Using debts to avoid tax

okay79

There's an interesting feature in The Guardian today on corporate tax avoidance ("Firms' secret tax avoidance schemes cost UK billions", http://www.guardian.co.uk/business/2009/feb/02/tax-gap-avoidance).

I'm wondering if and how any of the schemes these huge firms use could be employed by individuals too. This one seems interesting: "A household name has been deliberately loaded with debt so that it no longer has any profits to pay tax on."

Could anyone do the math to work out if there is a point at which an individual would save money like this, i.e. by going into debt and paying less interest than is saved in tax reductions? Are there any similar schemes individuals could use?

Perhaps this would make a good hunt for the forum.

tyllwyd

That's the idea behind offset mortgages - rather than receiving interest on your savings (which would be taxed), you use your savings to reduce the interest which you pay on your mortgage debt.