Transcription
The tax system was designed by the top 1% for the top 1% to get rich. I'm sorry, but it's true. How do I know? Because there's so many systems and laws created by the HMRC that are perfectly legal that allow rich people like me to leverage tax-free income by owning assets. Meanwhile, everyday hardworking employees in Britain are paying 40 to 45% tax on their income.
So today I'm going to reveal the buy, borrow, die strategy. And I can guarantee that most wealthy people that you know or you've heard of use this strategy. It's the same method that allows Warren Buffett to pay less tax proportionally than his secretary does.
Now, I'm on a mission to help everyday people across the UK, maybe people like you, to become part of the top 1%, at least financially. So, let's break down the buy, borrow, die strategy that all the wealthy people are using so that you can use it too and become wealthy.
Disclaimer, I'm not a tax accountant. I'm not a financial adviser. I can only speak from what I am seeing and from what I have personally lived through my experience. But always make sure that you seek professional advice when making investment decisions and planning your taxes.
Now, let's look at this. Most people, maybe you earn most of their money through their income. They have a salary. But that's one of the most highly taxed ways to make money. Why is this the case? Well, I believe it's set up and designed to help the rich people become richer and pay less taxes and the hardworking poor and middle class to pay more taxes.
See, when you're just an employee, the tax is just done for you. You don't even think about it. It just comes off of what you get. And taxing people through their income. And you've got all these millions of people, hard workers, just getting taxed automatically without even thinking or doing anything is one of the easiest ways for the government to collect a lot of money on mass volume. And most people don't even realize to the extent they're being taxed. They just get their paycheck and just think, "Oh, okay." And most of the high earners that are getting a lot of income are getting clobbered with the highest taxes up to 45% income tax. And on top of that, they've got their national insurance.
Let me put that in perspective. If you're a hardworking person and you're working on a job, you're getting taxed 45% almost half your income. That means five months of the year approximately, you're not getting paid. You're working voluntary and it's going to the government January, February, March, April, May.
And what gets even worse is that people don't even realize this, but every year your taxes are going up without you even realizing it. And they're not raising taxes. They do this through a stealth tax, which is almost like a secret tax, a secret way of them taking more of your hard-earned income from you.
In the UK currently, you can earn about £125,000 a year as a tax-free allowance. And anything from that to about £50,000 is 20% tax. And this is when you become a high rate taxpayer. Cuz anything above £50,000 to about 120,000 is 40% income tax. And anything above that is 45% income tax plus the national insurance. That's almost half of your income gone.
Now how does the stealth tax work? That's when they freeze these thresholds whilst your wages go up due to inflation. So let me give you a scenario. You earn say £50,000. So you pay tax of 20% above 125,000 up to £50,000. Now inflation's quite high. So your boss after a year gives you a 5% salary increase just to keep up with inflation. Now that 5% pay rise doesn't mean you're any richer. It doesn't mean you have any more money to spend because everything's gone up by 5%. It's just keeping in line with inflation. But because the higher rate threshold is fixed at 50,000, that means that that additional £2.2,000 pay rise that you got is now taxed at 40% rather than 20%.
The result is that you might feel like you should be richer because you're earning more, but proportionally the government are taking more money in taxes. You've been dragged by no choice or fault of your own, but you've been dragged into a higher tax bracket. And unfortunately, in the last budget, Rachel Reeves decided to keep those thresholds frozen again. Yet inflation continuing to go up.
And stealth tax does not just apply to salary. There's so many other areas where it also applies to. Let's take inheritance tax for example. The amount that you can pass on tax-free has been £325,000. Since 2009, I mean, how is that fair? In 2009, if you passed on £325,000, you were pretty much set for life. You can do a lot with that. Now, it's a lot less because of inflation. This is just another way that they're increasing taxes and taking more money off of the poor, working, and middle class without them even realizing it.
So the system makes you work all your life for 40 hours a week for 40 years and tax you 40% of the money that you earn and then on top of that you got to pay your council tax. You know people say, "Oh, but I don't mind paying taxes cuz it means the roads are cleaner." Well, you're paying your council tax, too. Oh, and your road tax. Oh, and when you top up your car, you're paying VAT tax. When you go to the pub and you get a pint of beer, the first few gulps that's going to the government, everything is taxed. The thing is, there's so many different hidden taxes. People don't realize that that's why they're poor.
And then when you finally save up enough to be able to buy a house after you've paid your income tax, you paid your national insurance tax, your VAT, you paid your accounts tax, and you finally got enough to buy a house, you then have to pay stamp duty tax to buy a house. And then when you want to leave that house to your kids, you're going to pay up to 40% again on inheritance tax that you already paid on assets that you already paid tax on. Or if you want to sell the house, you've got capital gains tax.
But wealthy people don't operate by this system. As I mentioned, wealthy people use the buy, borrow, die system. Let me break this down.
Step one, wealthy people don't pay themselves big salaries. They pay themselves small salaries like me. I pay myself £12,570 a year as income. Why? Because I'm not paying any tax on them. And then I use other people's money to buy assets. Other people's money that I've not paid tax on, they've paid tax. I will borrow other people's money to buy assets. Now, I have to pay those people interest on the borrowed money. But guess what? I will structure it in such a way whereby the interest that I'm paying them is tax-deductible. And what's left is my profit. Now that money doesn't get me rich. That money goes back into the properties, goes into the business, goes into running expenses. What makes me rich is when the asset goes up in price due to inflation. Most people inflation makes them poorer. But if you own assets, inflation makes you richer.
Let me give you an example. I bought a house in Birmingham in 2014 for £200,000. Now, most of that wasn't my own money. I used the bank's money. I borrowed £150,000 to get a mortgage. Now, the mortgage payments, the interest that I'm paying back to the bank, guess what? Is tax deductible. So, I've got my rent and my rent is being used to pay the interest payments, also pay the management company to make sure that it's passive. However, I just had that house valued. It got valued recently at £400,000. So, what does that mean? Well, that means that I've made £200,000 profit in the house, right? Wrong. I've not made £200,000 profit cuz if it's profit, I'd pay tax. You can only pay tax on profit. It would be profit if I did what most people would do and said, "Hey, 200 grand and sold the house. Now I'm going to get clobbered." Now, if you sell, you're going to pay capital gains tax or if it's owned in a company, corporation tax, which is going to mean your money's been eaten up, so I don't want to sell.
So, how do I get that money, that profit without it technically being profit, but what I do is I get a loan against it. I get a new mortgage. So, now I can borrow 75% of the new value. It's now 400. So that is 300,000. So I take that £300,000. I pay off the old mortgage and I'm left with £150,000 tax-free. Now what do I do with that money? I buy some more houses. £150,000 in my bank account completely tax-free. Now why is it tax-free? Well, it's because this is a special type of money. This is debt. Be under no illusion. This is not something I figured out. This is not a little hack that I found. This is what all rich people do.
Elon Musk is the richest man in the world. I like Elon Musk. In fact, he shouted me out on Twitter a few months back. So, thanks for that, Elon. But here's the thing. Elon Musk is very wealthy. He bought Twitter for 43 billion. Do you think that that 43 billion pounds was from Elon's income? Do you think he worked and paid himself a salary and then that money? No. Why not? Because then he'd have to pay tax. What Elon would have done, what all rich people do, is they start a company or they buy a property, they get something and they make it valuable. If Elon's got a company and it's worth a billion pounds or it's worth 50 billion pounds, does he have to pay tax on that? No. Because it's worth 50 billion. But until he takes it out as income, he doesn't pay tax. He wants to get the money out. What does he do? He borrows against the company like what I do. I borrow against the properties. I borrow against the assets. Why? Because then you can take money out tax-free. And what did Elon do? Well, he took out 43 billion as a loan and then used that money to buy Twitter. He didn't sell his Tesla stock because if he did that, he'd lose control within the company and he'd have to pay tax. He borrowed against the assets.
Your favorite billionaires do this. Richard Branson does this. In 2020, when Richard Branson wanted to really restore and revamp his company, Virgin Airlines, he needed to put money into it. Where did he get that money from? Well, he's got an island. Did he sell the island? No. He borrowed against the island tax-free and then used that money to push into another business, which he'll probably borrow against for another project. This is what all rich people do.
Adele from the UK, the singer. She's worth approximately £200 million. Very wealthy artist. She bought a house not too long ago for £50 million. Now, did she buy it cash? No. Could she have bought it cash? Yeah, she could have, but it would have tied up 25% of her entire wealth. So, what did she do? She borrowed. She got a mortgage to buy the house. So whilst poor people and middle-class people are desperately trying to pay down their mortgage, wealthy people are waiting for the value to go up and then getting a bigger mortgage against it to buy more assets.
Now you might be thinking, "But if I've got all these debts, surely I need to repay the debts and I'm going to have loads of interest and well not really because you can outsource who pays those interest payments." And in my case, I'm not paying the interest payments. I'm not paying the banks. That obligation is passed to my tenants. My tenants who if I've got a house and the interest payments are £500 a month, but the rent's two grand a month, then £500 is going to the bank, £500 might be going towards other expenses and maintenance, and £1,000 is mine.
Goal of poor people is to be debt-free. The goal of wealthy people is to be asset-rich. This is what they don't want you to understand.
Think about this. If you borrow money, let's say you borrow £100,000. Well, what happens to money over time? Well, money loses its value. Every year it gets worth less and less. If your parents were making 50 grand 30 years ago, they were rich. Now, if you're making 50 grand, you're not rich. So, money loses its value. So, if you borrow 100 grand over 10 years, that money is shrinking. Meanwhile, what's inflation doing? It's making money worth less, but it's making things more expensive. This is the very definition of inflation. Inflation is prices rising. Money shrinking, prices rising. So, if you put that 100 grand that you borrowed into an asset, like a property that's going up, your property is going up, but the debt is automatically shrinking.
So, this is the buy, borrow, die strategy. It's borrowing money to buy assets again and again and again. Now, what happens about that debt, though, cuz at some point, surely you're going to want to pay it off, right? You don't want to die with debt. Yes, this is it. This is the buy, borrow, die. We buy, we borrow, and buy more and borrow and buy more and borrow and buy more and then we die. That's the game.
Now, what happens when you die? Your money into your debt. And this is the thing that a lot of people worry about, but actually number one, I would say don't worry about it just yet until you have a lot of assets and debt anyway. But firstly, as long as your net is considerably more than your debt, it's fine. I will die with millions and millions of pounds of debt. But it doesn't matter because my debt is what also produces my net and my debt is what also produces my cash flow.
What I've had to spend the last few years working out is when I do die, which will hopefully be a very long time away. Yes, I know I'll have a lot of debt. Yes, I know I'll have a lot of net, but how am I going to pass this down to the next generation in a tax-efficient way? And there's many ways that a lot of people have done it and I've explored all of them and I've got my own personal setup. But there's ways that you can do this through trusts, maybe through companies, because if you've got a company, you generally don't pay inheritance tax when you leave a company to your children, for example. If your company happens to own some assets, that's okay.
Now, I'm not going to try and get into giving inheritance tax advice because firstly, I'm not qualified, but secondly, I don't know anything about you or your situation. But when you do get wealthy, it opens up a whole new world. Suddenly you can bring in the best specialists, the best accountants, advisors that will be able to put together a bespoke professional plan specifically for you. My best advisers, I mean, I've got a chartered accountant and he's also an adviser on the academy. So all of my academy members can have unlimited calls with him. He's opening eyes for people. I've also got a lawyer, partner of a law firm, millionaire lawyer. She's on the academy. Not only is she my mentor, but she's also teaching and giving guidance to our members.
So, wherever you are on in your journey, maybe you're at the very beginning the buy process where you're looking for a property you can buy. Maybe you're looking to raise finance from an investor. Maybe you're looking to borrow, refinance, release equity from your property. Maybe you've been in the game for a little while and you got a few million in assets and you're thinking, "How can I mitigate my tax bill when I die?" Regardless of where you are in your journey, if you want to get a little bit of support and help, not necessarily from me, maybe from my team, maybe from some of the accountants and the advisers that I know, I'm very, very happy to help you the best way I can.
I'm going to be running a free online training, which is going to be about an hour, an hour and a half, where I'm going to be going through the entire strategy of finding the best deals to buy, of borrowing against assets, of raising finance. I'm also going to be opening up doors to meet some of my team, to meet my accountant, to meet my lawyer. And guess what? The training is completely free.
So, if you'd like to join me because you take serious your wealth, because you want to leave behind a legacy, because you want to live a life of financial freedom, not by working hard, but by structuring your business right and strategically building wealth through working smart. Then, I'd like to invite you to join me on the online free training. So, I'll leave a link in the description and I'll tell you something, it's going to blow your mind. And worst case, you spend an hour or so with me and you go, "I'm all right. I'm gonna continue in my job. Thanks. That's not for me. That's the worst case." Best case, this opens up a whole new world and opens up doors that previously you could never imagine would be open for you. So, I want to open that door up now. Click the link, join me on the free training, and I can't wait to get to know you.