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?

I am a liberal through and through and not rich myself, but I do believe that if the rich are taxed too highly they will leave the country taking their taxes with them and this will damage the economy more, affecting the poorest. Obviously we need to get the balance right between what will be tolerated before the highest earners take their taxable bucks with them and what we need in the tax pot. I think we need to be looking at this post not as personal story of one person but if on mass how it affects our country as a whole.

no one ever paid 90% of their income, it was 90% on earnings over a million or something

It was on income over £20,000

£20k in the 70's is the equivalent of £200k these days.

@DonningDaFlameProof is not going to share a no cost service which will make you £240,000 in your first year ...

@Grimbles *Indeed... if everyone, including businesses, paid the tax they should do anyway, then maybe there'd be no need to have higher rate taxes."

Isn't this essentially," if everyone paid more tax then there''d be no need to raise tax rates." :)

The OP was way off beam with the original statements - especially % paid by high earners - but if we expect to spend ~ 40% of GDP on the welfare state then taxes will have to go up. On median earners just as they will for high earners. Squeeze the rich won't raise enough money.

DonningDaFlameProof is not going to share a no cost service which will make you £240,000 in your first year

No, I'm not. Because there is no advantage to doing so, this thread isn't about my business and even if I did I'm sure it'd be picked apart. Considering that I have been accused of being a prostitute several times already, a scam artist on top of the other personal insults - why on Earth would I give people the opportunity to link my normal username or, worse, my details IRL?

Again, I am not lying. But it is against MN rules to troll hunt - if you don't believe me, report the thread.

None of this sounds right. The fact is you are either tax resident here in UK or in the country where you are running the business.

The idea that you didn't benefit from other UK citizens' tax revenue when you were younger - and as an adult! - is laughable. Living Ina safe country because we have a police force. Benefiting from State education, the NHS, etc etc.

Also, as an IFA, you obviously are paying more tax than you potentially could if you were being advised correctly. But actually, I don't believe the percentages for a minute.

There is SOME evidence that disproportionate taxation can result in lower revenues but we are a long way from disproportionate in the UK right now.

OP, you keep saying things like ‘money that you’ve earned directly yourself’
Everyone with a job, no matter what they earn, earns it directly themselves. I earn no where near your salary, and I work for a large company. I earn my money myself! Nobody goes to work for me. I get up everyday and go to work. And I am more than happy have deductions out of my salary to pay for people who are not in a position to earn what I do. I’m not talking about benefit scroungers, but you say you have a disability, you are lucky that this does not affect your ability to earn. Do you not think we need to help those who will never have the same opportunities?

You have been privileged, you've had a good education and health care. If you now use private health are where do you think these Dr's train? Same with teachers.
Let's breakdown what you have said,
The £ figure you pay for tax is irrelevant as it is a % of a larger figure so it's not like you will have earnt the minimum wage is it?
Family homes in your area don't start at 500k, the type of house you want starts at 500k and that's a very different thing.

You should get slaughtered on this thread as you have taken out of the system that is funded by high and low earners and are now buggering off as you don't want to fund the same system to help others. That's your choice but don't pretend you have been forced into it. It's crass to portray yourself as some sort of victim.

Stay abroad as you have not contributed to this country. You deserve to come back and reap the rewards when you see fit while we keep the company afloat paying our taxes. Rich bitch!

Completely agree OP. People about about fairness, and forget what the dragons bang on about time and time again. A smaller slice of a large pie is much better than not having any pie at all.

This shows up in other areas too. I'm a high earner, and would be happy to work more in a field that lacks workers like me. The tax system completely disincentivises me to work more, and when this is brought up the only things people want to say is that I shouldn't earn so much in the first place. So crack on with those thoughts and enjoy a skills shortage.

Its not just the prospect of higher taxes but also Brexit (and all the associated xenophobia ) that makes the UK less attractive.

I came to the UK for college on a scholarship funded by my home country and stayed on. I have always been a top rate tax payer, used private healthcare, DC never used state schools and overall have only been a net contributor to the UK tax system.

We moved to the US for higher salaries and less taxes but fully intended to return to the UK. Despite significantly higher taxes, it was a price well worth paying for a liberal, tolerant country with a sense of fair play and justice.

However, since Brexit, we are increasingly unsure about returning. Boris is no better than Trump. All the liberal values that so attracted me to the UK when i first came seem to be a thing of the past.

So for us, tax alone does not drive our decision but all things considered, Brexit + higher taxes certainly makes us think twice about come back.

and the tax bill we'll just suck up because we like the UK.

The UK is a good place to live to the extent that the government can afford to fund a functioning infrastructure, legal system, healthcare system, police etc. etc.

If you don't want to pay taxes other countries are available.

no one ever paid 90% of their income, it was 90% on earnings over a million or something

It was on income over £20,000

Unearned income!
how many times do you need to be told this??? it was not on wages a top surgeon or lawyer earned.

Super hi rates had existed since WW2 99% !! and continued throughout the 50s, 60s and most of the 70s.

The thing that really stands out about the OP is that although they are complaining about Corbyn, they appear to have left the UK under Conservative administrations.

"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."

Being non-resident for 5 years seems a convenient period to stay away to avoid coming under 'temporarily non-resident' rules.
www.litrg.org.uk/tax-guides/other-tax-issues/capital-gains-tax/capital-gains-tax-individuals-not-resident-uk

It is absolutely clear that some people have the ability to arrange their lives to avoid tax, and will do so under any governmen.t. The OP claims that it is "insanely easy."

It's just not clear why anyone should care whether the OP comes back to the UK.

Super hi rates had existed since WW2 99% !! and continued throughout the 50s, 60s and most of the 70s.

Top rate of tax was also very high in the US during this period.

Unearned income!

Such as book royalties which led to huge numbers of successful authors/writers moving abroad. Or intellectual property income which led to huge numbers of inventors/designers moving abroad. Or on dividends, which led to huge numbers of company owners moving abroad.

The stupid thing about it was that "unearned" income is the easiest to move abroad, so it was inevitable they'd be a flight of money/assets out of the country to avoid the penal tax.

It's just not clear why anyone should care whether the OP comes back to the UK.
^This - and add in all the wankers continually threatening to leave if we don't make things exactly as they like - to paraphrase Billy Connolly when someone came up to him complaining about his language - " if you don't like it here, stay the fuck away"

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

the bottom line is that you can't tax people who don't have money.

The top 1% pay more tax because they have more disposable income.

Good point! Coldiloxs

The point the OP makes is that higher rate tax payers receive less and less reward for increasing their salary in the uk. They also usually pay their way for everything so can end up not significantly better off. To then intend to increase this will put off a lot of people from earning in the uk. It’s about getting the balance right as they are paying the majority of the tax for the remainder. If you reduce the amount of people in this category there is a problem for the rest.

This rhetoric makes me furious.

For the first time in my life, I'm a higher rate taxpayer. I'm very proud of that, as it means that I can contribute to society and to this country, and help those who need it. There have been times where the lower rate of taxation has been soul-destroying, because of the price of everything else and the cost of renting etc. I'm no longer in that position. And now that I've got there, they're suggesting that I should be taxed less? The moment that I can afford to pay more in tax, I should be saying that I don't want to do it? Fuck that for a game of soldiers. I'm a home-owner, I'm childless, I earn more than enough. Tax me at the higher rate. Don't increase the burden on those on NMW, or zero hours contracts, or those at the mercy of private rentals. I can afford it and I'm more than happy to do it.

Not intended to be a stealth boast but I'm really sorry if it comes off as one.

I think the issue is everyone’s situation is unique-no children & house owned may mean wages primarily to yourself. For those touching higher rate tax they may have several dependants, so divide earnings for example by 3/4/5, have children in university so paying £5k a year to top up living costs and then can’t afford to holiday. There is no distinction for this.

So all is smaller business owners will just pay our taxes and contribute to looking after the less fortunate fairly. But people like yourself will earn and avoid more. YABVVU. You like to live her but don't want to contribute fairly 🤷🏻‍♀️🤷🏻‍♀️ the mind boggles.