I hear the argument that some people in this category will refuse to work in the UK at these tax rates. But if we are going to have them, the idea that they could be avoided by changing the form of the income is nonsense.
And TBH the idea that "clever" people will refuse to work in high paid jobs because of this tax rate doesn't stand up to scrutiny. Who's going to turn down a million pound directorship in favour of a 100K job because they have to pay an extra 10% in tax?
I do think the fiddling with the personal allowance is unreasonable though. It's a measure which adversely affects a very small income range, and certainly is one where people might refuse to move up the salary ladder to avoid.
All we need now is to rebalance CGT (again) and to make sure than "employed" non-doms pay their fair share (and yes, as far as I'm concerned, they can go home if they don't like it).
If they can't get around the rules I think a lot will just relocate. Given a global company a lot of employees have a choice over where they work. Particularly for investment banking, there will be little point in running trading operations from the UK when none of the top people want to work here. It will not only be the top jobs that move but also the support services.
Other than moving there are also ways to get around tax rules, the idea of deferred bonus used to be popular, recently I have heard the government actually promoting this. The bonus is deferred and taken when employed in somewhere like Singapore.
I would also guess the use of contractor style arrangements will provide opportunities. Nearly 10 years after IR35 was introduced do the government give figures for how much that has increased tax income? AIUI a hell of a lot of the contractors took their payment arrangements offshore avoiding Corporation tax as well as PAYE.
If you want to earn a lot of money you are going to look to the easiest way to do it. A marginal tax rate on employment of nearly 57% tends to suggest employment in the UK will not be the easiest way.
They can't ensure non-doms pay that is why they introduced the lump sum payment.
As for you wanting high contributors to UK tax to move abroad I guess it depends on whether you are worried about fairness or maximising UK tax revenue. AIUI when Nigel Lawson reduced the top rate from 60% to 40% he actually increased Tax revenue.
It may be a lot, but I doubt that it is the majority. Just how is a consultant doctor (for example) going to move abroad to save tax?
And don't think that there is ready availability of jobs for these people. In many professions there is already a stream of people looking, unsuccessfully, to work overseas for other career advantages. Wanting to do so to save tax isn't exactly going to put you at the head of the queue.
And many people have ties to the UK, aged family that needs looking after, children in schools etc. Breaking these ties to avoid an extra 10 or 20K in tax doesn't seem likely (to save a few million, perhaps).
Why do people let what will happen to Investment Bankers colour their decision? There are lots and lots of other high paid jobs in the world.
Which will move anyway, just like all other back office jobs have done/are doing, IMHO. (and yes I think we should take steps to stop it, but having, or not, a 50% tax rate is not going to make one jot of difference).
How does deferring income help if you expect to be a high earner for the whole of your career?
And being given big bills by HMRC for trying. This one's got some way to run, but I expect HMRC to win.
But then neither is the current rate. If you want to move to somewhere with
20% or even a 0% tax rate to develop your business you can do so already. But people don't, why is that? IMHO it's because the lack of business structure in those places means that the expected income you generate by the move, is less than the tax saved.
Why not, Every other county (with the exception of Eire) attempts to do so. No-one else lets non-doms live, year on year, in their country without asking them to pay local tax on a world-wide accrued basis.
No, I don't want *them* to move abroad. I want the people with the attitude of "if you dare try to tax me " to go! They will find when they get there that, in business terms, the grass isn't as green as they think it is
Perhaps it will put a stop to the Hedge fund manager paying less tax than the cleaning lady.Although i would'nt hold my breath. Apparently Mr Bliar is very much against it. I wonder if he will be paying more tax?
You give and example from the public sector? You think most high earners work in the public sector? I'm not sure of what the current rates are but that would surprise me. As for companies like investment banks, oil companies etc, I think the choice is real either at a group or individual level.
You appear to have missed the point. In a global company a change of country is just a change of the desk you use, often it isn't even a change of department.
20% of take home salary, I would consider it. Additionally there is a lot of natural churn, now new people will not choose to come and replace those leaving.
Something about London being the financial capital of the world? Something about the UK economy being very reliant upon it? You may argue it was stupid to put all our eggs in one basket but given that we did it surely it is sensible to look after the basket until we can restore a better balance.
These are jobs that function better with direct contact, which is why they are still in London. The support jobs will move with the people who need to be supported.
Why do you assume they will be high earners for the whole of their career? High paid roles are often short and brutal. You earn a lot and when you are burn out you move to a low tax environment and take the deferred earnings. Later you can return to England and retirement or a less stellar career.
How many times has HMRC been successful when the target has defended themselves?
They do! That's what it is like for non-doms in the UK. I also know a few natives who only pay in the region of 100K.
I suspect that statement isn't true. But it may well be a reason that a lot of high earners choose to live in the UK.
Personally I'm more worried about the UK economy and tax revenue than I'm worried about certain people having a bad attitude. I only wish our Government was too. I expect they will have researched that greenness of the grass and will find it exactly the shade they expected it to be.
It doesn't have to be a "majority" - it only has to be a small minority and the effect of the 50% rate will be negative.
Take someone earning 250k, now they pay about 90k in tax, add in NI, VAT, stamp duty etc and that'll likely be another 25k or so, so 115k in total.
Under the new scheme they'll pay about an extra 13k.
So only 10% need to leave and the effect is fiscally neutral, then of course there's the wider economic benefits of them spending their money in the UK rather than abroad.
There are people in the UK *now* to escape high tax regimes in other countries. Many won't hesitate to move elsewhere.
But that equation could change for some now.
That's *why* we have so many non-doms.
Most will be aware of *exactly* how green the grass is elsewhere.
No of course not. What an absolutely stupid suggestion. It's an example of an employee who can't take their job elsewhere.
There are others. Anybody who needs to interact with people in the UK or who manages an item physically in the UK can't move elsewhere to do his(her) job. They have to stay put or they have no job.
Only if the management of the company will let you.
If whatever the company does has to say in the UK, then the company aren't going to let one high paid employee sit in e.g. France, just because it lessens his tax bill.
You miss the point. You are thinking that ALL high earners are in control of their own business entity, many are not.
Why would someone refuse a more senior position at a greater salary, just because it will move them into a more marginal tax band. They will still get more money.
High earners refusing to continue to do the job create opportunities, very good opportunities, for subordinates. To suggest that these senior jobs will go unfilled is ridiculous. I think that it's good that we have policies that create career progression within a company instead of (perhaps subsidising) buying in a replacement from outside
I bet you there will still be "good" people queuing up to do the job even at the higher tax rate
Which will be why many company's IT support is still done in the UK then! And why all call centres are still in the UK
Because most people who earn a high salary get used to earning a high salary
perhaps for some, but I bet the many dont/cant do this
It seems that no-one has got to court on this issue yet. I understand that many are paying, but of course, I only see the comments of the few.
Yes I know. I don't believe that it should be like this
It is more or less true.
Go to another country and look at their tax rules. Some will give you a percentage "discount" like the 25% rule in NL, but most will expect you pay full local tax on your world wide earnings.
Precisely!!!!! I agree, that is why many of them chose to come here.
I wasn't really complaining about the bad attitude. I was complaining about the "you need us because we're better than you are" attitude. I don't believe that we need these "imports". We are not a tin-pot country, we are well developed with world beating universities. Why do we need to bribe foreigners to come and work here. As I've already said, many will come here on a neutral tax basis for the other opportunities, just like many brits go to other foreign countries to work, despite often having a greater tax bill when they get there.
You've taken the argument into a point that I wasn't discussing.
I was discussing the effects that motivate an individual into moving. Not the effect on the tax take should they do so.
I know/
Why, even with the 50% rate it will still be cheaper here.
It could, for some. My point is that it won't be many.
I know. And what a c*ck up of the banking system they created for us.
We'll have to agree to differ on this point.
I repeatedly see/hear comments from people to the effect of "I'm going to leave Britain and go to wherever, because of X" without a thought for how they will get an appropriate job when they get there. You don't just turn up at the Spanish Job Centre and get a local job, but many think that you do.
plus most very rich people are not exactly PAYE - its all companies and dividends and offshore fiddles
but of course - the not tax paying elite are crucial to the country after all those shops in st. johns wood in London might close if no blacked out Range Rovers dropped by
But that's the relevant issue when discussing the effect of them moving.
Than where? There are other countries that will become cheaper, and other countries which already are cheaper but where the difference doesn't make the move worthwhile, or where the other advantages of living in the UK outweigh the difference at the moment, but might not next year.
My point is it doesn't *have* to many to make the higher taxes on the rich cost the taxpayer, rather than gain the taxpayer.
Strange - we keep being told this is a "global" problem - so why would it matter where they did it?
What, from people earning over 150k? Or some loudmouth down the pub who's probably never earned more than 30k?
Careful, Tim. Nick did write "capable and wanting", so is covering both willing and able, but that apart, I don't agree with your definition of "demanding"; to me it means that the job challenges the employee's ability and willingness both. If anything, I'd have thought ability more than willingness.
If you are the CEO of HSBC for example, you don't have to do the job from London. You could do it from any of the hundreds of countries around the world where they have a presence.
when I said demanding, I meant upon one's lifestyle with long hours and often lots of travelling, but I couldn't think of an easy way to describe this.
I know of several people who have given up such roles for half their (previous) salary and a job with routine hours
Plenty of places will be cheaper too. There are people from other European countries (eg Sweden) who are here now because taxes are lower - such people may decide to move back now that the tax advatages aren't what they were.
So it was non-doms who caused the problem was it? Was Fred the Shred a non-dom?
It'd be better is we persuaded the idiot politicians to piss off abroad, they are far more to blame than the majority of non-doms.
As the CEO of HSBC did quite successfully from Hong Kong from the time the bank was formed right up to the time they moved their headquarters to London in the mid-1990's.
There is talk that they might even relocate the HQ back to Hong Kong again in the coming years.
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