Where in the world can you pay the least tax?ALTax
What would make you leave the country for good? Better weather, a more relaxed lifestyle or even, perhaps, lower tax rates?
Many of the Britons who emigrate there were 140,000 last year believe that HM Revenue & Customs helps itself to too much of their money and that tax rates in America, Australia and much of Europe are lower.
But is this true or is it just a matter of perception?
In case you believe that, when it comes to tax, the grass is always greener, we’ve surveyed the tax regimes in some of the most popular destinations for British expats and summarised our findings in the boxes on this page.
But first a quick reminder of how much are paid in Britain.
Relatively low headline rates of income tax but large social security levies on top
National Insurance contributions
Paid on earnings of more than £153 a week. Employees pay 12pc on earnings below £41,865 and an extra 2pc above that. The self-employed generally pay £2.75 a week plus 9pc on annual profits between £7,956 and £41,865. A further 2pc is paid on profits above that level. Over-65s pay nothing.
Banded council tax levied by local authority, averaging £1,470 for a flat or £1,800 for a three-bedroom house (less in Scotland).
Banded stamp duty rates, ranging from 1pc to 7pc, payable on full purchase price under cliff-edge system.
Currently 10pc on total savings income up to £2,880. This will change in April 2015, from when no tax will be payable below £5,000. Otherwise interest is taxed at your marginal rate. Dividend income is taxed at 10pc for basic-rate taxpayers, at 32.5pc from there to £150,000 and at 37.5pc above that.
Numerous income tax bands, tax breaks for children and elderly relatives
Rates shown include national tax and the average local tax rate. Eur4,080 can be deducted as an allowance
Social security (equivalent to NI) 6.4pc of salary, up to a maximum of about Eur41,000. Self-employed pay about Eur250 a month. Married couples can use each other’s allowances, deducting up to Eur3,400. There are income deductions for children. Elderly parents living in the family home also help cut tax bills.
Charged by local councils at 0.4pc-1.3pc. Councils may also charge taxes on construction, motor vehicles and land.
Transfer fees of 6pc-7pc, stamp duty of 0.5pc-1.1pc on second-hand properties.
21pc for interest up to Eur6,000, 25pc on Eur6,000-Eur24,000, then 27pc.
Complex income tax system but plentiful allowances
A 3pc solidarity tax on income of more than Eur300,000 applies until 2016
For children, medical and funeral expenses, school and university fees, some insurance premiums. Sliding scale for those earning up to Eur55,000. A regional tax of 1.2pc-2.3pc is also levied, plus a municipal tax of 0.1pc – 0.8pc.
9.2pc of salary, deducted at source. Self-employed pay 18pc-28pc, up to an income of about Eur99,000.
Municipal service tax of 0.3pc-0.8pc a year.
3pc tax on urban property, 4pc if buying from a company or agency. Second homes attract tax at 10pc. Rural properties attract higher tax rates: 11pc, or 18pc for second homes. All rates are plus VAT. Agency fees (usually divided equally between buyer and seller) of 3pc-8pc, notary fees of 2.5pc-3pc.
Interest and some dividends and capital gains are subject to a flat tax rate of 20pc. Others are liable to tax of 49.7pc on gains.
Income taxed on family basis, with surcharges for high earners
An additional exceptional contribution€ applies: 3pc for income of more than Eur250,000 and 4pc for more than Eur500,000
Couples pay tax on a family basis
Combined income is added up and divided by the number of people in a household, including children, to arrive at an individual’s taxable income. Self-employed pay up to 48pc of net profits, less for lower earners. Tax allowances on mortgage interest, children’s education, charitable donations and maintenance payments.
Total rate of about 8pc, levied on pensions and benefits (7.1pc) and investment or rental income or capital gains (15.5pc).
Regional tax linked to notional rent a property might achieve. For main homes the rate is 0.2pc for more than Eur4,500 in notional rent. For second homes it is 1.2pc for Eur4,500-Eur7,600 and 1.7pc above that.
Tax of 5.8pc, less in some regions. Off-plan and newbuild homes attract less tax but up to 20pc VAT. Registration costs can be an extra 1pc or so. Legal, mortgage and professional fees come to a further 2pc.
Interest and dividends taxed at marginal rate, additional social charges up to 15.5pc.
Simple income tax system but watch for the ‘garden tax’
There is an additional solidarity tax ranging from 1pc on income of Eur12,000 to 4pc on income of more than Eur100,000. Self-employed pay 26pc on income up to Eur50,000 and 33pc above that, plus a single solidarity fee of about Eur450.
A tax credit of Eur2,100 applies to employees and pensioners with annual incomes up to Eur21,000 then falls on sliding scale.
16.5pc of salary. The self-employed are self-insured and pay according to income, with a monthly minimum of Eur250.
From 0.1pc for property worth Eur300,000-Eur400,000 to 1pc for those worth Eur1m or more, plus Eur1 per square metre of garden.
3pc tax. Land registry and other fees up to 5pc. New properties attract no tax but do attract 23pc VAT.
15pc tax on interest, deducted at source. Dividends taxed at marginal rate.
‘Luxury living’ tax
Applies to the assumed annual income from the ownership or use of private cars, aeroplanes etc, and up to 10pc for swimming pools.
No social security costs except small health care levy
Paid for through federal taxes, except for Medicare, charged at 1.5pc of taxable income. Those earning A$160,000 (plus A$1,500 per child) pay an extra 1pc.
Charged locally. In Sydney, for example, the charge is A$100 plus 1.6pc of the value between A$412,000 and A$2.5m.
States also levy fees on other transactions, including land transfers, leases and car sales. This varies between 1.4pc and 5.5pc on sums of more than A$960,000.
Interest taxed at marginal rate. Capital gains tax is payable on disposal of assets, except for personal items such as a family home.
Complex web of national, state and local taxes
Married couples filing together, widows and widowers and heads of household filing alone get different allowances. Taxpayers get a fixed amount for dependants such as children of just under $4,000.
State income taxes
4.6pc in Colorado, for example, or 6.5pc on income of more than $60,000 in Delaware, but none in Alaska or Florida.
6.2pc on salaries and self-employed income up to $117,000. Medicare charge is 2.9pc, plus 0.5pc on single incomes of more than $200,000 or joint incomes of more than $250,000. Many states levy sales taxes 9.5pc in Tennessee and 6.6pc in Florida.
Generally charged at county or municipal level. Expect to pay $8,000 a year or more in Manhattan or $250 in parts of Alabama or Louisiana. In Palm Beach, property taxes average just under $5 per $1,000 of value.
Many states levy sales tax on property purchases. Florida charges stamp duty and sales tax of about 8pc of the property value.
Dividends and other income taxed at marginal rate. Investments held longer than a year attract capital gains tax of 15pc on disposal, or 5pc in two lowest tax brackets.
No income tax but import duties on almost everything
No income or capital gains tax.
None nor for any other government programmes. Medical insurance and pensions are mandatory for all employees.
Stamp duty on lease and property transfers, customs duties, business licences and fees.
Tax at 7.5pc of price or market value, whichever is higher. Mortgages taxed at up to 1.5pc of the sum borrowed. Land leases charged at 5pc of rent for up to five years, 10pc for five to 10 years and 20pc for longer.
Cayman does not produce its own food, apart from fish and turtles. Duties are imposed on most products, although luxury items, such as watches and jewellery, are exempt.