The Sunday Times have published their rich list – one of those publications you can’t help but delve into. There is something fascinating about the monetary worth of the wealthy. According to the Sunday Times Britain has 104 billionaires – an increase from 30 since 2004.
The amount of money needed to join the ranks of Britain’s 1,000 richest is £85million, up from £80million in 2008 during the pre-crash boom – so it seems the rich really are getting richer.
Living in the UK and being rich does have its advantages. Especially if you have ties abroad where moving your money around seems second nature. If you live in the UK and are registered as a foreign national (having non-domiciled status – sorry about the jargon) you gain an advantage under our tax system. If you have non-domiciled status, you do not pay income tax or capital gains on earnings made outside of the United Kingdom unless you bring the money into the UK. To join this exclusive club all you have to pay is £30,000 or £50,000 a year (about the cost of a day trip in a private jet).
Let’s break some examples down to try to get rid of the jargon:
– You live in the UK; you work in the UK and you pay tax on the salary or dividend or interest you earn in the UK (or anywhere else). Seems all above board; but wait. The company you own is in fact in the name of your spouse who happens to live outside of the UK; therefore no income tax is paid on her dividends.
– What does that mean? If you live in the UK and have a one million dividend you pay 40-45%. As a non-domicile living outside of the UK you would only pay 20%, – “simples” as our favourite meercat would say.
– A non-domicile sells an investment property and pays tax on the profit (Capital Gains Tax for you and me) of 0% but a UK resident (in other words you and me) with no ties abroad would pay up to 28%.
To put it simply, the rich have the means to “live” where they want and put their money wherever they want, thus avoiding many taxes – good luck to them, I have no envy as such; but our tax system is so complex that it really does pay to be super rich and enjoy the benefits of having a simple tie in the UK for a “simple annual fee”. So what am I saying? The politicians seem to focus on mansion tax and higher rate of income tax, yet – and without wanting to get involved in party political debates, what we need is a simpler and more straight forward tax system, which is equal and fair – that would raise probably more money than we need!
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Contact your local business accountant for a free consultation; you’ll wonder why you didn’t switch to AIMS before.