Is the UK tax system day light robbery
Discussion
I don't think levels of tax will get any better in this country OP. You could try moving to the UAE or somewhere else with virtually no tax (in fact, the UAE government actually subsidises the price of petrol I'm lead to believe). There just comes a certain point where you have to say "that's how it is" and then concentrate on becoming a multi-millionaire so you don't need to worry about this crap.
OK, I have just had a read of wikihow.com/Start-a-Revolution and it looks like too much hard work for a Sunday. How did revolutions work in ye olde days, if we get enough people together and kill the queen do we rule the country? I vote that we send mat777, he likes a bit of attention and it wont be a disaster if he fails 
The problem in this country is the number of people being employed by the state. Approx 20% of the working age population is far to high.
Add to that the over generous benefits system - there is no way you should be better off than taking a job.
All around us the infrastructure is crumbling because wages/pensions/social security eat up the tax take.
Big business fail to pay their share by avoiding UK taxes.
As a small business owner the government have their hand in your pocket constantly. Every time you think you have taken a step forward they seem to grab most of it.
Add to that the over generous benefits system - there is no way you should be better off than taking a job.
All around us the infrastructure is crumbling because wages/pensions/social security eat up the tax take.
Big business fail to pay their share by avoiding UK taxes.
As a small business owner the government have their hand in your pocket constantly. Every time you think you have taken a step forward they seem to grab most of it.
I wish people would see the bigger picture. Cost of living is so different depending on the country comparison. Cost of living in Australia is much much higher than us. Don't also assume that Americans get an easy ride. They are taxed much differently on property. Euro countries are tax way more on road tax, some over 1k for fairly normal cars.
Starting a business is the best thing you can do. You pay less to withdraw money (dividend) compared to PAYE. You also don't have to pay employers NI providing it is less than 7.5k salary, you take everything else as a dividend. Also, you can obviously claim expenses and tax relief.
Corp tax is 20%. The idea is you don't draw out any more you don't need, if you only need x,000 to live draw that and leave everything else in the company and only pay 20% tax. Draw anything out as a dividend as and when you need it, with a tax credit on dividend you essentially pay 25% tax on withdrawals. After corp tax this is 40% tax compared to 42% as PAYE but you also don't have to pay the 13% NI employer contribution on the gross.
It's a lot more tax efficient in my mind.
The uk isn't that tax heavy. We have a shaky but decent economy, we enjoy advances in technology, medicine and education despite the problems or high expectations. Cost of fuel and food compared to average income is mediocre. Our economy allows us to buy houses. Look at many other countries. House prices are way out of reach and whilst fuel might be cheaper it forms a much much larger part of people's income.
We either have to pay the tax for our services and begrudge the value for money or live in an economy like Dubai's which promote high earners where everything is tax free but very very expensive. It wouldn't work on our island, population count etc
Starting a business is the best thing you can do. You pay less to withdraw money (dividend) compared to PAYE. You also don't have to pay employers NI providing it is less than 7.5k salary, you take everything else as a dividend. Also, you can obviously claim expenses and tax relief.
Corp tax is 20%. The idea is you don't draw out any more you don't need, if you only need x,000 to live draw that and leave everything else in the company and only pay 20% tax. Draw anything out as a dividend as and when you need it, with a tax credit on dividend you essentially pay 25% tax on withdrawals. After corp tax this is 40% tax compared to 42% as PAYE but you also don't have to pay the 13% NI employer contribution on the gross.
It's a lot more tax efficient in my mind.
The uk isn't that tax heavy. We have a shaky but decent economy, we enjoy advances in technology, medicine and education despite the problems or high expectations. Cost of fuel and food compared to average income is mediocre. Our economy allows us to buy houses. Look at many other countries. House prices are way out of reach and whilst fuel might be cheaper it forms a much much larger part of people's income.
We either have to pay the tax for our services and begrudge the value for money or live in an economy like Dubai's which promote high earners where everything is tax free but very very expensive. It wouldn't work on our island, population count etc
Edited by bp1000 on Sunday 17th March 21:50
bp1000 said:
I wish people would see the bigger picture. Cost of living is so different depending on the country comparison. Cost of living in Australia is much much higher than us. Don't also assume that Americans get an easy ride. They are taxed much differently on property. Euro countries are tax way more on road tax, some over 1k for fairly normal cars.
Starting a business is the best thing you can do. You pay less to withdraw money (dividend) compared to PAYE. You also don't have to pay employers NI providing it is less than 7.5k salary, you take everything else as a dividend. Also, you can obviously claim expenses and tax relief.
Corp tax is 20%. The idea is you don't draw out any more you don't need, if you only need x,000 to live draw that and leave everything else in the company and only pay 20% tax. Draw anything out as a dividend as and when you need it, with a tax credit on dividend you essentially pay 25% tax on withdrawals. After corp tax this is 40% tax compared to 42% as PAYE but you also don't have to pay the 13% NI employer contribution on the gross.
It's a lot more tax efficient in my mind.
The uk isn't that tax heavy. We have a shaky but decent economy, we enjoy advances in technology, medicine and education despite the problems or high expectations. Cost of fuel and food compared to average income is mediocre. Our economy allows us to buy houses. Look at many other countries. House prices are way out of reach and whilst fuel might be cheaper it forms a much much larger part of people's income.
We either have to pay the tax for our services and begrudge the value for money or live in an economy like Dubai's which promote high earners where everything is tax free but very very expensive. It wouldn't work on our island, population count etc
About right.Starting a business is the best thing you can do. You pay less to withdraw money (dividend) compared to PAYE. You also don't have to pay employers NI providing it is less than 7.5k salary, you take everything else as a dividend. Also, you can obviously claim expenses and tax relief.
Corp tax is 20%. The idea is you don't draw out any more you don't need, if you only need x,000 to live draw that and leave everything else in the company and only pay 20% tax. Draw anything out as a dividend as and when you need it, with a tax credit on dividend you essentially pay 25% tax on withdrawals. After corp tax this is 40% tax compared to 42% as PAYE but you also don't have to pay the 13% NI employer contribution on the gross.
It's a lot more tax efficient in my mind.
The uk isn't that tax heavy. We have a shaky but decent economy, we enjoy advances in technology, medicine and education despite the problems or high expectations. Cost of fuel and food compared to average income is mediocre. Our economy allows us to buy houses. Look at many other countries. House prices are way out of reach and whilst fuel might be cheaper it forms a much much larger part of people's income.
We either have to pay the tax for our services and begrudge the value for money or live in an economy like Dubai's which promote high earners where everything is tax free but very very expensive. It wouldn't work on our island, population count etc
Edited by bp1000 on Sunday 17th March 21:50
Try running an business in France or Italy.
As an extreme example (flawed mainly by ignoring your personal tax/NI allowance).
You earn £1.00 gross
your employer has already paid 12p NI on that,
you pay another 12p employees NI,
then 20p income tax,
that leaves you with 68p.
You use that 68p to buy petrol (so you can drive to work to earn money)
of that, 33.8p will be tax (fuel duty + vat).
So, you're actually getting 35p worth of petrol for your £1.12 earnings, leaving the state with the 77p balance!
Still, it pays for wars and benefits, amongst other useful stuff. </daily mail rant>
You earn £1.00 gross
your employer has already paid 12p NI on that,
you pay another 12p employees NI,
then 20p income tax,
that leaves you with 68p.
You use that 68p to buy petrol (so you can drive to work to earn money)
of that, 33.8p will be tax (fuel duty + vat).
So, you're actually getting 35p worth of petrol for your £1.12 earnings, leaving the state with the 77p balance!
Still, it pays for wars and benefits, amongst other useful stuff. </daily mail rant>
Eric Mc said:
bp1000 said:
I wish people would see the bigger picture. Cost of living is so different depending on the country comparison. Cost of living in Australia is much much higher than us. Don't also assume that Americans get an easy ride. They are taxed much differently on property. Euro countries are tax way more on road tax, some over 1k for fairly normal cars.
Starting a business is the best thing you can do. You pay less to withdraw money (dividend) compared to PAYE. You also don't have to pay employers NI providing it is less than 7.5k salary, you take everything else as a dividend. Also, you can obviously claim expenses and tax relief.
Corp tax is 20%. The idea is you don't draw out any more you don't need, if you only need x,000 to live draw that and leave everything else in the company and only pay 20% tax. Draw anything out as a dividend as and when you need it, with a tax credit on dividend you essentially pay 25% tax on withdrawals. After corp tax this is 40% tax compared to 42% as PAYE but you also don't have to pay the 13% NI employer contribution on the gross.
It's a lot more tax efficient in my mind.
The uk isn't that tax heavy. We have a shaky but decent economy, we enjoy advances in technology, medicine and education despite the problems or high expectations. Cost of fuel and food compared to average income is mediocre. Our economy allows us to buy houses. Look at many other countries. House prices are way out of reach and whilst fuel might be cheaper it forms a much much larger part of people's income.
We either have to pay the tax for our services and begrudge the value for money or live in an economy like Dubai's which promote high earners where everything is tax free but very very expensive. It wouldn't work on our island, population count etc
About right.Starting a business is the best thing you can do. You pay less to withdraw money (dividend) compared to PAYE. You also don't have to pay employers NI providing it is less than 7.5k salary, you take everything else as a dividend. Also, you can obviously claim expenses and tax relief.
Corp tax is 20%. The idea is you don't draw out any more you don't need, if you only need x,000 to live draw that and leave everything else in the company and only pay 20% tax. Draw anything out as a dividend as and when you need it, with a tax credit on dividend you essentially pay 25% tax on withdrawals. After corp tax this is 40% tax compared to 42% as PAYE but you also don't have to pay the 13% NI employer contribution on the gross.
It's a lot more tax efficient in my mind.
The uk isn't that tax heavy. We have a shaky but decent economy, we enjoy advances in technology, medicine and education despite the problems or high expectations. Cost of fuel and food compared to average income is mediocre. Our economy allows us to buy houses. Look at many other countries. House prices are way out of reach and whilst fuel might be cheaper it forms a much much larger part of people's income.
We either have to pay the tax for our services and begrudge the value for money or live in an economy like Dubai's which promote high earners where everything is tax free but very very expensive. It wouldn't work on our island, population count etc
Edited by bp1000 on Sunday 17th March 21:50
Try running an business in France or Italy.
mjb1 said:
As an extreme example (flawed mainly by ignoring your personal tax/NI allowance).
You earn £1.00 gross
your employer has already paid 12p NI on that,
you pay another 12p employees NI,
then 20p income tax,
that leaves you with 68p.
You use that 68p to buy petrol (so you can drive to work to earn money)
of that, 33.8p will be tax (fuel duty + vat).
So, you're actually getting 35p worth of petrol for your £1.12 earnings, leaving the state with the 77p balance!
Still, it pays for wars and benefits, amongst other useful stuff. </daily mail rant>
Also realise a war however bad this sounds give the government an excuse to borrow and inject hundreds of millions if not billions into the uk economy. For weapons, defence, services etc. You have to justify borrowing on large scale and sadly war is one method. You earn £1.00 gross
your employer has already paid 12p NI on that,
you pay another 12p employees NI,
then 20p income tax,
that leaves you with 68p.
You use that 68p to buy petrol (so you can drive to work to earn money)
of that, 33.8p will be tax (fuel duty + vat).
So, you're actually getting 35p worth of petrol for your £1.12 earnings, leaving the state with the 77p balance!
Still, it pays for wars and benefits, amongst other useful stuff. </daily mail rant>
It primarily goes to uk companies, which in turn create jobs, pay salaries and this filters down to buying houses and spending money on the British high street.
They want you to not personally withdraw cash, keep it in the company and ideally employee loads more people and grow. Employing even more.
Realistically why would you take out more than you need to live if you have your own business. You waste a large sum in tax. Just take out exactly what you need and take lumps as and when.
This is what happened when they put the tax band up. People on top rate of tax didn't withdraw. They loaned themselves the cash as at 1% interest it was cheaper to do this than to pull money out of the company at 50% tax. The government realised and reversed the rate back down.
People don't want to pay more than they have to. You also get up to 30% tax relief if you spend part of your gross profit investing in British start up businesses. There are plenty of ways to sensibly and "legally" manage your tax,
You might feel hard done by with fuel bills but please look at road tax in a cheap fuel bill country. You are looking at 1k plus as well as mandatory winter tyres costing around £800.
Edited by bp1000 on Sunday 17th March 23:08
Edited by bp1000 on Sunday 17th March 23:09
Ozzie Osmond said:
The UK tax burden is IMO huge. For anyone who's doing reasonably well,
I tried to work it all out once. What % of your money actually ends up in the governments hands through direct and indirect taxation- 40% income tax
- National insurance
- 20% VAT
- Fuel Duty
- Road fund Licence
- Council Tax
- Airport tax
- Stamp Duty
- Capital Gains Tax
- Inheritance Tax
- Booze duty
based on decent salary of 40 grand and then using guess numbers for food, petrol, insurance, council tax etc etc etc.... I never got to the end though. I got bored.
Still.... for a lot of those you can do something about it. Buy less stuff, drive less, don't buy a house, don't have any investments, don't drink and dont have relatives with large estates to give away upon their death. In short don't have anything, be a drone, live in a box, do as you are told, be grey (or beige). Or if you are wealthy enough employ a decent accountant to do all that for you.
Accountants aren't expensive. If you structure your company right, currently if you followed the advice to not pillage it for pointless personal wealth, use it as a bank and if you ever folded it, depending on the structure you pay only 10% capital gains tax after relief as the rules currently stand. Otherwise the rate is 18%. So you get your money out in the end cheaper anyway. That's after enjoying running your own business, claiming equipment, expenses, low co2 cars on the books with tax relief benefits. Also employing your mrs a small wage for work. That gets another 10k into the household on a lower rate of tax which comes off your corp tax bill.
All this is above board. Never try to claim for dodgy stuff to avoid paying tax. Never take the Micky they will find out.
Running a company is defiantly more tax efficient.
Don't think about how much goes on tax end to end. Everyone is in the same boat. You will get personally rewarded for running a business because you will benefit the immediate economy and create jobs, that's why the benefit and relief exists.
All this is above board. Never try to claim for dodgy stuff to avoid paying tax. Never take the Micky they will find out.
Running a company is defiantly more tax efficient.
Don't think about how much goes on tax end to end. Everyone is in the same boat. You will get personally rewarded for running a business because you will benefit the immediate economy and create jobs, that's why the benefit and relief exists.
mjb1 said:
As an extreme example (flawed mainly by ignoring your personal tax/NI allowance).
You earn £1.00 gross
your employer has already paid 12p NI on that,
you pay another 12p employees NI,
then 20p income tax,
that leaves you with 68p.
You use that 68p to buy petrol (so you can drive to work to earn money)
of that, 33.8p will be tax (fuel duty + vat).
So, you're actually getting 35p worth of petrol for your £1.12 earnings, leaving the state with the 77p balance!
Still, it pays for wars and benefits, amongst other useful stuff. </daily mail rant>
hmm lets assume you earn a reasonable sum and dip into the 40p tax bracket.You earn £1.00 gross
your employer has already paid 12p NI on that,
you pay another 12p employees NI,
then 20p income tax,
that leaves you with 68p.
You use that 68p to buy petrol (so you can drive to work to earn money)
of that, 33.8p will be tax (fuel duty + vat).
So, you're actually getting 35p worth of petrol for your £1.12 earnings, leaving the state with the 77p balance!
Still, it pays for wars and benefits, amongst other useful stuff. </daily mail rant>
So you pay roughly 30p tax on £1 earned And your employer pays 12p So the gummint so far has 42p and you have 70p in your pocket. Sou you go and buy some petrol for 70p. you then pay the 64% tax on the fuel leaving you with about 25p in fuel. Therefore you earned £1 and the gummint got 87p.
They then employ civil servants who are notoriously more wasteful than the Torey Canyon so only about 2p of your taxes actually go on anything other than form filling. 50% of that will be spent on windmills, solar subsidies and way to 5 co-ordinators. Leaving just 0.1 p for useful things. ish
The simple fact is that the OP is correct. The UK tax system is a total rip off because the government fritter money away on total irrelevancies, sign up to subsidizing countries with less debt fixing the probleme du jour, and squander money on a benefits system that is totally out of touch with reality, plus a state pension scheme that is run like a Ponzi scheme. And that's just the start......
While the self employed may be able to improve their situation by using a good accountant it doesn't help those employed by large corporations - they are taxed at a ridiculous level. It is no consolation that other European countries may charge higher rates of tax, the fact is that Britain's tax should be lower if it wants to have any chance of remaining competitive globally.
This in turn means that Britain needs to redefine it's expectations of government, unfortunately I doubt that will happen in the next 20 years and so I resign myself to remaining an expat,
While the self employed may be able to improve their situation by using a good accountant it doesn't help those employed by large corporations - they are taxed at a ridiculous level. It is no consolation that other European countries may charge higher rates of tax, the fact is that Britain's tax should be lower if it wants to have any chance of remaining competitive globally.
This in turn means that Britain needs to redefine it's expectations of government, unfortunately I doubt that will happen in the next 20 years and so I resign myself to remaining an expat,
Ozzie Osmond said:
For anyone who's doing reasonably well...
Just out of interest how much do you think a person would need to earn to pay an effective tax rate of 40% and what percentage of the population have that level of income? You do realise the median income in the UK for 2012 was just under £19k/yr?- 40% income tax
I'm just struggling to understand this argument a bit. Its been a while since I lived in the UK but while calculating I get that a person paying an effective 40% rate on income would be earning over £160k/yr.
Storer said:
The problem in this country is the number of people being employed by the state. Approx 20% of the working age population is far to high.
Add to that the over generous benefits system - there is no way you should be better off than taking a job.
As I said, above, in Labour/unions-think this is described as 'putting money in to the economy'. Trying to reduce the public spending burden will 'take money out of the economy'.Add to that the over generous benefits system - there is no way you should be better off than taking a job.
If we didn't take everyone's money away from them and spend it on everyone else, the nation would be broke. Apparently.
speedy_thrills said:
Ozzie Osmond said:
For anyone who's doing reasonably well...
Just out of interest how much do you think a person would need to earn to pay an effective tax rate of 40% and what percentage of the population have that level of income? You do realise the median income in the UK for 2012 was just under £19k/yr?- 40% income tax
speedy_thrills said:
I'm just struggling to understand this argument a bit. Its been a while since I lived in the UK but while calculating I get that a person paying an effective 40% rate on income would be earning over £160k/yr.
Were you excluding everything other than income tax?Edited by 0000 on Monday 18th March 07:28
Otispunkmeyer said:
I tried to work it all out once. What % of your money actually ends up in the governments hands through direct and indirect taxation
And what happens when it goes back to the Guv'mint? They spend it all on diversity coordinators and benefit recipients.And what happens them? They spend it on goods and services (which other people profit from)..
Countdown said:
Otispunkmeyer said:
I tried to work it all out once. What % of your money actually ends up in the governments hands through direct and indirect taxation
And what happens when it goes back to the Guv'mint? They spend it all on diversity coordinators and benefit recipients.And what happens them? They spend it on goods and services (which other people profit from)..
Employing people in and of itself is an excellent way to make the nation richer. Even if we don't need to employ them.
Johnnytheboy said:
Countdown said:
Otispunkmeyer said:
I tried to work it all out once. What % of your money actually ends up in the governments hands through direct and indirect taxation
And what happens when it goes back to the Guv'mint? They spend it all on diversity coordinators and benefit recipients.And what happens them? They spend it on goods and services (which other people profit from)..
Employing people in and of itself is an excellent way to make the nation richer. Even if we don't need to employ them.
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