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?

I have to chuckle at the lack of understanding of a business owner of basic accounting.

Revenue and earnings/profit and what you pay yourself are not at all the same thing.

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.

An excellent point. Everything to do with having children costs extortionate amounts of money. Those on the lowest incomes get benefits/support/free services, but those in the squeezed middle don't. Childcare costs and uni accom/living costs are a real problem these days. Then as soon as you hit higher rate tax, you also start to lose your child benefit too!

YABVVVVVU how selfish! So the welfare state was good enough for you when you had nothing but now you’ve been lucky enough to make it big you would rather leave the country than pay your fare share. Corbyn will be taxing the top 2% who currently have accountants who help them to dodge paying any tax it probably won’t even affect you on what you earn but you’ve shown yourself up to be incredibly selfish and horrible I hope you take some time to reflect!

Whotells - you are childless. So you have more spare money than parents. I am paying about £50k a year out of after tax income for the twins' university costs so as not to burden other tax payers with loan debt they may never pay back. For many y ears over 5 children and working full time even with 2 week old babies I have paid lots for childcare.

If we allowed all working parents wheren both parents work full time to set their childcare costs against their tax that would start to even things outa bit as it can cost over £20k per baby for full time childcare in London and most parents don't have one baby and often will have baby plus toddler so £40k before you even get started on London rents.

@Xenia Yes, I understand that - should've made it clearer that the rhetoric I'm referring to is the OP's. There are clearly situations in which people who are classed as high earners actually come out with less than you'd imagine (I think I covered that in rents but perhaps should've added childcare) and who therefore need more help from the taxation sphere. My bugbear isn't with working parents, it's with people who can comfortably afford to pay tax (like me) and who instead threaten to move abroad to avoid doing so. Not with people who are struggling - for whatever reason - to make ends meet.

@Kazzyhoward Yes, sorry; I should've been clearer that what I object to isn't the squeezed middle but the OP's attitude. Those who can comfortably pay more tax should, rather than threaten to move abroad!

"you are childless. So you have more spare money than parents"

One might also say "You are rich. So you have more money than people who are poor."

regarding paying tax in the 70s

*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*

No it wasn’t.

I should know I lived through it.

My parents should have moved away but chose to stay. We had struggled to get in a position to have the nice house but then couldn’t afford the upkeep. It took 6 years to sell at the price we had bought it for.

6 years of living in a caravan in the front garden because we couldn’t afford to heat the house or the electric to have the lights on.

The family business was on its last legs because no one could afford to buy anything and if I remember correctly Labour back dated the tax rises so we had a huge extra tax bill just as everything went to shit.

Tax for all those that had a high income was 75% and 15% for “unearned” income, so 90% tax then it was raised 83% on earned income and with the 15% for “unearned” making 98% tax.

Grimbles

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

Her workers were on strike (not for the first time) because they said they couldn’t manage on the money they were being paid because their amount of tax had gone up and the goods in the shops had gone up and there was this cycle of inflation.

The lady wasn’t sad at all. In fact that time in our house she was over the moon.

I think the years of worrying and scrimping and saving and having to operate the factory on her own because her staff were working to rule and wouldn’t stay for overtime to finish off an order were behind her and the relief was immense.

The oil crisis she could handle but the jump in everyone’s tax tipped virtually every business over the edge.

Those saying they would stay even if they had to pay 70s amount of income tax, I think you need to look at how it would affect your children and their lives

Labour say they are going to tax the top 5% of earners.

To be in the top 5% you might only have to earn about £80,000 per year.

Not exactly a huge amount if you work in the City or are a qualified Accountant, solicitor, doctor etc

Are we really happy to wave goodbye to these people.

hen I cleared out my father's papers after he died I found a 1970s tax list. I remember his upper rate was 65% (NHS dotor) but he then had to pay 15% more than that on his modest building society savings interest so 80% - in other words if you saved jsut about all of it was removed although giv en today you get just abhout nothing on your savings anyway perhaps we all mostly end up just as badly off as ever sure that the only certain things in life are death and taxes as ever..........
Then we had 60% inflation over 3 yyears in the 1970s which meant savings in effect halved in value - people had to rush to buy things before they were out of their reach.

I don't Labour stand much chnce of winning power but should not be complacent against it. I hope every mumsnetter will vote whenever we have an election whatever party they vote for. Set about registering now. Make sure any children of 16 or over are on the register ready to vote at 18 and if you ahve student children persuade them to vote too (in our famly we tend to keep those on the register at home but with a postal vote in the election is term or holiday time).

If you reduce the amount of people in this category there is a problem for the rest.

There is an alternative - reduce income inequality so that the tax burden can be spread more fairly amongst a larger number of people.

I know that's easier said than done, but if only a minority of people have significant disposable income, only a minority of people will ever be able to make a significant contribution to tax, and that is true whoever is in government.

Love the Marxist spirit on here. Agree. Roads, schools, hospitals all need to be paid for. From taxes. Just a shame governments prefer to waste that money on non-existent ferries, HS2, wars in Iraq, etc, etc. Would be much happier to shell out my earnings if those in charge weren’t so incompetent/corrupt.

So OP lives in a country with 0% income tax. Has a business with a turnover of at least £500k pa without any costs and there is excellent healthcare and no deprivation. He/she is saving to move back to the UK unless taxes are going up. Is that an accurate summary?

Just two questions: Why do you want to come back? Is it the weather?

Penalising taxes is definitely not the solution. Neither is living in a society with the harsh Victorian values, the way Torys are heading towards. Corbyn's Labour are heading towards Goodness knows where. I'd like to live in a civilised and fair society where everyone's needs are met, meritocracy rules, the rich use at least part of their wealth and power to serve the society, and where no one's penalised but the criminals. At the same time, I understand that penalising the rich would only impoverish a country and that's why taxes for the rich have to be internationally competitive. IMO our government should seriously and fearlessly look into the amount of the waste and incompetency in the public services before raising our taxes irrespective of how low or high our income is. I personally do not like to compensate for those.

We left the country for a few years in order to secure a good home for ourselves, private education for our kids and enough put aside in case the NHS couldn't meet our needs. We feel secure and wish it for everyone. We pay all the taxes asked of us and put a lot of our time in voluntary work like the council, environmental activities, charities, etc. We've paid back many folds as we should have done. I do believe that the more we have, the more we should give because we've been fortunate enough and bare a bigger responsibility towards the society we live in. I don't expects acknowledgement or thanks for it either because I'd like to see improvement in the society I live in and do my bit towards it. I'm definitely not alone in that where I am in the UK. NGOs are big here.

You've done very well and I'm very happy for you. Keep it up.

Our family income is top 1%. We pay our full whack of tax and wouldn't dream of leaving the country or using wealth planning dodges to avoid taxes.
I also grew up on the breadline, parents in low paying jobs but didn't claim benefits - I did however get my free healthcare and free education and low rent council housing as a child, made use of the cheap sports facilities at council run leisure centres, used public tennis courts, went on the occasional trip or scheme put in place for low income kids.
Then did well at school, got qualified, pull in a big salary and now I pay into the same system. That helps other lower income families.

Pulling the ladder up after me now I'm at the 'top' has never occurred to me.

Dear OP, What do you think a fare share tax should be for someone like you?

I think, everyone should be free to decide what's best for them within the laws. We're free to choose where we want to live in the UK or outside of it. We decided to come back after we felt we'd be financially secure enough. Others are allowed to choose too. "13.1% of NHS (England) staff say that their nationality is not British". They left their countries for a better future as many British left this country for the same reason. Everyone needs to decide what's best for them and it would be wonderful to keep and hold the ladder down for others in their communities to come up too! That's when life becomes more meaningful for everyone.

Off topic but why are you paying 50k a year for your twins university costs @Xenia ? That's 25k each, tuition fees are 9k, the recommended maintenance for living off (which you are paying yourself) is about 9k. That's 16k for living expenses a year which even as a student in London (I was one recently) is far far more than enough per month?

Mary1066 They left their countries for a better future as many British left this country for the same reason.

Well, exactly. My father was from China and he managed to move continents to find his future. Admittedly I might not have so many ties as someone who is not from a mixed background but I can't help thinking about the Anglo-Saxons who must have left Denmark or wherever by boat to move somewhere they hardly knew for a better future.

So I must admit I am a bit sceptical about being told people shouldn't move to other countries to benefit their own futures. Theres loads of people who work in several different countries in their lives. I will certainly move abroad if taxes go up, in fact I'd be quite happy to move to another Northern European country other than Britain if the opportunity presents itself. (I also enjoy a bit of variety in life).

I haven’t RTFT but I completely agree with you. Raising taxes on the wealthy isn’t the solution.
If Corbyn got into power we would also leave the UK.

"Off topic but why are you paying 50k a year for your twins university costs @Xenia ? That's 25k each, tuition fees are 9k, the recommended maintenance for living off (which you are paying yourself) is about 9k. That's 16k for living expenses a year which even as a student in London (I was one recently) is far far more than enough per month?"

Happy to answer that although I agree it is a bit off topic:
£9250 x 2 ( fees) = £18,600
£150 a week x 2 x 52 = £15,700
Plus I pay their rent and bills for the hous and halls in first year. Halls in first year were about £7800. Rent this year is more like £6k x 2
So that's £46300 this year but more in year 1. But I also pay for their car and their travel costs to and from and bills in their accommodation and some clothes so it will still be £50k a year.

So I am saving the state about £9250 plus £4k x 2 per year (or £8k if we were badly off - as they would get double the loan) - I will expect my medal from Corbyn in due course, given most students will not pay all these loans back so am doing the state a huge favour for the good of the nation)

Halls in first year were about £7800

Xenia's right. It's a rip-off, but that's the minimum in some university halls. And that's for self-catering.

So if you want them to eat / buy text books / come home occasionally, you have to top it up a bit, even if they do get part-time jobs that don't miraculously mess with their studies.I

Sorry to join in tangent.

If you want to leave, leave. You've benefitted from other people's taxes through all the public services they pay for - NHS, education, police, transport, fire service etc. and now you want to not put back in... I'd rather you lived somewhere else TBH, one less selfish person here.