FT: High earners left with few ways to avoid 50% tax


M

mugglefuggle

High earners left with few ways to avoid 50% tax
By Sharlene Goff

Financial Times
Published: April 24 2009 20:05 | Last updated: April 24 2009 20:05

High earners hoping to escape the punitive new tax rules introduced in
the Budget have few ways to turn, advisers have warned, as the
government has introduced sweeping legislation to block most
loopholes.

From next year, anyone with a total income of more than £100,000 will
face a higher tax bill. Hardest hit will be those earning over
£150,000, who will be caught in a new tax band of 50 per cent. This
group will also see their ability to claim tax relief on pension
contributions restricted (see below).

Accountants said wealthy clients were already hunting for ways to
sidestep the new rules. One option is to bring their total income –
share dividends, rental payments as well as earnings – below the new
thresholds. Those hit by the new 50 per cent tax rate, for example,
could reduce their income by handing assets such as share portfolios
and properties to lower-earning spouses.

But the introduction of strict “anti-forestalling” measures means that
for many wealthy people, higher taxes will be unavoidable.

“People have to be very careful not to fall foul of the anti-avoidance
rules on pension contributions,” said Richard Mannion, national tax
director at Smith & Williamson, the adviser. “The government has
brought in some draconian measures to prevent individuals escaping the
higher taxes.”

Advisers have urged those earning more than £150,000 to maximise
contributions to their pensions both this tax year and next to benefit
from full tax relief before it is capped at 20 per cent. But unless
pension contributions made from now on follow the same pattern as in
recent years, the lower tax relief will already apply.

“If investors have been paying regular contributions into their
pension, they can continue to do so, but if not, they won’t be able to
start now and gain the full tax relief,” said Andrew Tully, senior
pensions policy manager at Standard Life.

There are also measures to stop high earners setting up new salary
sacrifice schemes, which would allow them to replace a proportion of
their earnings with other benefits such as company shares or pension
payments.

“If something was in place before the Budget it can stand but those
earning over £150,000 can’t do anything new,” explained Tully.

Salary sacrifice schemes could still be a good option for people
earning £100,000- £150,000 who will lose their personal tax allowances
from next year but will not be hit by the lower pension tax relief. If
they can bring their salary below £100,000 and take a larger pension
payment instead, they would still qualify for tax relief on their
pension contribution and keep their personal allowance intact. Those
earning £100,000-£112,950 could avoid paying a marginal tax rate of 60
per cent.

Lower relief for lump sum pension contributions

Self-employed workers, partners and company directors who make annual
lump sum pension contributions can now only get 40 per cent tax relief
on the first £20,000 – while employees continue to benefit from full
relief on 10 times that amount, writes Matthew Vincent.

In this week’s Budget, the chancellor tapered down pension tax relief
to 20 per cent for those earning more than £150,000 from April 2011.
But to prevent high earners making large contributions with 40 per
cent relief before then, he also introduced “anti-forestalling”
measures that limit the amounts eligible for the higher relief to
“normal ongoing regular pension savings”, or £20,000 a year, whichever
is higher.

“Normal contributions” are defined as those made in a monthly or
quarterly pattern, and exclude the annual contributions typically made
from profits or bonuses by partners in law and accountancy firms,
directors and the self-employed. So these investors will be restricted
to the £20,000 limit. Employees already paying monthly or quarterly
are not affected and so can continue to contribute the full value of
their salary up to £245,000, with 40 per cent relief.

“Anyone doing regular contributions is better-off under the current
measures than anyone who pays in less than quarterly – it’s like
saying Christmas is no longer regular,” said Greg Limb, partner at
KPMG. John Whiting of Pricewaterhouse-Coopers said: “The Revenue needs
to frame rules that allow the same relief to someone who gives a
regular annual commitment”

http://www.ft.com/cms/s/2/d7758e5e-3100-11de-8196-00144feabdc0.html
 
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N

Nick

tim..... said:
High earners left with few ways to avoid 50% tax

-----------------------------------------------------------------------

Exactly how it should be.

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.
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.

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?
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.

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).
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.
 
T

tim.....

Nick said:
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.
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).
Particularly for investment banking, there will be little point in
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.
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.
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).
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.
How does deferring income help if you expect to be a high earner for the
whole of your career?
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.
And being given big bills by HMRC for trying. This one's got some way to
run, but I expect HMRC to win.
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.
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.
They can't ensure non-doms pay that is why they introduced the lump sum
payment.
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.
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.
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

tim
 
M

mick

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 somewherewith
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

tim- Hide quoted text -
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?
 
N

Nick

tim..... said:
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?
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.

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.
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.
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).
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.
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.
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.
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).
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.
How does deferring income help if you expect to be a high earner for the
whole of your career?
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.
And being given big bills by HMRC for trying. This one's got some way to
run, but I expect HMRC to win.
How many times has HMRC been successful when the target has defended
themselves?
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.
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 said:
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.
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.
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
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.
 
A

Andy Pandy

tim..... said:
It may be a lot, but I doubt that it is the majority.
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.
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).
There are people in the UK *now* to escape high tax regimes in other countries.
Many won't hesitate to move elsewhere.
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.
But that equation could change for some now.
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.
That's *why* we have so many non-doms.
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
Most will be aware of *exactly* how green the grass is elsewhere.
 
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T

tim.....

Nick said:
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
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.
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.
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.
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.
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
Something about London being the financial capital of the world?
That's irrelevent.
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.
I bet you there will still be "good" people queuing up to do the job even at
the higher tax rate
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.
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
Why do you assume they will be high earners for the whole of their
Because most people who earn a high salary get used to earning a high salary
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.
perhaps for some, but I bet the many dont/cant do this
How many times has HMRC been successful when the target has defended
themselves?
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.
They do! That's what it is like for non-doms in the UK.
Yes I know. I don't believe that it should be like this
I also know a few natives who only pay in the region of <20% on
salaries>100K.


I suspect that statement isn't true.
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.
But it may well be a reason that a lot of high earners choose to live in
the UK.
Precisely!!!!! I agree, that is why many of them chose to come here.
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.
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.

tim
 
A

Andy Pandy

From next year, anyone with a total income of more than £100,000 will
face a higher tax bill. Hardest hit will be those earning over
£150,000, who will be caught in a new tax band of 50 per cent. This
group will also see their ability to claim tax relief on pension
contributions restricted (see below).
This really is a brain-dead idea, it's going to vastly complicate every company
pension scheme, especially defined benefit schemes, since the employer's
contribution will require individually valuing for every employee - and it won't
just affect employments where people earn over £150k as the company won't know
what other income the employee has.

And since those earning over £150k are likely to be paying 40%/50% tax on their
pension, the 40%/50% tax relief is not really as big a perk to them as it is to
someone earning £50-60k (who will likely only be in the 20% bracket on
retirement). A more sensible idea would have been to restrict the tax free lump
sum to a set figure eg £100k, as that's the real benefit to the rich of
pensions.
 
F

Fredxx

Andy Pandy said:
This really is a brain-dead idea, it's going to vastly complicate every
company
pension scheme, especially defined benefit schemes, since the employer's
contribution will require individually valuing for every employee - and it
won't
just affect employments where people earn over £150k as the company won't
know
what other income the employee has.

And since those earning over £150k are likely to be paying 40%/50% tax on
their
pension, the 40%/50% tax relief is not really as big a perk to them as it
is to
someone earning £50-60k (who will likely only be in the 20% bracket on
retirement). A more sensible idea would have been to restrict the tax free
lump
sum to a set figure eg £100k, as that's the real benefit to the rich of
pensions.
That does sound like a smarter idea, of limiting the tax free lump sum.
Something tells me that'll be in the next budget!
 
R

Robin T Cox

High earners left with few ways to avoid 50% tax
The phrase 'high earners' seems to suggest that those who are paid the most
necessarily deserve it. Recent experience contradicts that notion,

Let's call a spade a spade: it's the highest paid who are being required to
contribute a bit more. That's all. And if taxation is to be related to
ability to pay, then in the name of fairness and collectability it makes
sense.
 
T

tim.....

Andy Pandy said:
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.
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.
There are people in the UK *now* to escape high tax regimes in other
countries.
I know/
Many won't hesitate to move elsewhere.
Why, even with the 50% rate it will still be cheaper here.
But that equation could change for some now.
It could, for some. My point is that it won't be many.
That's *why* we have so many non-doms.
I know. And what a cock up of the banking system they created for us.
Most will be aware of *exactly* how green the grass is elsewhere.
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.

tim
 
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2

2009

tim..... said:
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


That's irrelevent.


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.

tim

well said Tim

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


what a pile of crock
 
N

Nick

tim..... said:
No of course not. What an absolutely stupid suggestion. It's an example of
an employee who can't take their job elsewhere.
So you agree you gave an atypical example.
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.
In a multinational company, which is what we are really talking about
when we talk about high paid employees, high paid individuals need to
talk to other high paid individuals. This is the point I was making
about investment banks, if the high paid traders and managers decide to
move, all the high paid individuals who support them also need to move.
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.
That is the way it works at the moment. Departments are split across the
world even quite junior individuals are given a lot of freedom to choose
their location. The important thing is normally that there are enough
people to form an effective office at any one location. If we take
investment banks as an example staff are often actively encouraged to
move to Singapore (20% tax).

You miss the point. You are thinking that ALL high earners are in control
of their own business entity, many are not.
No I'm talking about employees in multinational companies. Where have I
implied differently?


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.
You don't appear to appreciate that high paid roles often have very
significant disadvantages. The work is stressful and unpleasant, the
hours are long. I see you don't relate too well my examples of
multinational companies. Perhaps if you think of a pretty young eastern
european girl. She has a choice she can work for £8 an hour as a cleaner
or she can work for £90 an hour as a prostitute, even more if she is
willing to be buggered. Jobs are often like that in a multinational.
Employees are only willing to let themselves get buggered if they are
appropriately compensated for it.

You seem to think that the only difference between a high paid role and
a low paid one is the 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
You don't appear to understand the concept that salaries are driven by
the laws of supply and demand. If there were many skilled individuals
capable and wanting to do the job salaries would be lower.

That's irrelevent.
It certainly is not irrelevant to the finances of the government and the
company. Or do you decide policy on some higher religious principal?
I bet you there will still be "good" people queuing up to do the job even at
the higher tax rate
If so why do the companies not just pay smaller salaries?
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
There is a difference between supporting a £200 a year ISP customer and
supporting a £1,000,000+ investment banker.

Because most people who earn a high salary get used to earning a high salary
The choice isn't always theirs they burn out, they get old. You seem to
have a very public sector view of employment. These high paid roles
aren't secure for life they often only last a few years a lot of these
companies have very few old people.

perhaps for some, but I bet the many dont/cant do this
You still seem to be assuming they have a choice.


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.
Many have been to court, HMRC have won very few. AIUI the move almost
certainly reduced total tax revenue.
Yes I know. I don't believe that it should be like this
Religious reasons, or something practical?
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.
Singapore. It is a real choice for more reasons than this.

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.
Perhaps you arguments would be stronger if they were based on net tax
revenue rather than your opinion of the UK's tin pot status. These
simplistic mob views are precisely why NuLab is acting. Short term
electoral advantage.
 
A

Andy Pandy

tim..... said:
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.
But that's the relevant issue when discussing the effect of them moving.
I know/


Why, even with the 50% rate it will still be cheaper here.
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.
It could, for some. My point is that it won't be many.
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.
I know. And what a cock up of the banking system they created for us.
Strange - we keep being told this is a "global" problem - so why would it matter
where they did it?
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.
What, from people earning over £150k? Or some loudmouth down the pub who's
probably never earned more than £30k?
 
B

brightside S9

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.
"They" have been fiddling around with personal allowance for years.
Namely the age allowance for pensioners.
 
T

tim.....

Nick said:
So you agree you gave an atypical example.
No, most definately not. I think the investment banks is the atypical
example.

In a multinational company, which is what we are really talking about when
we talk about high paid employees, high paid individuals need to talk to
other high paid individuals. This is the point I was making about
investment banks, if the high paid traders and managers decide to move,
all the high paid individuals who support them also need to move.
But as the "market" is here, the traders aren't in a position to move.
That is the way it works at the moment. Departments are split across the
world even quite junior individuals are given a lot of freedom to choose
their location.
No in any company I've ever worked in. If you want a role in a foreign
office you have to compete for with it with the locals. Locals who
invariably speak the local language.
The important thing is normally that there are enough people to form an
effective office at any one location. If we take investment banks as an
example staff are often actively encouraged to move to Singapore (20%
tax).
and how many go? Singapore might be fun for a year, I can't see it being
the type of place that Europeans would move to forever
No I'm talking about employees in multinational companies. Where have I
implied differently?
By saying people can chose to move their whole company/department. Only the
controlling person can do that, the minions can't make that decision
You don't appear to appreciate that high paid roles often have very
significant disadvantages.
I fully understand that. They also have compensating advantages. People
would do the job otherwise.
The work is stressful and unpleasant, the hours are long. I see you don't
relate too well my examples of multinational companies.
I've worked for many multinational companies and they simply don't look like
the ones you are describing. You work with a team on project X. There is
zero possibility of an employee in that situation just deciding that they
wish to relocate to country X and remain working on project X. There may be
other roles that they can apply for in another country, but if they do that
they will leave behind a role on project X which will still be filled by
someone working in the UK. The person moving to the foreign country hasn't
changed the situation in the UK one jot.
Perhaps if you think of a pretty young eastern european girl. She has a
choice she can work for £8 an hour as a cleaner or she can work for £90
an hour as a prostitute, even more if she is willing to be buggered. Jobs
are often like that in a multinational. Employees are only willing to let
themselves get buggered if they are appropriately compensated for it.
This example is irrelevant to the question in hand. I can't see how you can
possibly think that it is. We aren't discussing the remuneration for
different jobs (or even for the same jkob within different countries), we
are discussing the ease with which someone can *chose* to take their *own*
job offshore.
You seem to think that the only difference between a high paid role and a
low paid one is the money.
Of course not, that's a silly suggestion. But I do think the idea that just
because someone is high paid that they have the ability to decide for
themselves where that job is done is wrong for a large number of the set.
You don't appear to understand the concept that salaries are driven by the
laws of supply and demand. If there were many skilled individuals capable
and wanting to do the job salaries would be lower.
I thought that you said earlier the high pay was necessary because the job
was demanding (and I would agree with you). This means that the salary is
determined by the number of people *willing* to do the job (at the
remuneration level), not the number who are able.
It certainly is not irrelevant to the finances of the government and the
company. Or do you decide policy on some higher religious principal?
As I have already corrected you. My comments are only directed towards
whether a person is able to move their own job. And your point was
irelevent to that

I agree that the financial sector as a whole is important to the UK. I
don't believe that one person's position within it is important (to UK PLC).
If so why do the companies not just pay smaller salaries?
Because they don't have the balls to try. Many sectors of UK industries
have reduced salary levels in recent years. But some still insist on paying
silly money on the pretence that it gets them the best people. Perhaps it
does, perhaps it doesn't. They won't know if the don't try.
There is a difference between supporting a £200 a year ISP customer and
supporting a £1,000,000+ investment banker.
So why have they moved the IT support for this person offshore then?
The choice isn't always theirs they burn out, they get old. You seem to
have a very public sector view of employment. These high paid roles aren't
secure for life they often only last a few years a lot of these companies
have very few old people.



You still seem to be assuming they have a choice.
I thought it was you claiming that they had the choice (I really don't
understand your comment wrt mine?)
Many have been to court, HMRC have won very few. AIUI the move almost
certainly reduced total tax revenue.
No-one has been to court to test the issue of "overseas" loans.
Religious reasons, or something practical?
Because it distorts the job market and reduces opportunities for locals to
rise to the top. On a minor issue, one of the reasons that we have loads of
foreigners in the Football League is because they can all be paid as no doms
(and hence chose to come her over other countries). It is widely accepted
that this excess of foreigners reduces opportunities for British talent.
Personally, I don't give a toss about what happens in football but it think
it is an indication of what happens in other areas.
Singapore. It is a real choice for more reasons than this.
And how many go there?

Um

Singapore, population 4 million of which less than 2% are "european" so
that's 80,000 across all job sectors and nationalities.
Perhaps you arguments would be stronger if they were based on net tax
revenue rather than your opinion of the UK's tin pot status.
What "net tax revenue for foreigners working in you country".

Well I doubt that HMRC even know this, but I bet that many European
countries have a (relatively) bigger take than the UK does.
These simplistic mob views
It isn't a mob view. It is a decision that I have formulated for myself

tim
 
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T

tim.....

Andy Pandy said:
But that's the relevant issue when discussing the effect of them moving.
but I'm not discussing the effect of them moving.
Than where?
Most European countries for a start after yiou add in their extortionate NI
rates
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?
Because the jobs where here. If the non-doms weren't doing it her, someone
else would have been doing it here (and might have done it differently)
What, from people earning over £150k? Or some loudmouth down the pub who's
probably never earned more than £30k?
From graduate level employees.

tim
 
R

Ronald Raygun

tim..... said:
I thought that you said earlier the high pay was necessary because the job
was demanding (and I would agree with you). This means that the salary is
determined by the number of people *willing* to do the job (at the
remuneration level), not the number who are able.
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.
 
J

Jonathan Bryce

tim..... said:
Exactly how it should be.

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?
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.
 
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T

tim.....

Ronald Raygun said:
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.
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

tim
 

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