Tactical Divorce - Tax Avoidance or Tax Planning?

ThinkingOutLoud_2

Well not for looking after her own children or cleaning her own house they won't!

Paddling her own canoe would not be a legitimate paid activity.

The work needs to be genuine work and HMRC are going to try and be tough (whether they challenge you year one or year seven).

JamTomorrow

Running out of options

Maybe it is time to try and secure a redundancy payoff and then come back as a Ltd Co Consultant.

Keep my income below £50k to get the child benefit back and employ my Wife as PA/Admin.

ThinkingOutLoud_2

JamTomorrow wrote: »

Running out of options

Maybe it is time to try and secure a redundancy payoff and then come back as a Ltd Co Consultant.

Keep my income below £50k to get the child benefit back and employ my Wife as PA/Admin.

• Not as mad as is sounds TBH. Many have done just that towards retirement whether "chosen" or given no choice by their employers.
• If you can get enough bubble into your wife pension from now on ... so you maximise use of her tax free allowance in years to come
• If you hit higher level tax in retirement - celebrate and take a look at VCTs as a way to mitigate (or even totally offset).

Keep paddling!

Acquinas

There's a slightly different attitude to this when we have benefit claimants cohabiting but pretending to have separate addresses in order that the working partner's wage isn't seen as income available to support the children and non-working partner. I'm all for not paying more tax than legally obliged, but this is getting close to white collar benefit fiddling.

Though this board is not a court of morals.

ThinkingOutLoud_2

Agreed. Hopefully we may have dissuaded the OP from a course of morally reprehensible fraud against the rest of us tax payers and if not and he goes ahead - with luck his canoe will be sunk as was the original canoeists.

Triumph13

Acquinas wrote: »

There's a slightly different attitude to this when we have benefit claimants cohabiting but pretending to have separate addresses in order that the working partner's wage isn't seen as income available to support the children and non-working partner. I'm all for not paying more tax than legally obliged, but this is getting close to white collar benefit fiddling.

Though this board is not a court of morals.

I would agree with you in many ways - that was largely what I was hoping to imply when I suggested OP fake his own death. OTOH, the issue of how we treat family units for the tax and benefit system is a complete minefield and full of things many think are unfair. A couple with both earning £50k take home over £6k a month but get to keep their child benefit whilst a couple with a single earner on £60k brings home £3.5k a month and doesn't. Much the same kind of problem arises with pension provision for many couples, leaving one partner with unused personal allowance - although the new single tier pension coupled with the ability to transfer part of the allowance should obviate that to a large extent in the future.
Life would be much more civilised if married couples were given the option to be taxed as a couple, as used to happen in days gone by, and would do away with most of the various !!!!-eyed schemes being proposed to get round the problems caused by separate taxation.

ThinkingOutLoud_2

Triumph13 wrote: »

Life would be much more civilised if married couples were given the option to be taxed as a couple, as used to happen in days gone by, and would do away with most of the various !!!!-eyed schemes being proposed to get round the problems caused by separate taxation.

Agreed.

I guess as a democracy we must have voted for someone who removed that and we could vote for someone who proposed to bring it back.

Until then, I favour those abiding within the law and paying taxes honestly without evasion ...

Triumph13

ThinkingOutLoud wrote: »

Until then, I favour those abiding within the law and paying taxes honestly without evasion ...

The problem is that while all of us (hopefully) are against tax evasion (which is illegal), other available options run the whole gamut from sensible tax planning, via aggressive avoidance to downright abusive behaviour. Whilst we'd probably have a high degree of agreement about things at the two extremes eg paying pension contributions=good, salary sacrificing a large salary down to minimum wage then claiming tax credits = despicable, there are a lot more than 50 shades of grey in between.

ThinkingOutLoud_2

Triumph13 wrote: »

The problem is that while all of us (hopefully) are against tax evasion (which is illegal), other available options run the whole gamut from sensible tax planning, via aggressive avoidance to downright abusive behaviour.

Yes, agreed.

I guess faking your divorce (those vows should count for something surely ) or pretending you wife works for you sit the fiddling end of the grey scale.

I realise the OP was only thinking out loud :-)

JamTomorrow

ThinkingOutLoud wrote: »

Agreed. Hopefully we may have dissuaded the OP from a course of morally reprehensible fraud against the rest of us tax payers and if not and he goes ahead - with luck his canoe will be sunk as was the original canoeists.

Absolutely dissuaded me from the divorce course of action. It was a genuine query as to whether it would be seen as tax avoidance or a valid (although unusual) tax planning option. Even if it had been the latter I am not sure it was something we would have actually done; but just trying to get a view of options.

I certainly wouldn't want to lie and go through all the hassle of a divorce and then be constantly looking over our shoulder ahead of remarriage.