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

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 :)

Someone told me in my early 20s, "The system's designed to keep you poor".....20 years later, he wasn't wrong.

The UK tax system in a nutshell: - Honest worker - Taxed to hell to prevent you from getting rich. - Rich donkey - Can invest, start a business, etc to pay less tax, or set up an offshore account in a tax haven to bypass tax entirely, to get richer. It's almost like working backwards.

No Richy's IR35 has prevented that one. I've just closed my consultancy, I'd even saved over £70k to employ someone and rent an office. It's just not worth in the UK, engineering degrees, years of experience in R&D in robotics, MSc in rocket science, setting up your own company, inventions/ideas you want to develop, it's all impossible, shopping at ALDI and living like pauper is the only way, spending everything you earn just to get to work and back, that's Richy's way.

I like the way you explained that people who are working hard 40-60 hours a week for years on end, have similar lifestyles and access to resources through currency, as those who do not work. Most people dont discuss this

I'm favoured, $22K every week! I can now give back to the locals in my community and also support God's work and the church. God bless Americaa.

It's not only tax - you try to get a mortgage/car loan as a business owner or self-employed person, the system is designed to keep you in the system, then taxes keep you down. I left the UK last week.

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.

I have never earnt £100k a year but I think it is absolutely disgusting that someone can put in the hard work and get their income to that level only for the blood sucking gov to take £1 out of every £2.

In a nutshell, if you live/work in the UK, anything over 100k just dump into a pension and retire early, that's the only way to avoid the mafia stealing all your hard earned money. Also try to invest as much as possible into ISAs, so again the grubby mafia don't tax the hell out of your savings. Compared to the US income tax system, the UK tax system can only be described as punitive!

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.

I freelance under a limited company as well. While on contract the company unilaterally decided that everyone was now on IR35. All objections were met with "there's the door" (illegal but they were a huge multinational, so I guess it's ok when they do it). I had to switch to PAYE with an umbrella company which took income tax, national insurance and a whole bunch of other taxes related to apprenticeships and hardship funds because the umbrella company had more than X number of "employees" so we all had to pay our share of that too. While all this is going on I still have my limited company with all its operating costs and taxes to pay. The government treated me like I was an employee and an employer at the same time and some of that money was taxed twice. The accountant did a stella job of clawing back as much as he could but for some of it he said I'd have to take the double hit. I've always been a good financial planner so I could suck it up in the short term, but it really stung. Reform said they will get rid of IR35 so they get my vote on that alone !

Thanks for this, a small nudge re income tax bands would be to clarify that in Scotland there are additional income tax bands than in England. Appreciate though that this may be too granular given that the pitch is for the broad strokes of tax, but perhaps worth a mention that there is a difference.

Ltd company owner here. Best thing I ever did. My effective tax rate is very low. £12570 salary, the rest in dividends. Anything else stays in the company as cash or assets. With the capital purchase write-offs, it's an excellent way to build wealth.

useful video thou the last part, PAYE vs Dividends isn't quite the whole picture. PAYE part is missing the NI element (employee and employer), also the 0 band allowance and the Divi part is ignoring the Corp tax in the comparison vs PAYE. i.e. 19% + 8.75%

I am 66 and still working and paying far too much tax in the 40% band plus the VAT i seem to be working just to pay the tax,

It’s disgusting it should be one person one tax and tax maximum should be 15%. 25k - 50k 16% 60k-100k 20% 100k+ and if there’s no money for the gov tuff do without like we have to. God when will we revolt in the uk it’s long over due.

Thanks for the video. My wife did some temping using a limited company, which was great, looked like payments were coming in a lot higher but after corperation tax, paying a base salary of £10k to keep pension status and then drawing rest from dividents it worked out she lost more than 50% to taxes and would have been better off just being paid normal salary. Very difficult to avoid the system without already having money in the first place.

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!

I have listened to several channels, but I finally found you here. Your explanations are very clear and easy to understand!