High earner leaving UK because of tax

[DonningDaFlameProof]

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?

@InMySpareTime

Moving North wouldn’t have worked for us, we would have still been in a crap financial position, and DH would have taken a pay cut.

OP you are welcome to move wherever you like and post it about on here.
I like living here (UK) and wouldn't want to live anywhere else.
I invite people who feel the "burden" of tax is too great to clear off as soon as possible and I don't feel we will be worse off for their departure.

On these threads I've always wondered why people would rather emigrate than move to the North of England, or Wales, or Scotland.

weather, facilities at weekends and holidays.
At least that's mine.

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

Tory spending plans are way higher than Labours, so perhaps you better ask them?

Labs plans were costed at the last GE and deemed to be ok by the ONS.

You need a better accountant.

We paid £630k in stamp duty when we moved to this house last year. No, it’s not a mansion - it’s a 5 bed period property in London. Not detached either. It had no kitchen, no lights, ancient plumbing and needed a total renovation.

We couldn’t sell our old house due to Brexit uncertainty and the depressed housing market in SW London. It was worth about £3.3m, now it’s probably around £2.9m. This is a very standard Victorian semi - nothing special.

DH used to employ 2000 people in the UK, from starter salaries to directors on over £200k. Now it’s dropped to less than half of that - again due to low confidence in the business markets as a result of Brexit uncertainty. So that’s already about 1000 taxpayers out of work. Many were from overseas, particularly Germany, Italy, Poland and the US, so went back or are making plans to.

He pays maybe several million in tax every year, There is much talk about the impact of a No Deal Brexit, but so much damage has already been done to certain businesses in the UK. DH and I are both staunch remainers and tbh, wouid go elsewhere if it weren’t for the fact one DC has seven more years left of school and we are committed to this. Many people are shifting funds overseas eg. there are tax-free schemes in Italy. To be honest, we fear No Deal more that a JC govt as there’s only so much damage JC can do in 4 years (if he even lasts that long). But No Deal will have much more damaging repercussions for longer. - maybe a generation? The poor will be worst affected. We have no confidence whatsoever anymore in the Conservatives due to their blatant lies, delusion and willingness to play mind-games at s time of national crisis. How dare they hold the public to ransom by refusing to reveal whatever scheme they have to get around the Benn Bill. I have met some of them a few years ago, eg DR - you would never have thought they’d be stopping so low as to try and deceive the public in this way. Nobody I know will be voting for them and this is people who would all fall into the highest 1% of earners category. They have sold out to populist, divisive tactics and sound bites. It’s scary to watch. We will be voting LD and hoping for the best.

On these threads I've always wondered why people would rather emigrate than move to the North of England, or Wales, or Scotland.

Housing costs might be cheaper, but so are wages. Most professional jobs pay a lot less in the regions compared with London. Same with business opportunities for the self employed - much less scope to get the same kind of lucrative customer you can get in London. People tend to migrate away from London once they're passed their prime working years, i.e. for retirement, semi retirement or winding down.

We don't have hi taxes

62% on incomes between £100k and £125k is ridiculously high and doing a lot of damage, especially re GPs and dentists who are choosing to reduce their working hours to avoid it.

Stamp duty is particularly nasty and stops jobs mobility.
I am no confidence eitehr this Tory party nor Labour will ever cut tax. I know Labour will bring in an awful lot more tax so I hope everyone will vote Conservative. Labour has not won an election since 2005 so let us keep it that way.

People asking about moving North. i am from the NE. I certainly love the Northumberland countryside and can in theory work from anywhere. When my children leave home I could probaly live anywhere although I have no immediate plans to move. My family children are all down here now and my parents int he NE ar dead and their siblings so no particular tie left to the NE. Also stamp duty makes people less likely to move within the UK. Iam not sure I would risk Scotland these days as it has higher income tax than England and some land taxes I don't like.

62% ?? ?

You've got me there, could only find, 20%, 40% between 50k and 150k and 45% on incomes above 150k.

or is that on pension contributions?

I am not a higher rate tax payer but I pay for my children to go to private school. If they are outlawed, I will not suddenly be paying loads of extra tax to cover the cost of my children being in a state school unless Corbyn raises taxes for lots of ordinary working people, which would be extremely unpopular. There are lots of families like us with one parent working just to pay the fees while the other pays the household bills. The labour party’s policies do not stack up.

Yes Xenia, the UK has done soooo well under 10 years of tory rule.

Vast majority poorer than they were 10 years ago.

Headline tax rates kept low, indirect taxes, esp council tax kept high, services kept low.

Inequality up, homelessness up, food banks up, poverty up child poverty up.

Division across the country UP!!!

They've really done a number on you.

62% ?? ?

You've got me there, could only find, 20%, 40% between 50k and 150k and 45% on incomes above 150k.

It's just not that simple - those are the bands.

But, £12k is tax free, so if you earn £13k, you only pay 20% on £1k, which is £200, so £200 tax on £13k is an effective tax rate of c1.5%.

The same but in reverse happens further up the chain - once you get to £100k, you lose £1 of the £12k tax free allowance for every £2 you earn. Ay £124k you not longer have any tax free allowance - so your effective tax rate rises as you don't have the zero band any more.

And, yes, you lose tax relief on pension savings.

One part of the system I cannot accept is the one where one parent earns an amount eg £50k and two parents both earn £49k each yet the one with the £50k is expemted from the child allowance. I know my figures are probably inaccurate but sure you will get the gist of inequality. As for the high tax, surely you knew you would be expected to pay higher taxes. If not, are you sure you are a "successful" business person.

I agree with you, OP. It's ludicrous you should be forced out of your own country because you are successful and eneterprising.

Many of these taxes are punitive and spiteful rather than useful or rational. Labour kicked up an almighty fuss when the top rate of tax (raised by them when in office) was lowered from 50% to 45% even though in a couple of years it had raised an extra £10billion.

Shame on you.

You lose your tax free allowance once you go over 100k, £1 for every £2 over £100k, so you pay income tax on the lot.

@Yamyamdad

I don't think you worded that well.

Did you really mean "You lose your tax free allowance once you go over 100k"

Agree with you 100% OP. In an ideal world we would all be equal financially, but the reality is if we all received the same financially there would be no incentive for anyone to work their arse off, going to UNI studying getting degrees and ultimately getting a well paid job if others just didn’t bother and received the same financial rewards. I say this as someone with a pretty modest income.

I would never move back to the UK.

You've paid more than your fair share OP and people want you to continue to do so, so they can keep their hands in the pot.

Ok, I'm not rich. I work in the NHS, at a low paid front line level, and I pay taxes like the majority on here. But the point is that hammering the rich, with too high taxes doesn't work. Does nobody remember the 70's where some people (admittedly super earners like pop stars) paid 90% tax. Obviously, they moved away from the UK and paid no taxes here. If the tax had been hed at 40-45% many would have stayed. The treasury would have got 40% of something instead of 90% of nothing.

As to criticising those who move abroad, to escape high taxes, how many of us would do the same if we were in that position? I certainly would.

It's a difficult line to walk - the government (and by extension HMRC) have to determine the optimum rate of taxation (income, CGT, IHT, corporation, VAT etc etc) at which they can generate maximum revenue without driving people and businesses away. It's hugely complex, and of course every individual and business with differ on what they think is too high a rate of tax.

I've seen several high earners move businesses abroad in recent years (accountant). It may be partly due to Brexit but they were also moving businesses to countries with more generous tax regimes. It does happen, whether we like it or not.

We cannot compel people to remain in one country (unless there are legal restrictions of course), so the govt has to try to make the UK attractive so those here will not be tempted to leave and those in other countries might be tempted to come.

I don't blame people for moving abroad if they can do better overseas and I can't get angry about it. It's precisely that kind of movement that could also benefit the UK should tax rates here be determined to be more favourable than other countries.

You’re looking at tax as simply ‘what do I get, for me?’. Oh I don’t want public healthcare or education- therefore I get nothing for my tax. Tax pays for our society, physical infrastructure like roads and bridges ( vastly under invested for decades), security- police, army, intelligence services etc, health, education, libraries, parks, environmental protection, protection of listed buildings, investment in the arts, emergency services, social services and so on and on. You say you like the UK, so so many other wealthy people. Why do you think so many Russian oligarchs live here? Because it’s a nicer place to live generally, once you venture outside your privately owned bubble. And that is paid for by taxes. If you’re looking at living abroad for a few years in order not to pay tax I assume you’re looking at somewhere like Dubai or Saudi. You’ll see the difference in their society and ours if you ever venture beyond the air conditioned ‘ex pat’ bubble.

I don’t know OP. I generally earn 100k plus but I fear Brexit ( and what it will do to the industry I work in) but would welcome a redistributive Labour government.

but for those of us who earn enough to be in the additional rate it will be easier to just leave

Dh hasn’t mentioned anything about leaving..

He may be planning to sneak off I suppose, ill hide his passport