Less than 1% Of Taxpayers Pay 24% Of All Income Tax And CGT
There are concerns the truly wealthy may leave ...
Posted by Roger Eddowes on 18/12/2023 @ 8:00AM
The top 0.3% of taxpayers in the UK have shouldered a significant portion of the country's tax burden, according to data obtained by a retail investment firm ...
If we're not careful, wealthy taxpayers may start booking flights out of the United Kingdom, never to return!
Wealth Club discovered that in the 2021/22 tax year, this group of high earners paid a staggering 24% of all Income Tax and Capital Gains Tax, with an average bill of £559,000 each. This marks an 18% increase from the previous year, highlighting the growing contribution of the wealthy to the UK's finances.
"This may seem like a positive trend for the country's economy!"
But there are concerns that the burden on these top earners may become too heavy, leading to potential consequences for the UK's tax revenue. I believe that if taxes on high earners continue to rise, there is a risk of them leaving the country, which will in turn, result in a significant loss of tax revenue.
The UK government is considering raising taxes on the wealthy to fund its ambitious spending plans, including the continued recovery from the COVID-19 pandemic. While it is important to ensure a fair distribution of taxes, there is a delicate balance to be maintained to prevent the wealthy from seeking more tax-friendly countries to call home.
Wealth Club also revealed that the top 100 taxpayers in the UK paid an average of £46 million each in Income Tax and Capital Gains Tax, an increase of 14% from the previous year!
This group, which includes some of the wealthiest individuals in the country, contributed a total of £4.6 billion to the UK's tax revenue. However, if these top earners were to leave the UK, there would be a significant gap of £11.5 billion in tax receipts, highlighting the potential consequences of driving away the wealthy.
These concerns are not unfounded, as the wealthy are a mobile group and have the means to move to countries with more favourable tax regimes. This is especially true in today's globalised world, where individuals can easily relocate their businesses and assets to other countries. With the rise of remote work and digital nomadism, the possibility of high earners leaving the UK for tax-friendly destinations has become even more feasible.
"The impact of losing the top earners in the UK would affect the economy as a whole!"
These individuals contribute significantly to economic growth through their investments, job creation, and consumer spending. Their departure could lead to a slowdown in economic growth and a ripple effect on other taxpayers, potentially resulting in a decrease in tax revenue from other income brackets.
Moreover, the loss of top earners could also hurt the UK's reputation as a desirable place to do business. The country's stability, rule of law, and skilled workforce have long been attractive to investors and entrepreneurs. If the wealthy start leaving the UK, it could send a message that the country is becoming less attractive for high earners and potentially damage its global competitiveness.
The Wealth Club data highlights the significant contribution of the top 0.3% of taxpayers to the UK's tax revenue. However, there are concerns that the burden on these high earners may become too heavy, leading to potential consequences for the country's finances and economy.
"It is crucial to strike a balance between fair taxation and driving away the top earners!"
With left-leaning politicians bashing the wealthy in the run-up to the General Election, how much they contribute in taxes and how their investments radiate out into the economy at large is certainly food for thought this Christmas.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you're a wealthy taxpayer who would like to know more, it may be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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