Wealth is draining out of the UK

[Ifmenhadperiods]

I was at an event with business people the other week. One of the high net worths said to me that no wealthy foreigner he knows will stay in the UK long term. He is local but says anyone with foreign connections and wealth is fleeing abroad - and taking their businesses with them. That is the chat around his dinner table in Holland Park.

One indisputable piece of evidence I guess is the massive slump in companies that list in the UK. We also have so few pension funds investing in UK business. Personally I don’t blame them: my own shares ISA is invested in the US and has grown by 30% in the last year, a figure UK shares just can’t compete with. Most of our FTSE top companies are in legacy industries like fossil fuels while elsewhere they’re in tech and innovation as well
as traditional companies.

Several friends have left here and gone to the US in the last decade and they say the lifestyle is excellent (and they earn far more, working in tech).

I have also spoken to friend’s older DC (6th formers) and some who have had offers from Oxford and Cambridge are rejecting them in favour of Ivy League schools.

Apparently Ivy leagues are FAR better at getting students to think about their careers from day one. Oxbridge is amazing at teaching you the subject in an academically rigorous way, but Ivy leagues pair you up with business investors if you do a degree such as economics. They have fees assistance for households earning up to 400k US dollars. Here you can’t get student loans if you have more than about £50k in household income.
I know the fees are higher there but they also have more scholarships in the US.

We are about to tax private schools. A popular policy with the public. But again, apparently the wealthy foreigners who can afford this tax are worried it will shake out the middle class Brits they want their kids to go to school with! They don’t just want their kids to go to school with foreign and British super elites. They’re quite fond of the eccentric Brits.

It seems every way you turn, there’s little incentive to make money especially with the cliff edge in income taxation. And the worst thing is it’s understandable because of the massive levels of wage stagnation we have to subsidise through working tax credits (no real wage growth for 20 years!).

We don’t want immigrants but we have no one to pay for our massive welfare bill which is made up mostly of a triple locked state pension and grossly inefficient health system.

If you’re lucky enough to have a bit of spare cash, forget moving up the property ladder, owning a holiday home or a rental (tax hell lies in all those paths).

Can anyone shake me out of this pessimism? Of course I know we are lucky not to be in Syria or Afghanistan or Gaza. But this is about the decline of the UK rather than where we are compared to truly volatile or oppressive countries. I genuinely don’t want to emigrate but fear we - along with anyone who was once comfortable but never wealthy - are going to have a very uncomfortable retirement - if I make it that far - and our DCs will face a future in a country that will continue to get poorer, with the entrepreneurial class deserting us.

Earnings, salaries are how society keeps score, whether anyone likes it or not. Talent, ability, adaptability and resilience, plus a sound knowledge of whatever field of recruitment. An unappealing country (my nephew is currently in KSA) just means his employer pays him about double the rate for the same level of responsibility as his European counterparts, plus it's tax free, so he's saving hard to buy a property. He isn't going to inherit spondulicks, so this is his opportunity.

This is in part - why we have a consultant and dentist crisis. Many won’t go over 100k as the penalty is far too high and it isn’t worth it.

The reason we have a dentist crisis is because NHS rates for dentistry are woefully inadequate, there’s no shortage of private dentists. NHS consultants effectively have a personal allowance of £26,250, thanks to pension contributions, higher tax rates therefore kick in at a much higher point.

This. It is causing a highly challenging productivity issue which is why they had to change pensions. These policies are actively reducing consultants and dentists.

Always amazes me that people can be so vocal about something they know nothing about. Then don’t understand why this is an issue.

@Teentaxidriver ha- you are right on that- we needed specialist tax forms in entertainment business to deal with artist withholding tax- filled in on line individually, my H got 3, no one else in band got one at all- our agent in Germany can't understand it- they apparently just pop into a local properly staffed tax office - he thinks the UK is nuts in the way we run things these days.

You said there are penalties as if it would effect everyone on salaries over 100k rather than the relatively small proportion of people on those salaries who have children aged two to four. I'm also not sure if it is that disastrous if people on those salaries drop their hours and spend more time with their children.

Most consultants don't have children aged 2 to 4. There are dentists. They are just not working for the nhs which has nothing to do with childcare either.

You’ve missed the point. You asked why 100k is such an issue. Multiple posters have told you. This means people with talent who have good earning power are going. Tech, IT, engineering, etc. Good luck paying for a welfare state then.

Salaries are much better abroad and don’t have marginal tax rates of 70% at 100k. That’s what everyone at 100k hits. Children or not. The pay off of 30% for more responsibility often isn’t worth it. Keeping 30% is frankly atrocious.

I agree with OP and that's WHY I am voting Labour. The Tories have played a massive part in this: choosing austerity rather than investment in infrastructure projects that could have protected growth; Truss blowing up the mortgage market and putting thousands on mine and thousands of others' payments; and - of course - fecking Brexit. They are not the economically responsible party.

I'm not missing the point. Some posters are saying that there is a penalty if you earn over 100k as if it will affect everyone on that salary whereas it will only be a small proportion.

There is a penalty. A huge one; the removal of personal allowance which gives you a marginal tax rate of 70% ish. It impacts everyone on 100k. Therefore some people decide the extra isn’t worth it for 30%. Others look abroad in global companies. Especially where the pay is so much higher and no tax penalties like that. Can’t recruit decent talent for shit in certain fields right now. Companies are having to put these jobs in their global offices.

Happy to admit I'm thick with regards to the tax issue and failed my maths O-level 4 times before giving up (Got A's in English though lol).

Can someone explain and breakdown the tax over £100,000 in terms of take home pay please?

Many thanks 😊

I don't know what you mean regarding the removal of the personal tax allowance.

On a completely different note, if we travel to Europe we can claim the tax back on purchases. A European visiting London can't do that. So if there's a choice for wealthy Europeans to shop in London or Paris, which would it be? So short sighted.

I am perplexed too. Since when is the personal tax allowance removed for people earning over 100k?

All explained in the link I posted before. So as well as paying NI and tax at 40% as soon as you hit 100k - your personal allowance is withdrawn. Adding another 20% tax in effect.

This is for an NHS employee with a pension contribution at 13.5%

Monthly
Gross pay £ 8,333.33
Pension. £ 495.34
Tax £ 2,081.86
NI. £ 334.22
Take home £5,421.

Once your adjusted net income is over £100k, your personal allowance is restricted by £1 for every £2 over the threshold. So if you earn over £125,140 (usually), you get no personal allowance.

Introduced by Alistair Darling, came into effect from 6 April 2010.

This. As we were a bit older and didn’t want to relocate. We put everything in pensions whilst in between 100k to 125k. Not doing all that extra work and taking on responsibility which would see 100s of careers potentially ending for 30%. People’s lives, jobs, mortgages. Company integrity. No thanks.

That is now why the talent coming through won’t stay in the UK. There is no incentive and very poor salaries in comparison to the global market. The days of Little Britain are over.

I didn't know that. It would surely be higher than 125,000 though once pension contributions have been taken off.

Of course there’s the small matter of NI contributions going down to 2% on the portion of salary above £50k but nobody ever mentions that for some reason.

So they should. Those people are already paying more than their fair share. Literally subsidising pensioners who haven’t paid in enough over their lives right now alongside everyone else. Hence the brain drain. But you know that.

But you never mention it. Do you?

Whilst our climate may not turn us into a complete desert, you do know that;

As more and more of the planet becomes uninhabitable, food will be harder to grow, prices will increase (already happening - see olive oil), so mass migration, instability and more wars over resources.

Sticking to the higher ground will prevent your house being swallowed by rising sea levels, it won’t protect you from increasingly severe storms and wildfires though.

This is a climate emergency. Sorry to add to your pessimism.

Why it’s known fact? People don’t understand the personal allowance. As you didn’t for a long time. Always popping up on these threads to berate higher earners who are literally covering pensions. Slow clap.

Tbf the U.K. is thought to be better placed in terms of climate pressures

Alongside a few other countries on similar latitudes