Because Ms Coates earns the majority of her wealth from her salary rather than dividends or other instruments, she is liable for a higher amount of tax than many other business chiefs. Ms Coates and her family are thought to have paid around £460m to HMRC last year.
If you own the company then, well. Salary is paid out before corporation tax. Income tax is higher than dividend tax. But the two together – at these sorts of levels at least, after the small scale allowances – run pretty much the same by design. Corp tax plus dividend tax isn’t far off income tax alone.
NI changes it again. Which is why the personal service company works. But it is still necessary to add in divvie and corp tax together to compare to the income.
Corporation tax is 25%, and higher rate dividend tax is 39.35%. So if your company made £100m in profit, it would pay £25m in corporation tax and then if you paid out the £75m as dividends that would be largely taxed at 39.35% (the higher rate dividend tax rate), so you’d pay another £28.75m so £53.75m in total.
If on the other hand you wanted to pay out the profit as a salary, and wipe out the profits that way, you’d have to pay a salary of about £88m, on which the employee would pay (in 2023/24) £46m in income tax and NI, and the company would have to pay £12m in NI contributions, so of the £100m in profit £58m would disappear in tax.
So if the above is correct (and I stand to be corrected if not) it seems to me that taking your profits as salary is less tax effective than paying it out as dividends, by 4-5% on large sums. Which when you’re talking hundreds of millions is not to be sniffed at.
For small-fry like us, the core advantage of the personal service company is that you can designate your wife as part shareholder, which is usually more tax-efficient.
Personally I find it disgusting the Britain’s richest woman makes her money from the totally evil gambling business. How many families are ruined to provide her £220m salary?
Yes I know, free markets and all that, nobody has to gamble unless they want to, etc etc. But it’s still a fortune based on other peoples’ misery.
If you’re going to try to protect everyone from everything, then we’d all have to spend our lives in tiny isolation bubbles with no contact with anyone else (physical – disease! virtual – potential fraud!), nutrition dispensed as a carefully balanced and medicated paste, and robots to chase us round for some exercise every day.
I believe there are more than a few dystopian nightmare films with that plot setup.
“Yes I know, free markets and all that, nobody has to gamble unless they want to, etc etc. But it’s still a fortune based on other peoples’ misery.”
No, its a fortune based on millions of people enjoying a flutter and not having a gambling problem, and a very small number of people who do have a gambling problem, for whom gambling is indeed a misery.
And I would argue that the people for whom gambling is an addiction are the sort of people who will always have an addiction, the question really is what its going to be. Eliminate gambling and they would probably have a drink or drugs problem instead. They are addictive personalities, they’ll find something.
And of course making things illegal is hardly going to stop them happening, as is evidenced by how many people are addicted to drugs. And illegal gambling will almost certainly be worse for the gambling addict, because Big Ron isn’t bound by any codes of conduct and will break your legs if you don’t make good your losses. William Hill tend not to do that.
The great thing about gambling is that it gives you hope, There can be points in your life where it can be the only hope on offer. And by that I don’t mean the hope of pulling yourself out of a financial hole, but rather the prospect that you might get somewhere with your life.
Take away gambling, and you’re condemning a man to fifty years of nine-to-five with no visible means of ever escaping it.
An argument made by some economists. Sure, state lotteries are a bad, bad, losing bet for the punters. But there’s a value to the £2 flutter hopes that, for 2 days, might change your life. The real value of the lottery is not, therefore, the £2 or the distinctly negative expected return, but the two days fantasising. And two day’s dreams for £2 is really pretty cheap.
I thought a Personal Services Company was what Helga works for when she dresses up as a Stormtrooper …
On the Betfair forum last week one punter had a look at the national numbers for suicides. This is what he found:
“I’ve been looking at suicide rates in the 38 wealthy countries in the OECD to see if there is any evidence of countries with a high suicide rate having relaxed gambling regulations and cultures. There isn’t. In fact, i’d say the reverse looks more plausible.
The average suicide rate is 10.6 suicides per 100,000 people. The country with the highest suicide rate is South Korea at 25.2. It’s also very very anti gambling. Perhaps the most anti gambling of the 38. By comparison the suicide rate in Hong Kong is 10 and Singapore 8.5. Both gambling hotbeds and both below the overall average. Australia is 12.3, UK 10.7 and Ireland 9. All with gambling cultures and relaxed gambling laws. The average of all 5 is 10.1, below the OECD average
In Western Europe ,I haven’t gone through every one, but I think the highest might be Belgium at 15.1 . Perhaps the most anti gambling country in Western Europe? France and Portugal, where Denise Coates’ Bet 365 is banned as it is in Belgium, are 12.1 and 11.5.”
I’d also add that Russia has a suicide rate of 21.6 per 100,000 people. And it also strictly prohibits online gambling.
‘And I would argue that the people for whom gambling is an addiction are the sort of people who will always have an addiction, the question really is what its going to be’
Indeed, we need to hurry up and make wireheads a reality
By comparison the suicide rate in Hong Kong is 10 and Singapore 8.5. Both gambling hotbeds and both below the overall average.
The HK situation is not as simple as that statement makes out. First, there is, currently, quite a high proportion of juvenile suicides in the overall figure which have no relationship with gambling. However, gambling is very tightly controlled in the city in theory. Legal gambling, in person or online, is the monopoly of the HK Jockey Club and is basically restricted to horses and football. Illegal gambling is, however, very common, especially with mahjong, but the law is fitfully enforced. And of course, for the determined gambler, there are always the casinos in Macau a short distance away.
tldr: strict gambling laws, limited enforcement.
If HK is suffering high levels of juvenile suicide, unconnected with gambling, then the rate among those of gambling age is lower than the already-low overall figure.
The legal avenues to bet are indeed restricted to those administered by the HK Jockey Club, but the amounts bet are extraordinary. Turnover among Hong Kong-based punters last year was HK$ 114.4 billion (£11.4 billion). That’s from an adult population of about 6 million, i.e, the average Hong Kong adult has £2,000 of bets per year, just from counting legal avenues alone.
And alongside that, evidently one of the world’s lowest suicide rates.
Reminds me of the old saying that no man ever kills himself who has an ante-post voucher in a drawer somewhere.
And the weird thing is that those huge profits of the HKJC are mostly ploughed into social welfare projects. I used to work for a school paid for by the RHKJC. It’s like voluntary taxation system without a government sticking its oar in and making it compulsary.
state lotteries are a bad, bad, losing bet for the punters. But there’s a value to the £2 flutter hopes that, for 2 days, might change your life. The real value of the lottery is not, therefore, the £2 or the distinctly negative expected return, but the two days fantasising. And two day’s dreams for £2 is really pretty cheap.
Not necessarily, if you wait for a big rollover. When the top prize is over £80 million (at 45 million:1 odds), then you get a positive expected return on a £2 investment. The record prize currently stands at £195 million.