Scottish Parliamentary Elections Sweepstake

[woody]

Currently, every penny earned over ~32k pays 40% (and 45% at 150k)

Not quite. Its (circa) £32k + the tax free allowance so around £43/44k this year, over which you'll pay 40% income tax.

[Corranga]

Currently, every penny earned over ~32k pays 40% (and 45% at 150k)

Not quite. Its (circa) £32k + the tax free allowance so around £43/44k this year, over which you'll pay 40% income tax.

Oops. Ta

Are we just talking a flat rate of income tax or are you including NI in that?

That's a good point. Due to changes in the structure of NI that Osborne announced 6 months ago, the NI I pay was increased last month, something I (naively) didn't know was going to happen - scrapping public sector employee rebate or something - well, University / charity sector / whatever they classify us as now :S. This is supposed to help pay for the pensions of those currently claiming them of course. In the same month, my own pension contributions also went up by a percent so I can have a pension of my own one day
Now, I could be wrong, but hitting the public sector to raise money doesn't seem to be the best plan - it's not exactly renowned for high wages!

Net result meant around £100 a month less in my pocket, so I'm slightly bitter

Chris

[BigD]

Are we just talking a flat rate of income tax or are you including NI in that?

That's a good point. Due to changes in the structure of NI that Osborne announced 6 months ago, the NI I pay was increased last month, something I (naively) didn't know was going to happen - scrapping public sector employee rebate or something - well, University / charity sector / whatever they classify us as now :S. This is supposed to help pay for the pensions of those currently claiming them of course. In the same month, my own pension contributions also went up by a percent so I can have a pension of my own one day
Now, I could be wrong, but hitting the public sector to raise money doesn't seem to be the best plan - it's not exactly renowned for high wages!

Net result meant around £100 a month less in my pocket, so I'm slightly bitter

Chris

Chris that will be the fact that pesion schemes are no longer contracted out of the 2nd state pension (SERPS as it was then S2P). When contracted out Employers and Employees received a discount on their NI contributions as they were not in the 2nd state pension (contracted out) but in anticipation of the flat rate pension coming in all Employer defined benefit schemes are now no longer contracted out and so no reduction in the NI. You're just paying the level that everyone else is now.

[Corranga]

Chris that will be the fact that pesion schemes are no longer contracted out of the 2nd state pension (SERPS as it was then S2P). When contracted out Employers and Employees received a discount on their NI contributions as they were not in the 2nd state pension (contracted out) but in anticipation of the flat rate pension coming in all Employer defined benefit schemes are now no longer contracted out and so no reduction in the NI. You're just paying the level that everyone else is now.

I appreciate that, but my pocket doesn't They say its better to have had and lost than to never of had at all, but when it comes to money I'm not convinced. People tend to live to their means, and whilst I was lucky enough to have an overall gain (as I started a new, higher paid position at the same time as receiving the 2 cuts) plenty of colleagues obviously didn't, and my employer didn't do all that much to make everyone aware..

There goes my lifetime dream of 1 wear only socks to maximise the satisfaction of pulling on a new pair every morning

[Rosssco]

Is it time to post this again:

Suppose that, every day, ten men go out for beer and the bill for all ten comes to £100.
If they paid their bill the way we pay our taxes, it would go something like this...


The first four men (the poorest) would pay nothing
The fifth would pay £1
The sixth would pay £3
The seventh would pay £7
The eighth would pay £12
The ninth would pay £18
The tenth man (the richest) would pay £59
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement; until one day the owner threw them a problem.
"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20." Drinks for the ten now cost just £80.
The group still wanted to pay their bill the way we pay our taxes.
So the first four men were unaffected. They would still drink for free.
But what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share?
They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.


And so the fifth man, like the first four, now paid nothing (100% savings)
The sixth now paid £2 instead of £3 (33% savings)
The seventh now pay £5 instead of £7 (28% savings)
The eighth now paid £9 instead of £12 (25% savings)
The ninth now paid £14 instead of £18 (22% savings)
The tenth now paid £49 instead of £59 (16% savings)
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
"I only got a pound out of the £20," declared the sixth man. He pointed to the tenth man, "But he got £10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved £1 as well.
It's unfair that he got ten times more than I!" "That's true!!" shouted the seventh man. "Why should he get £10 back when I got only £2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they
discovered something important. They didn't have enough money between all of them for even half of the bill!
And that is how our tax system works.

The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just
may not show up any more. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible
Now who's round is it ?????

[Mikie711]

I know about 20 guys who have done exactly that, gone drinking (living) overseas because of tax. Taking just a conservative average that's a £1,000,000 in tax revenue that's walk out the door which is £1,000,000 that has to be garnered from the remainder or cut from one budget or another. In the greater scheme of things that's not a large amount when talking about government budgets but I am only one guy and I bet there are tens of thousands of Scots or people who used to stay in Scotland who have done exactly the same thing. 10,000 x 50,0000 leaves a fairly large hole in the tax take ignoring the fact that they would then spend their disposable income in country rather than out.

[robin]

It's not a decision I understand. If each was paying 50K (20x50=1000) in tax then they must have been earning the best part of 140K. So I understand that they will have worked hard for that and that they would like to keep more of it to spend however they would like, but actually wherever they go they ought to pay some tax, so even if it's half as much, they're only actually saving 25K. Is it really worth it? Do they really need that extra 25K enough to move countries? Or were they wanting to move elsewhere anyway, and the tax saving was a nice bonus?

Cheers,
Robin

[Mikie711]

Some have moved out all together and some just work the non resident angle, only in the UK for 90 days. Either way they are paying no tax hence saving the full amount. I am considering staying out of the country for the 270 days as I am out for 194 days anyway.

The way the moving out works is that the majority of countries have an 182 day rule, out of the country for 182 days in one year and you do not have any tax bill. On our rotation you are out for more than that anyway so it's easy. They then enter the country of their choice on a tourist visa and stay 26-27 days and leave. You retain your UK residency but because your out the entire year no tax to pay in the UK either.
Like I said I know loads going it and have been for years, the potential savings are huge or you can live the jet set life style by using the tax you would have paid to see the world in style and still not have touched your remaining salary.

[campbell]

Neil was mentioning scams...!

[pete]

Hayek, not famous for his left leaning ways, was in favour of a national income.

[Mikie711]

It's not a scam in anyway. It's non residency. Every country has a set of tax rules by which you can legally remain tax free. Some of the guys I work with just visit different countries in their time off thus remaining outside the UK for the required 270 days. In most countries is easier because they have an 182 day rule. Some of the guys I work with from Croatia and Poland work tax free because of the 182 day rule. UK's is 90 day so harder and we also have a set of differing criteria that you have to be able to meet to be able to claim non residency so nothing dodgy about it. You still have to fill out a tax return and submit it as usual.
It's tax avoidance not evasion.

[pete]

It's not a scam in anyway. It's non residency. Every country has a set of tax rules by which you can legally remain tax free. Some of the guys I work with just visit different countries in their time off thus remaining outside the UK for the required 270 days. In most countries is easier because they have an 182 day rule. Some of the guys I work with from Croatia and Poland work tax free because of the 182 day rule. UK's is 90 day so harder and we also have a set of differing criteria that you have to be able to meet to be able to claim non residency so nothing dodgy about it. You still have to fill out a tax return and submit it as usual.
It's tax avoidance not evasion.

If someone is working overseas and decides to satay overseas rather than come to the UK should we really be considering changing our tax laws so they don't?

Or are you saying more will do it if tax rates change by a penny here or there?

Where do these people pay tax, or is it just nowhere?

[pete]

It's not a decision I understand. If each was paying 50K (20x50=1000) in tax then they must have been earning the best part of 140K. So I understand that they will have worked hard for that and that they would like to keep more of it to spend however they would like, but actually wherever they go they ought to pay some tax, so even if it's half as much, they're only actually saving 25K. Is it really worth it? Do they really need that extra 25K enough to move countries? Or were they wanting to move elsewhere anyway, and the tax saving was a nice bonus?

Cheers,
Robin

In the Gulf states the income tax rate is zero...

[Mikie711]

It's not a scam in anyway. It's non residency. Every country has a set of tax rules by which you can legally remain tax free. Some of the guys I work with just visit different countries in their time off thus remaining outside the UK for the required 270 days. In most countries is easier because they have an 182 day rule. Some of the guys I work with from Croatia and Poland work tax free because of the 182 day rule. UK's is 90 day so harder and we also have a set of differing criteria that you have to be able to meet to be able to claim non residency so nothing dodgy about it. You still have to fill out a tax return and submit it as usual.
It's tax avoidance not evasion.

If someone is working overseas and decides to satay overseas rather than come to the UK should we really be considering changing our tax laws so they don't?

Or are you saying more will do it if tax rates change by a penny here or there?

Where do these people pay tax, or is it just nowhere?

They don't pay tax and the reason they do it is because of the tax bill in the UK. Bear in mind these are guys that spend half their life out of the country working yet still pay full UK tax. More and more are just working the system so they don't have to cough up to the tax man. The rotation (28/28) we work just makes it possible for them to do it.

[BigD]

Sounds like they'll do that regardless of the U.K. Tax rate. (I think that's what Pete was getting at). They don't want to pay any tax. They should be out of the NHS system too in that case imo. Although they probably earn enough to go private.

Where do these guys plan to retire to? And where do their families live?