To shut down my small business because Scottish income tax rates are too high

[Pavementworrier]

I work full time as an employee and run my business in my spare time. I do love it, if provides an important service, I give preferential rates to those who would struggle to pay otherwise. But I'm keeping less than half of what the business makes after tax (and I'm lucky because I don't need physical premises - if I did I'd be close to literally paying to work).

I will feel sad to shut it down as it's become part of me over the years and I do think it adds to my community but I'm at the end of my rope at this point.

If public services were good I'd feel very differently but they're awful and the government reliably steers money away from them to put into the wrong things

Maybe I should just move to Dubai (only joking - but I can see why people do and that's depressing as well - we need to break the bloody cycle)

Can you move to England. There's your solution 🙄

A "whinge" about how appallingly the economy is managed. If I get sick I'm screwed - I will be on a waiting list for months or years. Kids coming into work haven't been taught key skills in school so my day job is much more stressful.

I am trying to contribute in various ways and I'm just punished for it.

You're not the good guy for accepting it, you're defending a model that is keeping people poor and miserable.

It would save me thousands a year. Obviously I would prefer to improve things where I live.

I would explore options with a decent accountant there are ways to set up which will lower tax rates.

I’m a strong critic of the Scottish government but I’m not sure that’s entirely fair. There is a much stronger social safety net in Scotland, which has seen a real reduction in child poverty, which I think is a worthwhile use of public funds. Over dependence on the state is an issue across the whole of the UK, but none seems to have an answer to that, it’s not Scotland specific.

But then you have higher housing costs, water rates, tuition fees for uni (if that applies), prescription fees, no better education system for workers coming through, no better health service. You’ll still be out of pocket with no better public services.

Why don't you set your business up as a limited company and then only pay ~20% corporation tax? If you don't pay yourself a salary and take dividends instead each year surely this is much more tax efficient?

A small point but arguably the education system in England is better (which certainly wasn't always the case). The systems are really quite different and there are considerable issues with the Curriculum for Excellence and have been since its inception. It's just one of those things I imagine the majority of English people don't know anything about. Same with NHS waiting times. In England, you don't hear about Scottish issues in the media. A lot of people don't even know the tax rates are different.

So don't. Let someone else who is happy to work for that level of financial gain take over the gap in the market.

It's your choice to work or not. If you don't think it's worth it, then don't do it. You don't need sympathy for deciding something isn't worth your time any more.

I’m in Scotland, with kids in school so fully understand the issues with Curriculum for Excellence. I also have extended family living in England with kids in school. The issues in both nations are different but neither system seems to be working particularly well.

Here we have a perfect example of the Laffer curve in real life. After a tipping point people adjust their behaviour. In this case (and in mine a few years ago) they work less because they judge the net gain for their work to be too low. They’d rather do others things with their time. The result is less productivity for the country, and less tax for the Exchequer.

So you're earning over £100,000?