Tax Avoidance: Are they all at it ?

[Jambo]

It's not the same as a personal loan. Here's the official description by HMRC:

http://www.hmrc.gov.uk/ct/managing/director-loan.htm

So basically, Jimmy Carr's bank account is actually his company's bank account, but he will be using it as his own. This means it is a director's loan, and thus the money he has been spending is not liable for income tax.

His company is offshore, so is not liable for UK corporation tax. He (or probably more likely, his accountant) has chosen to register his company in a country that taxes corporations and director's loans very lightly.

I know what a director's loan is, I'm a company director. You have to pay it back to the company on time, or pay tax on it if you don't.

Anyway the point is, this article is not about Jimmy Carr or the K2 tax scheme and there is nothing suggesting that the 148 staff at BBC are using this. It reads to me as if they have just set up a UK company, pay 20% corp tax (or 24% above £300k) and then the company will pay them their tax free salary allowance of £7,475 (depending on year end) and the rest is a dividend which they will pay 25% tax on, for example, if it's the higher tax rate.

It depends what the salaries in question are but I don't think it's as bad as the Daily Mail are making it out to be.

 

[Floogie]

Fair play, but it's about tax evasion via fraudulent means, not tax avoidance.

What we are getting at here is that some tax avoidance becomes tax evasion when the Ramsey principle is applied to a particular scheme.

 

[Housey]

Tax avoidance is legal, you are more than welcome to participate in it yourself.

I suspect it is often people who don't earn that much, relatively, who find it unfair. Whilst it's not fair and stupid to broad brush these things of course, it would be interesting to see the demographic behind the different perspectives as I think more often than not it would be less highly paid people that have negative opinions towards efficient tax payments. If I look back 20 years I would have a much bigger issues towards such actions than I do now, odd that.

I suspect my musing will create some angst, but it is usually the have nots or certainly have less's that have the biggest issue with people having stuff, whatever that stuff might be, well in the UK at least, though of course again that's far from empirical and just musings...

 

[Pudney]

I know what a director's loan is, I'm a company director. You have to pay it back to the company on time, or pay tax on it if you don't.

Well. You don't, the company does. Unless they write it off in which case you do pay tax on it. It's all in the details!

 

[Fr0dders]

I suspect it is often people who don't earn that much, relatively, who find it unfair. Whilst it's not fair and stupid to broad brush these things of course, it would be interesting to see the demographic behind the different perspectives as I think more often than not it would be less highly paid people that have negative opinions towards efficient tax payments. If I look back 20 years I would have a much bigger issues towards such actions than I do now, odd that.

I suspect my musing will create some angst, but it is usually the have nots or certainly have less's that have the biggest issue with people having stuff, whatever that stuff might be, well in the UK at least, though of course again that's far from empirical and just musings...

I think you're probably right.

Even "avoiding" tax and paying 25%, if your salary is well into 6 figures you're still going to be paying more in tax than the average person earns in a year, yet alone pays tax.

Given that fact, i don't think many in the same position would argue that its unfair and they should pay more.

 

[JAzz]

Tax avoidance is legal, you are more than welcome to participate in it yourself.

The way the media are kicking up a fuss about it all straight forward methods to reduce your tax bill are now being seen as immoral.

 

[Firestar_3x]

I personally think the general public and media are trying to pick a fight with the wrong group of people.....

Tax 'avoidance' or not they will pay more towards the economy both in direct tax and wealth and job creation than anyone else moaning about them.

Perhaps people should try and uderstand the potential consequences of cheesing these people off.

 

[Housey]

I know what a director's loan is, I'm a company director. You have to pay it back to the company on time, or pay tax on it if you don't.

I suggest you explore this a little more and understand the approach when the companies are off shore and how people might get around this as it REALLY isn't as black and white as you imply when done off shore via shelf companies.

Anyway the point is, this article is not about Jimmy Carr or the K2 tax scheme and there is nothing suggesting that the 148 staff at BBC are using this. It reads to me as if they have just set up a UK company, pay 20% corp tax (or 24% above £300k) and then the company will pay them their tax free salary allowance of £7,475 (depending on year end) and the rest is a dividend which they will pay 25% tax on, for example, if it's the higher tax rate.

It depends what the salaries in question are but I don't think it's as bad as the Daily Mail are making it out to be.

You will find it is a combination of all of the above I suspect and I agree the Daily Mail is worse than toilet paper and should be ignored at every opportunity.

 

[Pudney]

You will find it is a combination of all of the above I suspect and I agree the Daily Mail is worse than toilet paper and should be ignored at every opportunity.

The most amusing part is that most of the freelancers will be operating through a Ltd company (probably). And if you look at the "Anyone here working as a "contractor"?" thread everyone is advising the OP to do the exact same thing if he contracts. OOOOOH the irony

 

[Housey]

The most amusing part is that most of the freelancers will be operating through a Ltd company (probably). And if you look at the "Anyone here working as a "contractor"?" thread everyone is advising the OP to do the exact same thing if he contracts. OOOOOH the irony

Quite, but sensible people and those who've lived a bit end up realising that life is millions of shades of grey and rarely black and white

 

[Housey]

The way the media are kicking up a fuss about it all straight forward methods to reduce your tax bill are now being seen as immoral.

Never look to the media for your morals would be my advice, this is a big reason we have such a broken world right now in my book.

 

[Dj_Jestar]

I know what a director's loan is, I'm a company director. You have to pay it back to the company on time, or pay tax on it if you don't.

Unless the company is registered in a country that doesn't have that tax, I believe.

Anyway the point is, this article is not about Jimmy Carr or the K2 tax scheme and there is nothing suggesting that the 148 staff at BBC are using this. It reads to me as if they have just set up a UK company, pay 20% corp tax (or 24% above £300k) and then the company will pay them their tax free salary allowance of £7,475 (depending on year end) and the rest is a dividend which they will pay 25% tax on, for example, if it's the higher tax rate.

Disco. But no less they are chasing the OMGwave of rage at the K2 stuff with this

It depends what the salaries in question are but I don't think it's as bad as the Daily Mail are making it out to be.

Of course it isn't, but it's still a "hot topic"

 

[Reeve]

More likely you don't have a choice and if you did you would employee an account who's job it is to sort your tax out and do the same as everyone else.

If I earned that much it might irk me that people earning similar wages aren't paying as much tax. But my default position would still be to pay the tax. I guess the way I was brought up, I never really cared about always having the latest and greatest and with x amount of money coming in, I just wouldn't know what to do with it.

In my previous employment every one and their dog was downloading films and not buying them. It annoyed me that I was paying for something that they were getting for free even though the majority of them were earning more than me, but I still bought dvds and blurays (and get called a mug because of it ). Yes, the scenario isn't the same, but its close enough for me to know what I would do if I earned x salary. What annoys me is why even have the tax band if the people who would be affected by it are allowed to bypass it....pointless....

 

[Skull]

I suspect it is often people who don't earn that much, relatively, who find it unfair. Whilst it's not fair and stupid to broad brush these things of course, it would be interesting to see the demographic behind the different perspectives as I think more often than not it would be less highly paid people that have negative opinions towards efficient tax payments. If I look back 20 years I would have a much bigger issues towards such actions than I do now, odd that.

I suspect my musing will create some angst, but it is usually the have nots or certainly have less's that have the biggest issue with people having stuff, whatever that stuff might be, well in the UK at least, though of course again that's far from empirical and just musings...

There was an article in the Times today that around £2bn is lost to HMRC each year because people pay tradesmen in cash - which is then often not declared. That's illegal tax evasion, but it seems like it's OK to save some money by paying cash when you're on an average salary (even if it's contributing to illegal behaviour), but horrendous when rich people do it.

 

[robgmun]

There was an article in the Times today that around £2bn is lost to HMRC each year because people pay tradesmen in cash - which is then often not declared. That's illegal tax evasion, but it seems like it's OK to save some money by paying cash when you're on an average salary (even if it's contributing to illegal behaviour), but horrendous when rich people do it.

Absolutely, the hypocrisy and double standards among the wet liberal-left is breath-taking. Someone pass the bloody sponge

 

[Scotty123]

I suspect it is often people who don't earn that much, relatively, who find it unfair. Whilst it's not fair and stupid to broad brush these things of course, it would be interesting to see the demographic behind the different perspectives as I think more often than not it would be less highly paid people that have negative opinions towards efficient tax payments. If I look back 20 years I would have a much bigger issues towards such actions than I do now, odd that.

I suspect my musing will create some angst, but it is usually the have nots or certainly have less's that have the biggest issue with people having stuff, whatever that stuff might be, well in the UK at least, though of course again that's far from empirical and just musings...

Good post.

 

[CREATIVE!11]

surprise surprise...

 

[scorza]

There was an article in the Times today that around £2bn is lost to HMRC each year because people pay tradesmen in cash - which is then often not declared. That's illegal tax evasion, but it seems like it's OK to save some money by paying cash when you're on an average salary (even if it's contributing to illegal behaviour), but horrendous when rich people do it.

Who said it was OK to do that on an average salary?

 

[mattyg]

Who said it was OK to do that on an average salary?

Nobody! The poster said "it seems ok"

It obviously seems ok to those who are paying out that £2bn a year. But its the tradesmen who are at fault

 

[Sin_Chase]

It's legal.

Morals do not come into it.

All you people who never even knew what Tax Avoidance was prior to the Carr media witch hunt need to shut up and stop hurling abuse at persons operating fully within the law. If the law changes then it becomes evasion and illegal. Until such time, hush.