ACCOUNTANT EXPOSES: The UK Tax Regime Isn't Set Up For You To Get Rich

As a Qualified Accountant who worked in the tax sector for 10 years, I explain in this video:
- The UK income tax system including tax bands and the personal tax free allowance
- Why the UK Income Tax System is set up to incentivise investors and business owners
- Capital gains tax
- Company structures
- How the richest people (including Rishi Sunak and the Sunday Times Rich List Top 20) pay less tax

TIMESTAMPS:
00:00 - Intro
00:53 - The Income tax allowance
01:14 - Income tax bands and rates
03:40 - Why its hard to get rich through salary
04:46 - Investors pay less tax
07:00 - Businesses pay less tax
09:42 - Final thoughts

WHO AM I:
I'm Kiran, a qualified Accountant and experienced tax professional living in the UK. I make videos about finance, tax and investing.

MY FILMING GEAR:

DISCLAIMER:
This content, and the ideas presented in it, are for education and entertainment purposes only. Kiran does not provide tax or investment advice. The information presented does not consider the financial circumstances of any investor, and therefore may not be suitable for all investors.
Although Kiran is an Accountant, no Accountant-Client relationship is established with the viewer in any way.

As an Amazon Associate I earn from qualifying purchases. The product links in the description are affiliate links. This means if you choose to buy something through one of these links, I may receive a commission on the sale, but it makes no difference to you as a buyer.

[KiranKaurFinance]

Expanding on the example provided at 08:30 -
Please note this is a simplified example that has been used to illustrate the high level difference between salaried income and dividend income. It does not factor in NIC on salaries, or the tax free personal allowance for the first £12, 570 of income received by a shareholder, or any dividend allowance.
The effective tax rate will further depend on the profile of the business (as well as how money is extracted.) If you require more information, please consult your accountant to understand the best option for your personal circumstances.
Thanks for watching :)

[nicolasbenson]

Nobody can become financially successful overnight. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals. you have to contend with inflation, recession, decisions from the Feds and all. I was able to increase my portfolio by $289k in months. You have to seek for help in the right places.

[abcfx]

When I was in Portugal, I worked in two jobs paid the same amount of tax. Total earnings were counted. Here in UK I worked in two jobs my other job was getting taxed 50% and I would get the tax return only during the return period. Now I am planning to leave the UK. I invest a lot, and waiting for my hard earned money and losing investment opportunities and potential returns is driving me crazy. Leaving UK for good. I thought this country was a land of opportunities and dreams, but it is a shit hole and wasting life in pubs and nightclubs.

[pkc]

Best not to work over a certain amount of hours, claim benefits and keep a simple life.

[markheywood]

I have been self employed most of my life. Well until I broke my back and I'm not working right now. But while working I claimed for everything including washing my clothes. And when buying things I put almost everything through my expenses.

[sundayoyedele]

Corporate tax is lower than income tax... 😢 Says a lot right there. Brilliant video! Thanks Kiran. I'm starting me off as a corporation! Employment sucks!

[farzadjahanfard]

I am completely fine with paying taxes. The problem is that paying taxes is what you get in return. Indeed, we don’t pay more tax compared to Scandinavia, but they get a lot back; we don’t. The second problem is that people like Rishi dodge the tax because they can .Big companies like Amazon, Google, etc., dodge billions of taxes every year, and no one cares. God forbid a person like me don't pay his £200 tax. These are the real problems we have.

[simontemplate]

I’m afraid I rather disagree with some aspects of your presentation. The dividend tax rates are in addition to the corporation tax. So if we set aside the polemic issue of employers NICs, those working through limited companies and extracting their income by dividends are in a similar position to employees up to around £50k but above that, now find themselves paying considerably more tax than employees. So above £50k for an additional £10k of dividend, one is paying say 20% CT and then an additionally 33.75% of higher rate (40%) income tax plus dividend tax which works out around 47% marginal rate of tax. As an employee you would be paying 40% plus NICs which drop off to 2% above £50k so you are better off being employed.

But the basic premise of your piece about the glass ceiling preventing most people becoming high earners is bang on the money.

[douglassmith]

Main thing to consider is the pay disparity between rich and poor… it’s ever bigger now so the only way to correct it is to increase taxing on super rich who exploit bottom earners and ease tax on lower earners

[FileForename]

But we don't need people to become middle class. Historically, those in the middle class have always been troublemakers. Revolutions have been led by the middle class: Lenin, Napoleon. Hitler was born into the middle class as well. Lower classes typically don't cause trouble, as they are usually focused on survival and don't harbor higher ambitions. Additionally, it's difficult for them to organize, as no one wants to follow someone from the lower class. On the other hand, the rich and super-rich don't have any interest in starting trouble, as according to the risk/reward ratio, they stand to potentially lose more than gain if they engage in risky behavior. Moreover, they don't have much to gain, as they already possess most of what they desire.

That is my conclusion. If you disagree, please let me know your opinion. I am open to others' views and may adjust my beliefs if persuaded.

[alanturner]

Machiavelli consistently advises that well-ordered republics must ‘keep their citizens poor’. Although this maxim recurs throughout the Discourses, Machiavelli never directly elaborates on what this prescription for civic poverty requires. To the limited extent that this maxim has received critical examination, it is commonly regarded as contending that citizens must live in a condition of material austerity. Through an analysis of Machiavelli’s writings on the German free cities, this article challenges this interpretation and argues that rather than requiring that citizens live at some particular level of poverty, the maxim instead requires only that citizens maintain certain attitudes towards poverty and wealth. Our politicians still follow Machiavelli. Blair was an avid Fan. The thing is other countries are coming up with better solutions while the UK is rapidly falling behind.

[JJerem]

makes me chuckle when they say we are "allowed" to earn 12k.

[Swat-edbt]

Thanks Kiran clear and easy to follow advice. I just subscribed! ❤

[mrdaulo]

Why did the prime minister only 23 percent on 2.5 million? Also the benefits that you talk about are very difficult to claim for the people who need them.

[elenapopa]

The comparison you make at 8.30 isn't accurate. You call the 60k profit and then proceed to subtract expenses from it - it should be turnover, not profit. The taxable income is in fact what should be called profit. It's not a fair comparison in any case - if you have 22k worth of business expenses that money isn't yours, so even if you pay less tax because of it, you're still worse off in terms of money in the bank. Also it's not fair to compare dividend taxes to personal income taxes when you will have already paid corp tax on that profit before dividend tax applies. This kind of comparison can lead people to think it's more profitable running your own company when it's really not, at least not anymore - not at numbers like 60k. Also consider that VAT applies to businesses turning over 85k+, a tax which isn't payable by employees.

[samali]

First time watching now subscribed. Straight forward easy to understand content. Thanku ❤

[nathanaelkadiwa]

Jus what I needed to hear, you got a avid subscriber 🎉🎉🎉

[junedobson]

Do. You know prime minister does not paid tax so why should we pay, 😇🌎❤️

[shaunkenyon]

Thank information was straight forward and easy to understand....

[ibrahimeroglu]

New company owner from last year. I’ve always been sole trader. It’s good info for me right now. Thanks… from Edinburgh