student debt that will never be repaid.

Sweden by the way has abolish inheritance tax entirely

Norway is abolishing it this year. And so many Swedes and Norwegians have holiday homes, which in places like Scotland with even higher stamp duty has become prohibitively expensive. I don't really think the Scandinavian countries are quite as socialist as people think.

Actually, its something I'm against. I'd rather see people pay inheritance tax than more income tax. Inheritance fuels high property prices and I don't see why one person should benefit more than another person due to chance of birth, as opposed to being taxed a higher proportion of their income the harder and longer they work.

But socialists are invariably against inheritance tax - strange, isn't it? Its almost as though they want their own children to benefit compared to others.

We don't have hi taxes and nor will we under Labour

So where is the money coming from to put on place all the promises

Haven’t rtft but did we ever find out what business op was pretending to carry out?

Whether it’s right or wrong is largely immaterial. Many people (both natural and corporate) who pay one hell of a lot into the system will leave if Corbyn and his 6th form politics colleagues get in.

Whether it’s right or wrong is largely immaterial. Many people (both natural and corporate) who pay one hell of a lot into the system will leave if Corbyn and his 6th form politics colleagues get in

Enough to significantly impact the economy?

@familycourtq

Taking into account Healthcare and Federal, and any local State, School district etc and property and sales taxes, how much much tax do you think you are saving?

I just did this analysis to answer your question.

I converted DH’s salary into £ then entered it into listentotaxman.com so $67k=£54k

Taking into account all deductions in both countries we are £75 a month better off in the US. Doesn’t sound like a lot, however DH was only paid £23k in the UK for the same job!

YANBU. I know that many of the people on this thread don’t want to hear it but for those of us who earn enough to be in the additional rate it will be easier to just leave. We pay a stupid amount of tax and we are constantly short of money as a result. We have reasons for staying put for now but we also have exit strategies in place in case the burden becomes just too much. Net contributors like us will be leaving.

@SmoothLawAbider pretty much everyone we know that owns their own business is talking about leaving in that event. A lot of people will be loosing their jobs. It’s not going to be good.

@greanorthwoods Thanks for this information

All amounts converted to £ US amount followed by British equivalent.

Social Security: £343 NI: £422
Fed and state tax: £439 Tax: £736

Although we pay for health insurance, we don’t pay for student loans.

pretty much everyone we know that owns their own business is talking about leaving in that event. A lot of people will be loosing[sic] their jobs. It’s not going to be good.
Ah well then, better let Labour know so they can alter their manifesto quick.

Council tax was a little harder, I looked for a comparable size house where we used to live in the UK.

UK Council tax vs US property tax:
$4505vs $4200

we don’t pay for student loans - assume you mean your UK ones? You'd be paying for US college debt if you'd grown up there I imagine.

Net contributors like us will be leaving.
I'd prefer it if you go as soon as possible and take all similarly think people to whatever tax haven you prefer ASAP :)
Don't wait for Corbyn or another Tory gov to persecute ou any more, you poor wee lambs.

Haven’t rtft but did we ever find out what business op was pretending to carry out?
Sadly not, OP seems to be long gone.

@familycourtq

Correct, yes I guess we would be if we had.

Thank you to everyone who has replied.
I stepped away from the thread for a bit and haven't caught up yet; despite what I'm getting called here, I'm not vile, greedy, immoral nor selfish and I do have feelings, and it was getting a bit much to read the personal attacks.

I clearly didn't write my OP in the right way.
My point is that, regardless of whether you think its right, increasing taxes are going to drive high earners out of the country - I am an example of someone who has moved because the UK tax system was taking half of my business income - and yes, it is approximately half.

A percentage based tax system means the more you earn, the more you pay. Pn top of this, the percentage you pay increases as you earn more. And then the tax free allowance is removed.

I have never tried to make out that I'm struggling, never asked for sympathy and never made out I was hard done by (for those that went out of their way with spiteful "poor you" comments and photos of violins) I was using myself as a direct example of when high taxes push out high earners.

And for those that didn't spot it in my OP, moving away was a temporary measure to save to get a house back in the UK where I'd be happy to return and pay the tax. Had I stayed, it would take be more than 10 years to save the same amount - it makes logical sense.

I have been taking on board the counter arguments (sure the point of an AIBU is to debate and learn) and I appreciate those who have responded diplomatically.

Again, I will not be stating what my business is. Its obvious why I won't be doing that, but rest assured its a real business. It is completely possible to make the money, though its ridiculously hard and really risky - part of the reason why the payout is so high.

On these threads I've always wondered why people would rather emigrate than move to the North of England, or Wales, or Scotland.
They'd have all the benefits of education, NHS etc, and much lower cost of living.
That would surely more than offset any tax increase.

Haven’t rtft but did we ever find out what business op was pretending to carry out?

Does it have any bearing at all? By the tone of these sorts of messages, I could send a copy of my passport and bank statements and still be accusing of making it up.
If you think I'm not genuine, report the post. I've posted before about my business, the country I live in, my previous job etc - MNHQ can see all that.