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?

All that money and no ability to hire a decent accountant? Btw profits like that mean you aren’t in the category of ‘small simple business owner’.

Regardless I think you’ve moral failings leaving a country that educated you and provided healthcare just because of the tax. I hope you don’t bang on about charities you support with an attitude like that.

Out of interest how does the country you currently reside in treat a child with comparable circumstances to your childhood?

Do what you want but at least own who you are morally and don’t go looking for people to beg you to return to the UK and bestow is with your fabulous presence and minimal contribution.

@VanGoghsDog
Thank you for adding your comments clarifying the U.K. income tax thing...I was not 100% sure as I am American in the US and so pay US income tax myself. I was just disbelieving that the OP can be paying 50% when highest bracket is 45% and I knew they worked similar to our brackets in principle.

The country I have moved is extremely well known for the high level of care it provides to its own nationals - in fact its homelessness rate is next to zero, its state medical care one of the best in the world

Cool. How does it pay for that without taxation? Oil? How will it pay for that when the oil runs out?

And if it is one of the countries using oil instead of taxation then what about all the people it makes stateless so it doesn't have to pay for them? Much easier to crow about how well you take care of your own nationals when you just make all the people you don't fancy paying for stateless.

Either way you're still prepared to leach off another country to feather your own nest.

Or do tell us where this magical country is that does not require taxation or oil to deliver public services and doesn't commit human rights abuses along the way.

And if you are selling services overseas then you will not charge VAT. Get your facts right.

(as Labour always wants

What were the income tax levels under Blair?

My mum always used to say that we should try to design our society in such a way that we would think it was fair no matter what our particular position was in it. I've always thought that this was a sensible approach.

If the OP was in a different position right now, I suspect she might have quite different opinions on what is and isn't fair.

Not being VAT registered also sounds kind of fishy to me

I've never been VAT registered...because my business is not in the UK.

IF my business was registered in the UK, I would have to be registered as it earns about the threshold. I was just (probably badly) making the point that I'd be paying 20% of my sales if I was, but as its a service not claiming much back (as I expected that to be one of the arguments)

Anyway, my point wasn't to say that I'm hard done by, I'm clearly not, my point was that the tax rate has meant that it made more sense for me to move abroad - therefore people do in fact leave the UK because of high taxes.

the problem with tax is it is never straightforward. When we talk about people at the bottom end of the income scale paying a very high proportion of their income in tax it is because they don't just pay income tax - there is also the VAT that they pay on many of the items they need in everyday life.

Conversely when we talk about the tax paid at the top of the scale they will probably count National Insurance as part of their tax bill - and a sole proprietor of a company like the OP will include corporation tax and employers NIC as well as employees NIC and income tax etc.

Tax skews decisions all the time. So a rich person may chose to leave the UK or to enter into convoluted savings schemes to avoid paying it. At the opposite end of the scale I know many people working on NMW for charities who will employ multiple part time workers on restricted hours rather than a few people on longer hours they can actually live off because offering a full time job would mean they had to pay employers NIC so it would be more expensive for them.

IF my business was registered in the UK, I would have to be registered as it earns about the threshold

The threshold is £85,000

And yet you think you would pay over £200k in income tax?

I'm confused

You're a peach OP. I will get my miniature violin out as well.

I also hate the assumption that the poor don't work hard; where has that come from?
There are people working multiple jobs to make ends meet try telling them they aren't working hard enough or if they worked harder they to could be like you OP.

you're vile. The sooner Corbyn is in the better I say.

Op you have no idea whatsoever how VAT works so you are making decisions based on utter rubbish. Perhaps find out first before spouting lies and nonsense about taxes on the internet.

From The Independent
“Officials statistics show the lowest tenth of earners pay an average of 42 per cent of their income in the form of income tax, national insurance, VAT and council tax”

FWIW I agree with OP.

Yes people should pay their fair share, but there should come a point where an individual isn’t being penalised for being successful by paying hundreds of thousands in tax.

Bear in mind these people are also paying their VAT on purchases, which will like be more than a moderate earned contributes in total including their tax bill.

Wealthy people often pay for their kids education, the private health care etc, and in many cases generate employment for others. As such they don’t actually take as much out of the pot as many others do, despite contributing many many times more.

I actually think the Isle of Man system is a good one. People pay income tax up to a personal limit of £115k (figure might have changed slightly lately) but no one pays more than that amount.

I don’t think anyone can really argue that someone who contributes £115k a year on top of their VAT spend etc is not paying their way.

You should ask your accountant how VAT actually works, especially to non-EU customers.

Amazing that you got through the first year without learning these basic principles

That was New Labour, not the high tax, high spend Corbyn Labour

We now have the high borrow, high spend Boris Conservatives...

Is that better?

You clearly have zero understanding of how VAT works, so either find out or dump it out of your argument.

The country I have moved is extremely well known for the high level of care it provides to its own nationals - in fact its homelessness rate is next to zero, its state medical care one of the best in the world

Oh really? Please tell us the name of this utopia where you get all of the above AND significantly lower rates of taxation than the UK.

Countries with complete disregard for humanitarian rights need not apply.

“As such they don’t actually take as much out of the pot as many others do, despite contributing many many times more.”
In actual money possibly. Not in % terms.

I’m also going to presume you’re in one of the Arab states.

So paying tax is distasteful but raising your children in a country where life is cheap is fine? That’s some fucked up priorities to me personally but you crack on.

just to say some of the assumptions on Vat on business is wrong on here . It is more complicated if you are providing a service rather than goods and your business is global .

Also the tax relief on dividends has been reduced dramatically by the current government .

personally I would rather see higher tax bands - then 20% tax for everyone - higher VAT ( so you have a choice what you buy and pay tax on ) and a simplified system so that cash jobs for the self employed are eliminated and that tax is collected . IMO

I don't blame anybody for moaning about taxation. Everyone if they're working or have a decent pension, pays tax and usually has done so for years. Who wants to pay more? There isn't much incentive to work hard and generate money and jobs that benefit others.

It's a shame that some people feel they need to live in another country to avoid excessive taxes. In that position I would try to find loopholes so I could stay here - but I have no wish to live abroad. Also I'm not in the super wealthy category so it doesn't apply, I'm just comfortable.