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?

someone on PT wages on NMW pays 50% in tax and can’t afford to eat.

I don’t pay ANY income tax because I earn under the threshold. So the above statement is rubbish.

Higher salaries don't go on PAYE, and go through all possible legal schemes to reduce that ridiculous amount.

My DH is a higher rate taxpayer. He is fully PAYE and doesn’t avoid tax. Between us we have a lower income than our neighbours but they pay less in tax and receive child benefit. How is that fair?

Personally I believe income tax should be a straight percentage of earnings not increasing just because you work harder or longer or smarter and earn more but I know that will never happen.

It's not true that VAT is really a tax win consumers rather than sucessful business.

Consider a non-registered service provider (as the OP, but in the UK) with income of £83k (and assuming the VAT threshold of £85k). As a service provider there are very few items the trader pays for to deliver the service, but assume 10k. So the company keeps £73k.

Next year the service provider has an income of £85k and must be VAT registered. The customers won't pay more above the market rate, and so income remains £85k. But now has to pay £17k VAT but can only claim £2k back (on the 10k). The company keeps £60k.

The consumer really pays nothing more (the end price is set already), the company now pays £13k in VAT.

Overall the OP is just saying that at some level of tax people must choose not to engage as the reward is not there. This has to be true - if taxes were 100% then nobody would work, so there must be a level less than 100% at which point maximises income for the government (if that's what we want). The history of the farmers in Russia shows this to be true in practice.

Money has an absolute value - we generally pay the same price for identical items. In an ideal world we'd all pay the same absolute amount in tax, this % taxation (nether mind progressive aim) is already unfair on those who use their human endeavours most efficiently through effective working. People should not expect to receive services beyond the amount of tax they personally pay - anything else is really living off of somebody else's hard work. It's up to each person to ensure they meet all their own needs.

In this example, i've actually paid back my round of drinks several times with income tax over my 12 years of UK employment. And by remaining in the UK i'd be paying for the drinks for everyone else in the pub, hundreds of times over.

Well, no. Other people are chipping in to the drinks kitty too.

It’s always good to work on humility. For all of us. But you especially need to.

Why can’t you see it that you’re fortunate to be able to be a valuable net contributor for a while? You fortunate to be able to go expat to save for a house. Now you’re back and you’re able to chip in to the common pot in a valuable way. Why don’t you just feel good about that? Maybe later something else will happen and your situation will alter again.

I don’t pay ANY income tax because I earn under the threshold. So the above statement is rubbish

Well it’s rubbish because your dh is a higher rate taxpayer. Honestly 🤦🏻‍♀️

And you also pay other taxes - VAT, road tax, council tax? They all go into one pot to be redistributed. Please do some reading up.

Personally I believe income tax should be a straight percentage of earnings not increasing just because you work harder or longer or smarter and earn more but I know that will never happen

No, because that would be difficult to find the right rate.

Why can’t you see it that you’re fortunate to be able to be a valuable net contributor for a while? You fortunate to be able to go expat to save for a house. Now you’re back and you’re able to chip in to the common pot in a valuable way. Why don’t you just feel good about that? Maybe later something else will happen and your situation will alter again.

Have you read my post? This is exactly what my plan is. To go away to save for a house and then come back a contribute. It is literally in my OP.

"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."

No, because that would be difficult to find the right rate.

Let’s give it a go anyway!

My disability is a moderate mental health once, the provision for which on the NHS is extremely low.

You claimed your family hadn't received benefits from the state. Unless you're claiming that none of them have ever been ill, and that your mother didn't use maternity, vaccination and child health services when you were a child, that looks a tad unlikely.

But AGAIN, this isn't specifically about me

BS, your OP is full of I, I I, me, me, me. You used your own circumstance as an illustration of why people will/do leave, the natural consequence of that is people will discuss your example.

Keep it factual and impersonal if you don’t want to lead a discussion in the direction of personally analysing you.

I knew that this would get a beating

No shit. It's so obvious how this thread was gonna go that I'm not sure why you even made it.

Or did you have this hope that all the prollies would say "oh poor rich woman, please don't leave! Hey everyone! Let's all vote Tory to make sure these rich people stay in the country and get to keep more of their money!"

Seeing as the top rate on the highest slice of your income is only 45% your are either lying or engaged a truly appalling accountant.

OP, I would close this thread.

Too many people on here are jealous and just plain nasty.

Good luck in your 💫adventure💫.

Forget about the moaners on here who haven't got the mind set to try a bit harder to make their own lives more enriching. They just whine at anyone else's good fortune through damned hard work.

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."

So your main point was that rich people like you will leave even though you actually won't really leave you'll just go away for a few years then come back and spend the rest of your life paying the higher rate.

@DonningDaFlameProof so your discussion isn’t about what you claim it to be about? You haven’t left the UK you’ve temporarily relocated in which case what’s the problem?

High earners leaving for good is a discussion point. High earners moving for a bit with the intention to return because they haven’t got the patience to save or can’t get a mortgage isn’t the same thing is it?

Why would your circumstance have any relevance at all to arguing tax rates? Your talking about changing a long term policy to benefit your short term plans.

Keep it factual and impersonal if you don’t want to lead a discussion in the direction of personally analysing you.

If I did this people would bay for an example, or ask what on Earth I know about it and I'd be crucified for drip feeding.

The end of the day - I had a choice = remain in the UK, but lose half of my earnings. Move abroad, and keep 100% of my earnings.

People also seem to be ignoring the fact that I paid tax for 12 years before leaving the country, so not just taking without paying back.
Not to mention the fact that I plan to come back, and pay the high rate tax once I've saved for a house.

I think YABVU and YANBU in a way.

I am very lucky to be in a job that pays me over 150k a year and when I do a tax return each year there is a always a small eek feeling at the amount that goes in tax. I think very few people who aren’t in the top tax bracket realise what you lose when you get to that point, no tax free allowance, lose much of your free nursery hours, pension allowances change dramatically so you get taxed on much of what your employer contributes, no marriage allowance: so at times the effective rate of tax you are operating in is much above 50% for portion of your pay.

However I recognise how lucky I am. My life was saved by the nhs as a baby, I was state school educated, went to uni when tuition fees were very low, my parents received child benefit. I am proud to be British and I have always paid every piece of tax I owe without any attempt to avoid it. It’s part of being part of a fair society.

I don’t feel rich even though I know compared to most we would be considered to be so - our mortgage on a 3 bed house is very high due to living just outside london, my partner hasn’t worked for the last three years while studying and due to health conditions - we do not live a rich lifestyle with loads of holidays. I add this just for context - salary alone doesn’t tell you what lifestyle somebody can or does have.

I am angry that successive governments don’t bother to find a way to tax many companies who operate successfully in our country properly - if they would do that, we would all be ok within the current tax bands. I am also frustrated that I am paid through PAYE and that there are a lot of self employed who do not declare properly and so are effectively taxed at a far lower rate than me with the same salary.

The fact that you seem to have chosen to leave the country as soon as possible once you became wealthy - purely for tax purposes - is really poor. Especially as you have presumably gone to a county with a terrible attitude to women’s rights: you have taken the benefit of being British to create a good life for yourself (free school where being a woman didn’t hold you back, free nhs etc) and then as soon as you have a chance to pay back to that system properly you have gone. Horrible attitude in our current system. Really horrible and selfish.

But...and it’s a big but.... it all depends what labour do the tax system. The idea that the Tories suggest they would lower taxes is insane (except maybe the pension position now which is stupid and counter productive). But labour take them too high and people will go. Sort out the likes of amazon before you take more from individuals. It’s about fairness all round. The poor should pay the least, well paid individuals next, billionaire companies the most.

I’ve been a higher rate tax payer (not now I’m part time) and my husband is an additional rate tax payer. We both think we should be paying more tax. There are some aspects of the current tax regime that are just silly and £100k represents a big cliff with a loss of personal allowance, 30 hours childcare, tax free childcare etc.

Personally I believe income tax should be a straight percentage of earnings not increasing just because you work harder or longer or smarter and earn more

THIS!!!

no that would be fair, and we could be talking about tax being a contribution instead of being the penalty they currently are.

But most people are always happy when OTHERS are charged more, pay more, they only start to wake up when it starts applying to them too. Same people who believe anyone is RICH as soon as they earn more than they do.

Or did you have this hope that all the prollies would say "oh poor rich woman, please don't leave! Hey everyone! Let's all vote Tory to make sure these rich people stay in the country and get to keep more of their money!"

@SmoothLawAbider

*good sized family home for £500k"

Sound like one of those "executive home" estates where you are hugger mugger with the other high fliers , breathing in the fumes from their bbqs and 4x4s. Personally if I was a super successful business person like you I would be aiming just a tad higher, well, more than a tad if truth be known! Don't let your humble beginnings hold you back, you deserve 5 acres, a tennis court and an indoor pool, not to mention electric gates and a sweeping carriage way.

Userzzzzz

you are aware that if you want to pay more tax, you can... Nothing and no one is stopping you.

Only the greedy, unethical ones will leave.. which is fine by me. Don’t let the door hit you on the way out.

High earners leaving for good is a discussion point. High earners moving for a bit with the intention to return because they haven’t got the patience to save or can’t get a mortgage isn’t the same thing is it?

As I said in my original post, my point is about "raising taxes for the wealthy...if this happens, I know that we won't end up moving back"

"AIBU to think that penalising the wealthy is not the solution?"

Keep it factual and impersonal if you don’t want to lead a discussion in the direction of personally analysing you

If I did this people would bay for an example, or ask what on Earth I know about it and I'd be crucified for drip feeding

You could have cited research, but you chose not to.

I think he’s an odious little man, but I do like the way Alan Sugar very publicly pays his taxes every year

Let’s give it a go anyway!

Ok so what would you suggest?

20%? Is it 20% on the first £1 you earn? Do you get a tax free allowance? In which case it stops being a flat %.

What if 20% isn’t enough to fund the NHS, education, the police? Then what? What happens when it needs to go up to 50%?

The reason for a stepped tax (on income), is that it helps spread the amount you pay on ability to pay.

But the biggest issue we have is that income tax is the one we know about the most. However taxes on other gains such as investments are actually quite low, but are enjoyed by those who are very well off. Should they pay more?

As I said before, income tax is 30% of the total tax take. We need a bigger conversation about all taxes.