UHY Hacker Young report finds UK economy over-taxed

According to research by UHY Hacker Young, Top 50 firm, the UK economy is paying way over the global tax average. Britain has a tax burden of 18% above everyone else around the world.

So yes, it is fair to say that we are somewhat over-taxed as a nation.

The high effective rate of 32.9% GDP could well be meaning that our growth could be in jeopardy; the global average is 27.8% of GDP. The US is at 25.4% GDP and Ireland is at 28.3% - even Japan come in at 29.5%.

In saying this, many of our European counterparts also have high tax burdens, with most coughing up around 40% in tax.

The report by UHY Hacker Young warned that such high tax can put off investors, which has knock on effects when it comes to large corporations choosing to locate their bases outside the UK where the tax burden is lower.

UHY Hacker Young tax partner, Roy Maugham, said;

"While our tax burden compares favourably with some of our Western European neighbours, increasingly, that is not where the most intense competition is coming from. It needs to be a clear ambition to make our economy globally competitive by keeping a close eye on the overall tax take - perhaps even setting a specific target.

"That will need to be balanced by greater efforts to ensure that spending on the public sector delivers the best results for its customers.

"How much tax is too much ought to be discussed much more openly during the election campaign."

What do you think of the latest report? Are we running the risk of falling behind with the rest of the world due to our high taxes? Let us know your thoughts @OmnitasTax & join in the conversation on Facebook – with the General Election only weeks away, the debate is certainly sure to be a lively one!

To Dom or non-Dom? That is the question

Labour has announced that it will remove the existing tax benefits in April 2016 if it gets into power. This follows the recent Budget announcement where a £90,000 charge was introduced for non doms (a person who lives in a country but is not legally domiciled in it, in other words) who have lived in the UK for 17 out of the last 20 years.

Whichever party forms the next government, it appears that non doms are clearly in the sights of the major political parties and the long standing tax benefits future looks bleak. Most non doms should now consider the likelihood of the tax benefits they receive continuing in the long term as remote.

To dom or not to dom? That is the question

It is estimated that its abolition would affect 116,000 people but there are no certain sources as to how much tax would be generated. What is certain, however, is that it would make the UK less attractive to those who have the resources to choose where they live and work.

Obvious casualties would be the high end London property market and businesses like hedge funds that can easily relocate to more tax friendly jurisdictions.

Like many tax strategies, the long term effects may take years to materialise; new businesses may simply not chose to come to the UK.

Weighted against this is the prevailing view that everyone should pay their fair share of tax. Historically, non dom status is an aberration in the tax system and its original reason for existing has long disappeared.

So what are your thoughts about it all? Do let us know and join in the conversation @OmnitasTax and Facebook – we are also here to help with any tax advice that you may need so please do feel free to call us on 01902 837 408 or click here.