British business owners face fourth-highest tax burden among developed economies

• British business owners with income around £160,000 in combined salary and dividends pay the fourth-highest amount in taxes among major countries
• Only Japan, France and Ireland generate higher overall tax bills when inheritance tax is included
• Brits will pay £280,000 more in inheritance tax than Americans, Australians, Canadians, Portuguese, and New Zealanders

A new international analysis of tax systems has warned that the UK imposes the fourth-highest overall tax burden on a representative business owner when compared with 12 other developed economies.

With 246,000 people emigrating from the UK in 2025, and a 17 per cent increase in the number of people making searches about emigrating or moving abroad over the past year, the study aims to find which countries allow their residents to keep more of their money, and which are the most heavily taxed jurisdictions.

The analysis from financial education specialists Investing Insiders modelled the finances of the same hypothetical individual across 13 different countries, including each G7 nation and other popular destinations for Brits to emigrate to. The data takes into account a broad range of taxes including income tax, dividend tax, inheritance tax and investment taxes. All figures were converted into pounds sterling to enable a like-for-like comparison.

The study analysed a business owner or company director who pays themself £60,000, receives a dividend of £100,000, with pension contributions of £20,000, puts £20,000 into an ISA, and receives £1,200,000 in an estate from inheritance given by a parent (a £950,000 home, £200,000 from ISAs and investments, and £50,000 in other assets).

The results show the hypothetical UK business owner would pay £324,982.81 in total taxes, which is the fourth highest of all major countries included in the study.

This is behind only Japan (£370,215.53), France (£367,817.47) and Ireland (£348,409.11), with seven countries in the study placed with a tax burden of less than £100,000.

Brits will take home £31,303.40 from their wage, £63,713.79 from their dividend, and the full £815 earned from investments as ISAs are tax free. This means they will pay £44,982.81 in taxes related to that income, which is the sixth highest overall.

In comparison, people in Ireland will pay the most at £66,356.11 in tax when equated to pound sterling, almost £17,000 more than those in France would pay (£49,530.10), which is the second highest amount.

One area where Brits are better off than most countries is tax relief from pensions, as with £20,000 contributions, the government will add £5,486.50 in relief, and a further £1,946 can be claimed back from a tax return, increasing the overall amount to  £27,432.50.

However, inheritance tax laws are much more restrictive than in most other countries, and on a £1,200,000 estate, the charge in the UK is £280,000, the fourth highest, bringing the overall tax burden to £324,982.81.

Despite usually being a once-in-a-lifetime event, Australia, Canada, New Zealand, Portugal, and the United States don’t charge anything for inheritance, and people in Spain and Italy would each pay less than 5 per cent of the total value of the UK.

Countries ranked by overall tax burden:

UK Data In A Snapshot

Commenting on the analysis, Antonia Medlicott, Founder and Managing Director of Investing Insiders, said: “Our study highlights the cumulative impact of multiple layers of taxation on business owners and the wealth they and their families create. The findings show that Brits are generally taxed more harshly than elsewhere when it comes to building wealth, investing, and passing this on in the future.

“When comparing countries, the conversation often focuses on individual tax rates, but the overall burden is much more significant when several taxes are all considered at the same time.

“Rather worrying are inheritance tax charges. Whereas many countries help their residents, Portugal removed inheritance tax in favour of a flat 10 per cent stamp duty charge, but made descendants exempt; our nil-rate band for estates has been frozen since the 2009-10 tax year, despite costs and prices rising sharply since then. Pensions will also be included in a taxable estate from next April, but if the government wanted to help people, copying other developed economies would be a good place to start.”

Methodology:

The analysis modelled identical personas across 13 countries, made up of the G7 and the top 10 countries Brits are emigrating to, according to ONS data, using the same assumptions for income, investments, dividends, property ownership and inheritance.

Four personas with different levels of wealth were included in the analysis for fair results to show how income and tax levels change at different price points. All personas assume a person who is 45-years-old and is a single child to provide equal results.

Country-specific tax rules were then applied to each scenario. For example, in Canada, any interest gained from investments and money from dividends is included in income taxes. All final figures were converted into pounds sterling to enable direct comparison.

Persona three provided a business owner or company director, with an income of £60,000, pension contributions worth £20,000 per year, investments of £20,000 per year, a dividend of £100,000 a year, and inherited a home worth £950,000, as well as £200,000 in cash and £50,000 in other assets.

*Exchange rates for each country are as follows (rounded to two decimal places):

EU Countries: £1 to €1.16
Australia: £1 to $1.90
Canada: £1 to $1.88
Japan: £1 to ¥215.08
New Zealand: £1 to $2.30
USA: £1 to $1.34

The number of Brits emigrating was taken from the ONS and the number of Brits searching about emigration and moving abroad was taken from Google trends