General Election 2015 – Tax Implications?

antrobus

Jonbvn wrote: »

Why does this read in such an accusatory tone.;)

You do know that tax avoidance is legal, given that even your Dear Leader does it?

Or indeed the previous leader, G Brown who signed his house over to his wife in order to 'avoid' tax on the rental income. Or the one before that, T Blair who has some labyrinthine structure of LLPs designed to 'mitigate' his tax liabilities.

P.S. Other politicians are available who undoubtedly also pay for professional advice to achieve similar ends.:)

Cyberman60

coastline wrote: »

Theres been a big change over the years which has seen income tax relief become part of welfare...which you could say has distorted the picture.
Years ago a married man had a tax allowance and if you look at the link it was around 50% of the basic tax allowance.
Today at £10,000 this would be £5,000 if the same ratio was applied.
This was scrapped around 1999 and became a welfare payment under working tax credits...in one of the links it is suggesting a £31bn payment a year.

http://www.taxhistory.co.uk/Income%20Tax%20Allowances.htm

http://en.wikipedia.org/wiki/Working_tax_credit

http://www.dailymail.co.uk/debate/article-2127602/We-afford-Labour-s-31-billion-tax-credit-monster-Our-welfare-link-rights-personal-responsibility.html

I've always included WTCs as welfare. A big problem is that they encourage people to work limited hours in order to qualify and pay no tax, which of course is tax avoidance. Another Labour failure IMO. :mad:

BobQ

Jonbvn wrote: »

Why does this read in such an accusatory tone.;)

You do know that tax avoidance is legal, given that even your Dear Leader does it?

I am accusing anyone who does more than uses tax law as it was intended. Firms like the one mentioned create opportunities to avoid tax for those that can afford to pay them to do so and this means avoiding tax that Parliament never intended should be avoided. Tony Blair may well have done this, Mrs Thatcher certainly did. As far as I know Milliband and many others of all political persuasions are just using the law in the way it was intended like many others.

antrobus wrote: »

There is a conference speech that Ed Balls gave in 2013 in which he talks of "restricting pension tax relief for the very highest earners to the same rate as the average taxpayer".

What you think that means would depend on what you think Balls meant by the "very highest earners", or what an "average tax payer" was, and what form the 'restriction' would take.


http://press.labour.org.uk/post/62052732090/ed-balls-mps-speech-to-labour-party-annual

This appears quite vague and was well over a year ago. The following seems to provide a better indication of what is planned.

http://www.independent.co.uk/news/uk/politics/labour-plans-fairer-society-by-reducing-tax-relief-on-pensions-9550071.html

Namely that Labour would seek to encourage most people to pay into a pension by incentivising them to do so, but limit the advantage that higher earners gain from it.

I suspect this means keeping tax relief for those up to £150K (as an incentive) but also lowering the annual tax free allowance and/or the lifetime allowance so that higher earners benefit less. So for example you could leave current tax free rates up to £150K, reduce it to 25% above that, and reduce the lifetime allowance to £750,000.

But I agree there is not a clear statement of policy and Labour needs to make one before the election. Equally, Fry's interpretation is simply speculation with no substance.

Cyberman60

I heard that Milliband used extreme avoidance measures to avoid inheritance tax on a house. Labour are such hypocrites. :rotfl:

michaels

BobQ wrote: »

I am accusing anyone who does more than uses tax law as it was intended. Firms like the one mentioned create opportunities to avoid tax for those that can afford to pay them to do so and this means avoiding tax that Parliament never intended should be avoided. Tony Blair may well have done this, Mrs Thatcher certainly did. As far as I know Milliband and many others of all political persuasions are just using the law in the way it was intended like many others.

Does this not put a huge onus on the individual to try to understand not only the letter of the law but also to work out (how) exactly what was intended by the law? I salary sacrifice more into my pension to avoid losing my child benefit. When the child benefit was withdrawn for those earning over 50k was it intended that people should behave in such a manner or not? Where is it written down?

BobQ

michaels wrote: »

Does this not put a huge onus on the individual to try to understand not only the letter of the law but also to work out (how) exactly what was intended by the law? I salary sacrifice more into my pension to avoid losing my child benefit. When the child benefit was withdrawn for those earning over 50k was it intended that people should behave in such a manner or not? Where is it written down?

My point is that is most cases we know what is allowed. Parliament intended that those with a taxable income over £50K should not get CB and that people should be able reduce taxable income by increasing pension contributions within prescribed limits. So Parliament intended this to be possible.

It did not intend that you claim to be a second had car dealer when you are not and then use fictional losses to reduce your taxable income using some obscure legal interpretation dreamed up by an imaginative accountant in the expectation that you never get caught. But I assume you have not done this!

antrobus

BobQ wrote: »

....It did not intend that you claim to be a second had car dealer when you are not and then use fictional losses to reduce your taxable income using some obscure legal interpretation dreamed up by an imaginative accountant in the expectation that you never get caught. But I assume you have not done this!

Well, if he had he would have failed.:)

HMRC killed off the ‘Working Wheels’ scheme
https://www.gov.uk/government/news/second-hand-car-dealer-tax-scheme-scrapped

And actually that's what happens with the overwhelming majority of these 'imaginative' tax avoidance schemes. They basically don't work and so, apart from being an ongoing PITA for HMRC, are not really of any significance in terms of the overall tax take.

Jonbvn

BobQ wrote: »

My point is that is most cases we know what is allowed. Parliament intended that those with a taxable income over £50K should not get CB and that people should be able reduce taxable income by increasing pension contributions within prescribed limits. So Parliament intended this to be possible.

I strongly disagree. The UK tax system is a labyrinthe and it is not feasible for anyone to determine whether something should be allowed based on a moral code that only Grauniad reader's seem to understand.

wotsthat

BobQ wrote: »

My point is that is most cases we know what is allowed. Parliament intended that those with a taxable income over £50K should not get CB and that people should be able reduce taxable income by increasing pension contributions within prescribed limits. So Parliament intended this to be possible.

It did not intend that you claim to be a second had car dealer when you are not and then use fictional losses to reduce your taxable income using some obscure legal interpretation dreamed up by an imaginative accountant in the expectation that you never get caught. But I assume you have not done this!

When the taxman comes calling parliament's intentions are irrelevant. Rather, you have to be able to prove you've followed the rules as they're written.

Deciding what parliament intended, in the absence of rules which make such intentions clear, is just a matter of opinion.

antrobus

wotsthat wrote: »

When the taxman comes calling parliament's intentions are irrelevant. Rather, you have to be able to prove you've followed the rules as they're written.

Deciding what parliament intended, in the absence of rules which make such intentions clear, is just a matter of opinion.

Technically, 'what parliament intended' does come into it. The courts will look at parliamentary intention when attempting to decide what a particular piece of legislation means, but that intention will be derived from the text of the legislation, and nothing else.

Therefore it could well be quite wrong to state that "Parliament intended that those with a taxable income over £50K should not get CB", because what Parliament intended is clearly set out in Schedule 1 to the Finance Act 2012. And it is the intention of that piece of legislation that matters, not what some politician said the intention was.