Only the employed seem to pay tax?

[Taxevasion]

This is annoying me. Met a person recently that owns a lot of property (multi-million) that is let out in various ways but doesn’t pay any tax. Whatever they do is legal but the fact is they don’t pay tax so don’t contribute to the costs of running the country.

So am I being unreasonable in thinking this is very unfair? It seems that only those of us who are employed and pay tax paye fully contribute.

@Taxevasion

Yes as I said was talking about tax on their income not other taxes

But they do pay tax, it's just organised differently to PAYE tax.

Yes we do need a wealth or asset tax to make things fairer.

It is true that employees pay the most tax. (Unless you count benefit reductions to offset employment income as tax, in which case it's employees on universal credit who have the highest marginal rates.)

The biggest reason for inequality is the fact that there is little tax on assets and a lot of tax on wages.

It has also caused massive social problems by increasing house prices, they are now seen as an asset, not somewhere where you live.

YABVU

I am self employed. I and my colleagues work in a profession where earned income is relatively high and the consequences of tax evasion would be huge. I pay higher rate tax, as do most of my colleagues.

Just because you do not know self employed people who pay tax on their earned income does not mean that we do not exist.

I think you are right @Taxevasion.
It’s totally possible to not pay any income tax and only tax on dividends for example.
Most people don’t chose to do that because then it means that they are missing out on state pension but I imagine that if you already have a nice pension pot, you might well not really care about that one

And I’m pretty sure that the likes of Jacob Rees Mog don’t pay income tax on their whole income either!

Being rich/having a high income does enable you to escape from some taxes indeed.

Having an accountant doesn't mean you can get away without paying income tax.

Does the person have a company that's registered in another county? That might affect how much income tax they pay here.

No @icedcoffees they don’t pay tax, they have some arrangement that means they don’t have an income that is taxable. They pay the usual fuel tax council tax etc but as I have repeatedly said that isn’t what I’m talking about.

It’s funny though to see the number of self employed people who are automatically horrified that someone couod say they are not paying taxes blablabla.

I am self employed. The first thing my accountant told me when I set up the business was how to play between being self employed and having a ltd company to reduce taxes, Incl income tax.
If people havent looked at that, then 🤷‍♀️🤷‍♀️

Whatever they do is legal
I doubt it. Have you searched for their name on the Companies House website? I suspect they are doing all this through limited companies, which being legal entities in their own right, pay their own corporation tax.

@Taxevasion

No *@icedcoffees* they don’t pay tax, they have some arrangement that means they don’t have an income that is taxable. They pay the usual fuel tax council tax etc but as I have repeatedly said that isn’t what I’m talking about.

How do you know so much about their tax situation?

I’m not saying it’s everybody @LadyMacbethWasMisunderstood

No @icedcoffees they don’t pay tax, they have some arrangement that means they don’t have an income that is taxable.

If they are living in the UK and getting income from renting property in the UK there is no way this income is not taxable unless they are doing something illegal.

They told me @icedcoffees

Exactly @PerfectlyUnsuitable

@Taxevasion

They told me *@icedcoffees*

Doesn't mean it's true, though.

People often brag about things that are total bollocks.

I think a lot of people on this thread are shockingly naïeve. Of course it means you pay less tax as so many things are deductible and if you’re wealthy enough you can structure whatever you want in a way to minimize your effective tax burden.

Yes as I said was talking about tax on their income not other taxes

Rental income received by an individual is taxed at the same rates as salary. (But there's no NI on rental income.) If they're not paying tax, they're not personally receiving rent. That could be because they have a company, in which case they will pay corporation tax on both profits from renting and any capital gains they make. Corporation tax for someone who owns a company is effectively part of their overall income tax burden, though they'll pay more tax when they pass money out of the company and back to themselves. They will overall pay less tax than an employee on the same income, but not massively less.

If they have a company, they can avoid paying current income taxes (including corporation tax) by putting money in a pension as employer contributions. However when they draw that pension, they will pay tax, so while this postpones the tax bill for up to a few decades, it does not get rid of it.

This is one possibility: You have £10 million cash. You set up an offshore company in say British Virgin Islands and give it the £10million. You buy rental property in the Uk and 'borrow' the money from your BVI setup. The interest rate and amount of borrowing can be such that no profit is made in the UK on these rentals.

The profit is made in a no/low tax jurisdiction.

Does "only the little people pay taxes" ring a bell?

It is nuts that, above a certain level of wealth, taxes are practically optional.

Me and DH pay tax thank you very much

Could they be taking a monthly salary within their personal allowance and therefore pay no tax and take dividends instead which are taxable but not PAYE

@ANameChangeAgain

I'm self employed and pay a shed load of tax.

Just came on to say the same.

I do believe though that many super rich people pay far less tax proportionally. But impossible to avoid paying any at all!

I’m sure that some people find a way to minimise their tax bill. Generally large companies I’d have thought.

Its remarkable the number of people who are self employed who pay themselves a salary £12,570 (i.e no tax to pay) and the rest in dividends.

@BeaMends

Whatever they do is legal I doubt it. Have you searched for their name on the Companies House website? I suspect they are doing all this through limited companies, which being legal entities in their own right, pay their own corporation tax.

That would be my assumption too.

Given the level of rents the op suggested, I would suspect it's through a limited company. So the person would be correct, they don't pay income tax on the rental, but the company pays corporation tax.