Treasury chief sees UK rich fleeing high taxes
Wednesday 13th May 2009, 2:30PM BST.
GUERNSEY will see a steady stream of wealthy individuals move to the island during the coming years in an effort to escape higher UK taxes, according to Treasury minister Charles Parkinson.
Deputy Parkinson (pictured) spoke after it was confirmed by Guy Hands’ public relations spokesman that the multi-millionaire owner of Terra Firma private equity group had moved to Guernsey.
It is understood Mr Hands made the decision to move after the UK’s latest tax hike, which was announced during last month’s Budget and will see people earning more than £150,000 per year paying 50% in tax.
The Sunday Times Rich List estimated that the financier lost about £150m. last year as recession struck the UK and, while confirming Mr Hands had moved to the island, his spokesman said the businessman did not wish to comment further.
Deputy Parkinson confirmed he was aware Mr Hands, who, together with his wife Julia, also owns L’Horizon Hotel in Jersey and is still thought to be worth £100m., had moved to Guernsey.
‘A number of wealthy residents in the UK are concerned by the tax increases there and are looking to relocate abroad and Guernsey is one of the places they will consider – especially since we lowered our tax cap, which was a move specifically designed to attract wealthy individuals,’ he said.
He said this type of businessman could provide a boost to Guernsey’s economy.
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What a disgrace; and the more that come the less for the Guernsey people who cannot compete with these rich people.
And they till say it isn’t a tax haven; perhaps a little letter to the telegraph might help a bit.
I’m not jealous of their money; but I object the way they flaunt it, thus pushing up prices, leaving the Guernsey people stranded.
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Of what benefit is this to the ordinary person?
Are we trying to create a Monaco where a shed costs a million Euros?
We have halved corporate tax to help the fat cats and now we want them to invest in our housing. Where are these extra open market houses going to come from? Convert local market housing perhaps?
I suppose if you get paid thousands for sitting on the Boards of questionable companies then helping the rich avoid tax is a good idea. Their government’s might not think so… So here we go again!
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It is reported that Guy Hands may relocate part of his business to Guernsey which, no doubt will benefit the local economy, supply new jobs take up vacant office space etc. This is great news, I hope we have more people moving to Guernsey and contribute to the local economy in this way!
I cannot blame them for moving, it would seriously begrudge me if over 60% of my earnings was taken from my pay packet. The new tax increases in th UK are ludicrous!
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Heading of article
Treasury chief sees UK rich fleeing high taxes
Where do they flee to?
A tax haven.
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Oh great, more imports to strain our already overstretched and overpopulated island, it wouldn’t be so bad if they were charged a decent rate of tax, say 30 or 35%, maybe our economy would see some worthwhile benefit from opening its doors to anyone who is rich enough to buy open market.
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Perhaps people should read yesterday’s article by Simon Jenkins in The Evening Standard about Guy Hands and Guernsey. The likes of Guy Hands did enormously well in the good times in the the boom in the UK. He should be a good citizen and pay taxes over there now things are less rosy. And we shouldn’t be encouraging them to come here. As Jenkins said “micro states” like us can keep taxes low because we don’t have to pay for deindustrialisation or immigration (immediate benefits) as they have to. Yet we benefit from being in their Western European sphere. And yes Guy Hands did pay a lower tax rate than Terra Firma’s cleaning staff due to that cosy capital gains (really income for these guys) rate of 10% that New Labour gave them.
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One more valid reason why Guernsey folk should insist that a 60,000 POPULATION CAP be made law in Guernsey. And do it now before all average Guernsey working families are forced to leave the island.
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Jonny
Are you sure? The 50% band only kicks in on earnings above £150k, so the 60% number is fallacious. I can quite easily blame them for moving, especially those like Hands who have helped in the creation of the mess the world is in.
And what jobs will they ‘create’ for locals? Do we have queues of PE administrators hanging around street corners? Ipes may shed a few, but you have to ask why. The very fact that you are citing ‘empty offices’ is a sad endictment.
It has long been suspected that the those who control the balance of power in Guernsey would wish to see Guernsey turned into a Monaco, as Frank View states, a playground for the cultureless vultures, run by money for money. Not people.
These rich responsibility-shirkers will not add value. They will distort the local economy further out of the reach for the average earner. They will not pay there fair share of tax. They will garner special attention and have an unequal weighting in Guernsey’s policy decisions.
I’m all for attracting entrepreneurs, but let’s make them real ones, not the ‘masters of the universe’ that have caused millions of people to have their futures ruined by the greed of the few.
Whilst normal people stare agog at the shameful exploitation of UK MPs allowances, including tax dodging schemes, these misanthropes are a billion times worse. They have cost the UK £1,300,000,000,000. That’s hardly something to be proud of.
And if we’re to fill that black hole caused by greedy Guernsey politicians imagining they could steal a march on our competitors (has it worked? Where are all these businesses, where is the growth? Why do Guernsey people want to subsidise the global failures of the tax dodgers?) then we’re going to need a veritable army of the likes of Hands.
The ‘nineteenth hole’ will become an unbearable cacophony of embarrassing blather about the size of their ‘portfolios’.
Meanwhile we can’t employ some firefighters, nurses, teachers, policepeople etc. Maybe they can advise how best to asset strip and commercialise our public infrastructure before they b*gger off somewhere with better weather.
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eric – what part of the above article suggests guy hands is looking to flaunt his wealth. to the contrary, he seems keen not to talk about it.
how is he going to push up prices in a way which will effect the normal house buyer – he is hardly competing in the same market.
he is exactly who we want – wealthy, entrepeneur, and with the taxes he will pay locally, a positive inflow for the island. much better surely that he is spending his money in our island.
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This is hardly breaking news – its gone on since Open Market was the norm.
However Eric makes a pertinent point – this is what is commonly known as tax avoidance.
As far as I am concerned, if someone makes a living in England they should pay their taxes – simple really.
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You know Jenny; IT has been said
“As ye sow so shall ye reap.”
Now many poorer families are suffering inn England because of these money mad people, they don’t care a tuppenny damn about the ordinary people; much of this money has been ill gotten; and like Dickens Scrooge want to hold on to it and gloat,
In my humble opinion, there is no place for him in Guernsey or the likes.
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I certainly agree that rich expats who add nothing to the local economy or community are of no benefit to us, but I doubt that we would ever become the new Monaco as out climate is simply not good enough for the rich layabout playboys.
If wealthy individuals wish to move here from the UK it will usually be because they still want to run businesses, thus creating jobs and providing revenue. If they want to lay around doing nothing they will go elsewhere.
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I don’t get why Mr Hands had to move here personally? Surely he could have just sent his cash over to live in Guernsey instead?!?
Guernsey’s glorious finance industry has been accommodating rich peoples cash for decades so that the wealthy can continue to live in civilised countries like the UK without the tiresome burden of tax.
‘Course, maybe he just likes the beaches and our well-governed society….
(Eric @ 7.58am – Hmmm, to be honest, it sounds like he’ll fit right in…..)
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How long is it going to be before Guernsey folk say no to these wealthy people coming in to the island. All they do is buy up property and resell it at prices way to high for the likes of my son to purchase his own house. The way things are going it will soon return to Victorian times where the only work to be found will be to work for these idle rich layabouts at a pitance pay. Are these wealthy people are trying to turn the island into a mini Monaco?
The island has long lost its holiday appeal and charm that it once held in high esteem, to be replaced with ugly glass office buildings and these people flaunting the IDC laws at every turn. It makes you wonder who is in whose pockets!
Its time the Guernsey people stood up and tell them to b****r off and leave our island alone, and return it back to the idylic holiday destination it once was.
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But Student Bob, that’s the point. Rich UK residents cannot just stay in the UK and keep their cash here – they would still be taxed in the UK if their income is generated there. What they can do is shelter investments here so that it is only taxed by the UK when the money is repatriated.
The idea that there are rich people
in England drawing down from bank accounts here, but not paying UK tax on the income that hits their pocket is a complete fallacy.
Apart from the UK resident non-doms that is, but then the UK government has bent over backwards to enable them to earn millions in the UK and hardly pay any tax. But that’s another matter because of course there isn’t a “tax haven” in the City is there? No, of course not.
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ian – I agree that we don’t want to go too far down that road but I think you are confusing 2 issues. If you are complaining about rich layabouts, then they will be buying open market housing and won’t affect the price of houses that your son is looking for. If they are able to operate in the local market, then they will be playing their part in the island economy.
I do agree however that the ability of young islanders to buy property and retain their life here is a major issue.
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Let’s look at it sensibly and as an opportunity. Restrict the numbers of very wealthy people allowed in to the island, and make sure that those who do come in pay full rate social security and income tax, rather than the island pampering them with a social security contribution and income tax caps.
There is no need for that – even paying full rate on all income here they would still be better off than in the UK and Guernsey could benefit significantly.
It is would be totally unjust to allow the wealthy in to the island and they do not pay taxes according to their means – Guernsey is not a charity for the rich. We need tax income, and if they want to live here, they can give it to us.
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How is this individual inflating local properties? They will be living in Open Market which will have no effect on Local Market prices.
There is an interesting article a few days ago regarding investors purchasing flats etc which is having a real effect on the prices for first time buyer properties, this is not created by extremely wealthy individuals with bigger fish to fry.
I’m pretty sure the Open Market properties are capped, or very close to it, so therefore we are not boosting our population. If you’re really concerned about the population increasing perhaps then you should be focusing your efforts on reducing teenage pregnancies and people having large families. Personally I don’t think thats possible to implement (depsite what goes on in China).
I’m happy to welcome such people so long as they don’t beat up taxi drivers, urinate in the street or get kicked out of bars for being sick in the toilets, unlike many many people that have come into our world (whether being born or imported). I’m almost certain that these wealthy chaps will have far more civic pride than a lot of people skulking about at present.
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Tuch – you are right, only in exceptional circumstances are houses added to the open market, so the cap on people that do not contribute is already there (not saying that OM residents don’t contribute, just that if you don’t contribute you are only able to live on the OM :-)).
Agree that the cap on income tax seems a bit unnecessary. If that is the only reason that people stay here then we probably don’t want them.
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TL says “The idea that there are rich people in England drawing down from bank accounts here, but not paying UK tax on the income that hits their pocket is a complete fallacy”
Complete fallacy?
Only a few months ago we were being told that by some of the professional finance posters that if someone chose the witholding tax view it might be regarded as evasion.
I take it that TL would not be against the automatic sharing of interest details to the appropriate tax authorities.
That would be one way of ensuring the truth that drawing down from bank accounts here, but not paying UK tax on the income, is indeed a fallacy.
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Arnald,
I find your post pessimistic and partly narrow minded. Firstly you are forgetting the other charges, taxes etc such as national insurance, 11% and a reduction of the taxable cap on pension contributions, all are charges taken directly from your pay packet.
As for proper entrepreneurs, I cannot see how a man who is self made, is know as a workaholic and has, as a business accreditation bought EMI records in his time. What sort of entrepreneurs are you thinking of, tomato and flower growers!
He will no doubt create new jobs if he chooses to move any business to Guernsey, it should also be assumed that they will undertake a certain amount of training involved to help people adapt to the ever changing parameters of Guernsey’s job market, lets call that evolution.
Having read a couple of articles about this move; one that comes to light is from Hands’ local rag, stating he and his family are avid contributors to the community and it would be a blow to loose the family. I say this, people blinded by jealousy or resentment for success should not treat every case with such a green stick. Though it is so easily done with an island mentality.
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Ian- unless you son is in the market for an £8mio+ open market house, I very much doubt that Guy Hands’ purchase will have much impact on your son.
I feel that the Press has got it’s facts wrong with regard to Guy Hands. He bought the Eyebrow house quote a few months ago, so unless he had a magic crystal ball, i’m not sure how his move has anything to do with the increase in top rate tax in the UK?
I think having someone such as Guy Hands as a Guernsey resident can only be a good things. I can’t see him being a huge drain on our resources, and even if he doesn’t set up any sort of business here, he will surely employ gardeners etc for his mansion!
I’m not sure the wisdom of Charles Parkinson making statments about Gurnsey attracting UK residents “fleeing high taxes”. Surely after the issues surrounding tax havens with Obama etc that now is not the time to be making such statements? You really have to wonder about the intelligence level of some of our politicians…….
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They are only coming to Guernsey, because we have Zero.10. The rich will only come here, so they can use. WE the ordinary Guernsey people will continue to be taxed more and more, so that they can pay nothing and use services free.
Please wake up to this fact, that we will be more exploited.
I did have a lot of respect for Charles Parkinson, but am now slowly losing it.
I thought he was our knight in shining armour.
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David J, I’m sorry but your post just doesn’t make sense! Which rich people come to our island and pay zero taxes but use our services for free? How does zero 10 attract rich individuals to the island?
I fear your post is just another example of the narrow-mindedness of many people in Guernsey.
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David J – if rich people come to live here they are subject to the same tax rules as you and I (although the super rich benefit from the cap on tax payments of £200k). Zero-10 will not have any impact on their personal income. Unless they are working (and therefore contributing) they will be living open market. They will also no doubt spend lots on the island and not “use” many public services at all. Whilst I agree that we do not want to increase the number of rich people just coming to live here, there cannot be an increase unless the housing laws are relaxed. So I wouldn’t worry.
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“if rich people come to live here they are subject to the same tax rules as you and I”
You don’t seriously believe that do you TL? Trust companies, houses sold by share transfer. Yes they contribute but avoid where possible they will.
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Jackie – the income that they receive is taxed in the same way. If they have money that they do not need to get their hands on then, yes, they can tuck it away in companies and trusts. But as soon as they access the money, it is taxed as income. Houses sold by share transfer avoid document duty and tariff legal fees – but the company will generally attract a lower price than the house would have done and so it is swings and roundabouts.
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As the bloke is buying/ has bought an OM pad, presumably another open marketeer sold it to him.
One in, one out.
Both probably subject to tax cap.
Net difference about nil?
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Well. All moans and groans but no solutions?
And no takers for my idea of a 60,000 Guernsey Population Cap eh?
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“but the company will generally attract a lower price than the house would have done and so it is swings and roundabouts. ”
A company that avoids document duty is sold as a benefit.Have a look at some of the local advocate websites that promote this scheme to avoid doc duty.
It’s in black and white, go Google ;)
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“Ozannes ……… Guernsey housing markets and can assist in the establishment of asset holding companies in order to convey property by way of share transfer”
Asset companies to hold domestic dwellings? I wonder why?
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Jackie, just because it can be done doesn’t mean it makes financial sense in every case. If you wanted to buy a house for £1m and were offered the chance of buying a company that owned the house instead, but you had no real guarantee that the company does not owe £2m to a bloke down the road, how much would you be willing to pay for the company? £1m? Certainly not. The same issue arises in every other country in which there is a differential between the tax charged on property transfers and the tax charged on share transfers. In reality, I doubt it has a major impact on tax revenues because it will only be sensible in a very small number of cases.
Expat80 – as for the population cap, the housing restrictions already stop people just moving here, the housing licences enable a system of controlling workers coming here. There doesn’t need to be a formal population cap, we just need to ensure that the housing licence policy does not chase economic development at the expense of community.
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Jackie – I’ve just checked the Ozannes site and you took that quote out of context. The sentence starts off talking about commercial property and so the reference to asset holding companies could simply be a reference to commercial property. I’m not doubting that there aren’t some houses sold in that way, but to say that the advocates promote it as a way to avoid duty is not quite true.
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