18 07 2016

No more tax dodging? Britons 'should pay UK taxes wherever they live in the world'

All British passport holders should pay full UK tax regardless of where they live in the world, in a move that would slash tax-dodging scandals and make the system fairer, according to the Chartered Institute for Securities and Investment (CISI).

Such a move would follow the US system where all citizens pay tax globally, in exchange for the other benefits of the country’s citizenship.

CISI seeks to improve behaviour and cultural standards in finance, for instance by setting examinations and offering qualifications in professional standards for financiers.

By taxing all Brits everywhere, the super-rich would be prevented from moving abroad to cut their bill, while those who remain in the UK would be spared an ever-mounting tax charge.

“The UK income tax system isn’t fair at the best of times. The top 1pc of taxpayers, roughly those who have an income over £150,000, pay almost 30pc of the entire income tax burden of £160bn, while the average person pays less than £5,000 a year,” said CISI chief executive Simon Culhane.

“We could greatly simplify the collection of UK tax, and spread the load more fairly, if we moved away from just operating a residence test when determining whether an individual should pay tax.”

Those working or based abroad would not have to pay tax twice as double taxation treaties stop this, CISI said.

For example, a person in a country with a lower rate of tax than the UK would pay the tax they owe locally first, then top that up to the UK level in a payment to HM Revenue and Customs.

A worker in a country with a higher tax rate would only pay the local rate and not have to send funds to the UK, as they have already been taxed at a higher level on their whole income.

Currently a complex system counts how many days a Briton has been in the UK before they are liable to pay tax, with 16 days, 90 days and 183 days all being different thresholds.

“It will avoid the nonsense of midnight flights and sub-optimal planning as individuals, usually highly paid and with a high net worth, take steps to ensure they don’t overstay their time in the UK in a given tax year,” said Mr Culhane.

“The citizenship/residency tests would mean those seeking lower tax havens can still do so, and they can run empires and businesses from anywhere in the world – but if they want the benefits and rights of UK citizenship they must accept their responsibilities to pay their fair dues and contribute to the UK Exchequer.