Is being a tax avoider socially unacceptable?

Out,_Vile_Jelly

TheBlueHorse wrote: »

what would you do if your builder/handyman says "£650 but i'd take £500 for cash"?

I've twice been offered a discount for cash (with the actual amount not specified). I declined, mainly because I work in the education sector and taxes fund my university, and also because I want there to be a record of the transaction in case of dispute.

I don't worry about cash tips in restaurants; likewise I don't keep a record of every GiftAid donation to set against my tax return.

Biological altruism has played a part in the evolution of Homo sapiens. I wonder how much deadweight and freeloading societies can tolerate though.

Jonbvn

Let he who is without sin cast the first stone.

That means you Milliband & your complex IHT avoidance schemes.

jamesmorgan

Much of the confusion in the debate comes from the term 'tax avoidance'. Many people clearly use the term to mean different things. Increasingly it becomes synonymous with someone avoiding paying tax in a way that they can't personally do (ie it is the politics of envy).

As an example, most people are reasonably comfortable with avoiding tax by payments into a pension. However, take an extreme example of someone earning £50K who has 6 children - for the sake of argument from 2 separate marriages, but they are all now living with him. His current net salary is around £36K. If he changes his tax affairs to pay £40K into a pension each year, his net salary is £10K so he pays no income tax. He also benefits by being able to claim tax credits (around £20K) and child benefit (around £5K) giving an overall net pay of £35K. So his net pay is largely unchanged and he benefits from an additional £40K/annum into his pension.

Is this morally right? Many people will argue that it isn't - not because they disagree with tax avoidance in pension schemes, but because this individual has 6 children and as a result can benefit in a way that others can't.

michaels

jamesmorgan wrote: »

As an example, most people are reasonably comfortable with avoiding tax by payments into a pension. However, take an extreme example of someone earning £50K who has 6 children - for the sake of argument from 2 separate marriages, but they are all now living with him. His current net salary is around £36K. If he changes his tax affairs to pay £40K into a pension each year, his net salary is £10K so he pays no income tax. He also benefits by being able to claim tax credits (around £20K) and child benefit (around £5K) giving an overall net pay of £35K. So his net pay is largely unchanged and he benefits from an additional £40K/annum into his pension.

I only have 3 kids but have looked into this however it is not possible to salary sacrifice down to below minimum wage and doing so may also impact on things like salary related benefits such as life assurance, access to credit etc. Also you need to have no savings if you want to benefit fully from things like council tax benefit, housing benefit, free school meals, free prescriptions etc. Once Universal benefits kick in all those other nicies like child/working tax credits etc will also be assessed against capital other than PPR. I am also not sure how they assess interst and investment income, I was looking at whether I could use acounts that pay annual interest on anniversary of opening and open close old ones just before the end of the previous tax year and open new ones just into the next tax year in order not to earn any interest during the tax year in question in order to avoid being paid any interest during the benefits claiming year as the effective marginal tax rate is hideous, into the 95%+ range if you are eligible for housing benefit.

Jason74

TheBlueHorse wrote: »

what would you do if your builder/handyman says "£650 but i'd take £500 for cash"?

Throw him out of my house and find a more honest builder. ANd yes, I have done exactly that in the past.

Loughton_Monkey

purch wrote: »

It's the EU mate.

The Maastricht Treaty ended the EEC and created the EU.

I humbly accept the correction. It's my age. In my day, I thought we joined the "Common Market".

If it is now a "Union", does that mean that we (UK) could now 'go on strike'? We could all wear anoraks and woolly hats and march on Brussels with placards telling them to stick it up their Junckers....

purch

I remember when we joined the Common Market they had that Football match at Wembley between GB & NI + Denmark versus the Rest.

I was only 13 but I can remember watching it on the old Black n White telly (we got a colour one for the 74 World Cup)

N1AK

michaels wrote: »

...cos I do it, paying money into my pension and having an ISA.

Based on Milliband's rhetoric against tax avoiders should we assume Labour would move to close these 'loopholes' in the tax system?

It's the usual idiotic nonsense from the current opposition, which sells to a broad swathe of the ignorant electorate.

Buying a fuel efficient car is 'tax avoidance', biking to work in order avoid needing fuel is tax avoidance. Tax avoidance is simply "tax management" with an incredibly loaded name.

If there were obvious legal tax loopholes that the Labour party takes exception to then they should name them and explain what they will do to close them.

N1AK

jamesmorgan wrote: »

Is this morally right? Many people will argue that it isn't - not because they disagree with tax avoidance in pension schemes, but because this individual has 6 children and as a result can benefit in a way that others can't.

It's morally fine imo because what he's doing is legal and obvious. In practice I think that situation is rare, or non-existent, however it would be trivially easy for the government to say that pension contributions should be considered as income for the purpose of benefits (or alternatively payments above 10% of income, or payments over £10k pa), which would close this 'loophole' if that is, in fact, what they government thinks it is.

I doubt many people would be happy knowing someone is doing this whether he was doing it with 2, 3, 4 or 10 kids.

antrobus

jamesmorgan wrote: »

Much of the confusion in the debate comes from the term 'tax avoidance'. Many people clearly use the term to mean different things. Increasingly it becomes synonymous with someone avoiding paying tax in a way that they can't personally do (ie it is the politics of envy)....

HMRC has a specific view of what constitutes 'tax avoidance'. They mean some kind of artificial or contrived arrangement. As in "You are entitled to plan your tax affairs in a way that makes sure you do not pay more tax than you have to....But there is a big difference between using tax reliefs and allowances in the way in which they are intended to be used, and trying to bend the rules to avoid tax."

https://www.gov.uk/government/publications/tempted-by-tax-avoidance

So what Jimmy Carr got up to with K2 was tax avoidance. But what Ed M did with his inheritance or Gordon Brown did with his house would not be tax avoidance.

Life would be easier if we all stuck to that definition, but I fear that the politics of envy has a certain attraction.