This year marks the 50th anniversary of the last public performance of The Beatles – the band whose legacy lives on, not least in the world of tax.
Many will know the HMRC karaoke favourite ‘The Taxman’ (‘There’s one for you, 19 for me...’), George Harrison’s furious response to being hit with a super-tax by Harold Wilson’s government.
Less well-known is the ‘Beatles clause’ – a targeted anti-avoidance rule aimed at preventing entertainers from converting highly taxed income to lower-tax capital receipts – a measure which remains on the statute book to this day.
Yet half a century after the band left the stage, the tax issues they raised are as relevant as ever amid a growing international clamour for new super-taxes.
The recent suggestion from one congresswoman that the US government should introduce a 7% income tax rate for those earning over $10m has generated considerable headlines on the other side of the pond.
Meanwhile in the UK, many high earners worry about the prospects of a return to punitive taxes under a future Labour government. The party’s latest manifesto promised tax hikes for the top 5% of earners, new wealth taxes and a new land value tax to boot.
Within this context, we were very interested to read the inaugural Sunday Times list of the top UK taxpayers (see bit.ly/2TsvCyM).
Some commentators have quite rightly questioned how the Sunday Times was able to compile this list, given the confidential nature of individuals’ tax affairs. How do we know how much tax someone has paid? True transparency would only be possible when all individuals are required to make their tax returns public. While that’s a bridge too far for most people, perhaps there might be a demand for a personal version of the voluntary ‘fair tax mark’ for individuals wishing to demonstrate how much tax they pay on what income and gains.
But health warnings aside, the publication of the list does point to a change in the public mood.
While at one time it may have been socially acceptable to be seen to be diddling the taxman, paying high rates of tax is now seen as a badge of honour with top taxpayers being feted for their contributions to the exchequer.
And perhaps we shouldn’t scoff. The fact remains that there are individuals who pay eye-watering sums in tax every year.
The latest data from HMRC suggests that the top 1% of earners contribute 28% of all income taxes to the nation’s coffers, while the top 5% contribute almost half (48%).
And while a super-tax might sound like an appealing idea in principle to address perceived unfairness in the system, do we really want to get back to the days of Harold Wilson when the top income tax rate was 83%, and combined with a 15% surcharge on unearned income, the marginal rate reached a staggering 98%?
This wasn’t a fair progressive system. It was outright theft.
As George Harrison so neatly put it at the time:
‘I’m the taxman, yeah,
I’m the taxman,
And you’re working for no-one but
me.’
George Bull, Andrew Hubbard & Frank Shepherd, RSM UK (RSM’s Weekly Tax Brief)
Home >Articles > Why The Beatles’ legacy lives on … in tax
Why The Beatles’ legacy lives on … in tax
This year marks the 50th anniversary of the last public performance of The Beatles – the band whose legacy lives on, not least in the world of tax.
Many will know the HMRC karaoke favourite ‘The Taxman’ (‘There’s one for you, 19 for me...’), George Harrison’s furious response to being hit with a super-tax by Harold Wilson’s government.
Less well-known is the ‘Beatles clause’ – a targeted anti-avoidance rule aimed at preventing entertainers from converting highly taxed income to lower-tax capital receipts – a measure which remains on the statute book to this day.
Yet half a century after the band left the stage, the tax issues they raised are as relevant as ever amid a growing international clamour for new super-taxes.
The recent suggestion from one congresswoman that the US government should introduce a 7% income tax rate for those earning over $10m has generated considerable headlines on the other side of the pond.
Meanwhile in the UK, many high earners worry about the prospects of a return to punitive taxes under a future Labour government. The party’s latest manifesto promised tax hikes for the top 5% of earners, new wealth taxes and a new land value tax to boot.
Within this context, we were very interested to read the inaugural Sunday Times list of the top UK taxpayers (see bit.ly/2TsvCyM).
Some commentators have quite rightly questioned how the Sunday Times was able to compile this list, given the confidential nature of individuals’ tax affairs. How do we know how much tax someone has paid? True transparency would only be possible when all individuals are required to make their tax returns public. While that’s a bridge too far for most people, perhaps there might be a demand for a personal version of the voluntary ‘fair tax mark’ for individuals wishing to demonstrate how much tax they pay on what income and gains.
But health warnings aside, the publication of the list does point to a change in the public mood.
While at one time it may have been socially acceptable to be seen to be diddling the taxman, paying high rates of tax is now seen as a badge of honour with top taxpayers being feted for their contributions to the exchequer.
And perhaps we shouldn’t scoff. The fact remains that there are individuals who pay eye-watering sums in tax every year.
The latest data from HMRC suggests that the top 1% of earners contribute 28% of all income taxes to the nation’s coffers, while the top 5% contribute almost half (48%).
And while a super-tax might sound like an appealing idea in principle to address perceived unfairness in the system, do we really want to get back to the days of Harold Wilson when the top income tax rate was 83%, and combined with a 15% surcharge on unearned income, the marginal rate reached a staggering 98%?
This wasn’t a fair progressive system. It was outright theft.
As George Harrison so neatly put it at the time:
‘I’m the taxman, yeah,
I’m the taxman,
And you’re working for no-one but
me.’
George Bull, Andrew Hubbard & Frank Shepherd, RSM UK (RSM’s Weekly Tax Brief)
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