"clever financial products"

SallyG

http://www.theguardian.com/politics/2015/feb/16/osborne-advised-using-financial-loopholes-to-avoid-tax-and-care-costs
From 2003 -
“The one piece of advice I would give to Bill [a viewer] is that there are some pretty clever financial products that enable you in effect to pass on your home, or the value of your home, to your son or daughter and then get personal care paid for by the state,” Osborne said."
Are they still available?

Aegis

SallyG wrote: »

http://www.theguardian.com/politics/2015/feb/16/osborne-advised-using-financial-loopholes-to-avoid-tax-and-care-costs
From 2003 -
“The one piece of advice I would give to Bill [a viewer] is that there are some pretty clever financial products that enable you in effect to pass on your home, or the value of your home, to your son or daughter and then get personal care paid for by the state,” Osborne said."
Are they still available?

To be honest, a lot of the stuff that claimed to do that would now be simply deemed to be aggressive tax avoidance and likely ignored. You also have many old style methods now falling under Pre-Owned Asset Tax regime, which strictly limits how easily a main residence can be passed on to kids without any possibility of it needing to be sold to fund care home fees.

You could argue that a pension (or any other retirement pot - pension is just a good example because the new death benefit rules make these extremely useful for backing up a good succession plan) helps a lot with this: fund a pension enough and your care fees can be paid without selling your house.

Paul_Herring

Aegis wrote: »

aggressive tax avoidance

This has always irked me. There is "tax avoidance" and "tax evasion" - the former is perfectly legal, the latter not. And if the politicians think that something that falls into the former should be falling into the latter then they should be doing something in parliament to move it.

When did the concept of "shades of grey" enter the lawbooks on this? Or is that - as I suspect - a rhetorical question?

Aegis

Paul_Herring wrote: »

This has always irked me. There is "tax avoidance" and "tax evasion" - the former is perfectly legal, the latter not. And if the politicians think that something that falls into the former should be falling into the latter then they should be doing something in parliament to move it.

When did the concept of "shades of grey" enter the lawbooks on this? Or is that - as I suspect - a rhetorical question?

I would prefer that they used the old terminology as well, but I can see why they changed matters. I have seen some cases where individuals received so much income tax relief on an investment that for almost no (or, in some cases, negative) personal risk they make hundreds of thousands of pounds simply by aggressively taking advantage of loopholes in the tax code. Strictly this is legal, therefore tax avoidance and not evasion, but it's very much against the spirit and overarching principles of fair taxation for someone earning millions of pounds a year to pay no income tax at all by purchasing a low-risk investment.

With examples like that, I can see why the playing field changed, but it would be nice if HMRC and the government just closed the loopholes or required all schemes offering any type of packaged tax break to clients to undergo a preapproval process.

jamesd

Of course those options are still available. The easiest one is just to give away the home and pay market rent for it. Investment trusts and trusts in general remain options.

The concept of shades of grey entered the discussion most recently when a political party looking for something good for itself to say decided to focus on tax avoidance as if it was something bad, not something most of us here do, and try to paint people engaging in tax avoidance as evil rather than mostly just doing the same thing as the rest of us would do in their position, lawfully trying to minimise their tax bill.

Paul_Herring

jamesd wrote: »

The concept of shades of grey entered the discussion most recently when a political party looking for something good for itself to say decided to focus on tax avoidance as if it was something bad, not something most of us here do, and try to paint people engaging in tax avoidance as evil rather than mostly just doing the same thing as the rest of us would do in their position, lawfully trying to minimise their tax bill.

Not unlike Margaret (Lady) Hodge and her family's arrangement with Stemcor...

Oh....

:eek:

SallyG

I just reckon if we all know about it and can do it that makes it fair and square - but it should be acknowledged, published and made common knowledge.

sinizterguy

SallyG wrote: »

I just reckon if we all know about it and can do it that makes it fair and square - but it should be acknowledged, published and made common knowledge.

It is common knowledge to those accountants who do it.

Should you wish avail of these options, all you need to do is pay them for their time, expertise and experience.

If by common knowledge, the MSE team should be publishing it on this website instead of reporting how they survived without Sky for a week, then that ain't going to happen.

sinizterguy

Aegis wrote: »

but it's very much against the spirit and overarching principles of fair taxation ..

The law has no 'spirit' or 'principles'

It is worded as as it is, and this can be interpreted in any reasonable way.

If you want to remove all doubt, then get the law rewritten to be completely interpretation proof.

jamesd

Paul_Herring wrote: »

Not unlike Margaret (Lady) Hodge and her family's arrangement with Stemcor...

So long as the firm paid all tax required under relevant current laws I'm content until those laws are changed. I am, however, concerned at her assertion that:

"All I can say to you is that I condemn tax avoidance of any kind by anyone"

It seems quite unlikely to me that she has not personally sought to avoid tax via membership of the MP's pension scheme, other pension schemes, paying into ISAs or their PEP predecessors, using VCT, EIS or SEED EIS, using her personal allowance, transferring assets between spouses to reduce CGT or income tax, say.

I hope that she does not really condemn us using those forms of tax avoidance and I certainly would not condemn her for using them, except to the extent that it may suggest that she was condemning tax avoidance while engaging in it herself.

Aegis

sinizterguy wrote: »

The law has no 'spirit' or 'principles'

It is worded as as it is, and this can be interpreted in any reasonable way.

If you want to remove all doubt, then get the law rewritten to be completely interpretation proof.

The law may not have spirit or principles, but the people setting the laws do and so do the people who vote in those lawmakers. A principle of fair taxation is not enshrined in law, but it forms the basis of a sustainable society, hence it has become such a big issue since the credit crunch.

I think it would be a truly excellent idea to rewrite the tax laws to something much simpler with fewer loopholes, but that would be the work of probably at least an entire Parliamentary term and would be enormously expensive. As such, I very much doubt we'll see that any time soon. Until then a shift in how tax avoidance is dealt with is probably the best solution from a bad bunch.