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There are an awful lot of taxes and an awful lot of ways to avoid them. Here are some ways to avoid tax in the UK:

Save into a pension plan.
Save into an ISA.
Stay in a part-time job when you could go full time.
Stay at home to look after the kids instead of working.
Buy something second hand you could have bought new.
Marry someone.
Give a grandchild some cash.
If you own your house, build an extension instead of moving.
Pay cash to the builder, plumber, whoever ought to have charged you VAT.
Go shopping for booze in France, or in the duty-free shop at the airport or on the ferry.

And that's just off the top of my head.

Basically, if you make decisions about money you make decisions about paying tax.

Comments

( 17 comments — Leave a comment )
drplokta
13th Feb, 2015 17:28 (UTC)
The commonest way of all to avoid tax is just to buy less stuff. Some taxes, like petrol, alcohol and tobacco duties, are intended to be avoided in this way. But if you would buy more stuff if it was 17% cheaper, you're avoiding VAT by not buying it anyway.

But paying cash to the builder or plumber is not tax avoidance; it's facilitation of tax evasion.
vicarage
13th Feb, 2015 17:58 (UTC)
Have investments that give you capital gains rather than income, and use your CGT allowance (or the huge benefit of no CGT on your primary residence)

Reduce consumption by renting and borrowing, not buying.

Travel by train, where VAT is not applied

Visit a museum, not a cinema.

Buy from small retailers that aren't VAT registered. (they might pay VAT, but on the lower costs before they add value for you)

Edited at 2015-02-13 18:01 (UTC)
drplokta
13th Feb, 2015 18:02 (UTC)
Renting a house results in a lot more tax being paid, not less. Owner-occupation is much more tax-efficient than renting.
vicarage
13th Feb, 2015 18:11 (UTC)
I was thinking of renting dvds, cars etc. You still pay VAT, but on a £2 rental, not a £10 purchase.

Secondhand cars have different VAT rules too. Dealers have to pay on their markup, but private sellers don't.

Eat Jaffa Cakes, not Chocolate Biscuits!
drplokta
13th Feb, 2015 18:26 (UTC)
Note that all of these things only constitute tax avoidance if you would take the other option were it not for the tax. It's only tax avoidance if you change your behaviour in response to the existence of the tax, not if you would have gone to the museum rather than the cinema anyway, because you prefer museums or there are no good films.
(Anonymous)
13th Feb, 2015 18:05 (UTC)
How do you pay less tax by being married? We don't.
Catherine Pickersgill
(Anonymous)
13th Feb, 2015 18:15 (UTC)
Your 2nd last point is abetting an offense if the tradesperson should be charging VAT, which I for one would never do (and I'd be very unhappy at having it suggested).
The others are all just the system working correctly.
This is not comparable to squeaky little schemes that use loopholes which are generally only available to the very wealthy, (not "everyone").
Fink: "... Lord Fink, the party’s former treasurer, admitted he had taken “vanilla, bland” steps to reduce his tax bill and claimed that “everyone” was involved in tax avoidance." (Independent)
(Catherine again)
(Deleted comment)
drplokta
13th Feb, 2015 19:37 (UTC)
If we're going to say that things that rich people do are unacceptable, we need both a term to describe it and a definition of that term. Without that, it's simply tax avoidance, which for the reasons given here is perfectly unobjectionable.
la_marquise_de_
13th Feb, 2015 19:12 (UTC)
Most of these are tax planning, though: the tax is paid at a later date or covered by rules designed to encourage saving and such-like. It's a far cry from legal dodges engaged in by the super-rich.
ms_cataclysm
13th Feb, 2015 20:23 (UTC)
Paying the builder in cash if you do so in the expectation that he will not account for VAT is actually illegal tax evasion and not legal tax avoidance.

Interestingly, the Miliband family "tax avoidance" scheme is infamous for carrying a high and uncontrollable risk of increasing the family's tax -even when properly executed.

vicarage
13th Feb, 2015 20:51 (UTC)
Reading the BBC page (http://www.bbc.co.uk/news/uk-politics-31412434), if they are quoting Milliband accurately, it is very bad of him to criticise for tax avoidance. If he believes the actions to be illegal, he should call them tax evasion. But its up to HMRC to decide which side of the line dodgy practice falls, and to prosecute if they feel the likely proceeds justify the costs.

If politicians feel there are too many loopholes, or too weak enforcement, they can employ more inspectors or draft new laws. They should not make taking advantage of poor law a moral issue, to that the extent that a rich man can restore his reputation by donating money to the state.
davidwake
14th Feb, 2015 11:32 (UTC)
You missed out the main ones: become a banker, become a politician, be stupidly rich...
drplokta
14th Feb, 2015 21:04 (UTC)
The top 1% of taxpayers pay about 28% of all income tax paid, even after tax avoidance, so avoiding paying tax by becoming rich doesn't actually seem to be working out very well for them. "Be stupidly rich and end up paying lots of tax" seems to be more how it goes. Being stupidly poor is a much much more effective method of tax avoidance.

Edited at 2015-02-14 21:05 (UTC)
dorispossum
15th Feb, 2015 18:32 (UTC)
It's impossible to be too poor to pay tax. VAT.
dorispossum
15th Feb, 2015 18:55 (UTC)
And 28% is hardly generous if you own half the wealth. Even some wealthy people acknowledge the dysfunctionality of a tax system that allows them to contribute a lower personal percentage than their low paid employees.
dorispossum
15th Feb, 2015 11:09 (UTC)
Not really tax avoidance unless you're only doing the thing to avoid paying tax, si not really fair to equate part time work to secreting cash in Swiss bank accounts. :0 As for ISAs etc, these arent tax dodges so much as social engineering. Society (via its elected representatives) has decided it would rather not take the cash in those circumstances. And, crucially, it's transparent. These aren't deals done behind closed doors, so society can choose to take, or not take, the cash it is owed, as it feels appropriate.
Suggestion discussed at party yesterday: corporate tax rates should be determined by how much it pays to tax lawyers and accountants. Say on a 100/1 ratio? :0
( 17 comments — Leave a comment )

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