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and thus save £1bn – providing they become elected next time around of course.
Just when you think the scheme has had enough knocks lately & negative changes – now this.
Further details & costings at her Tory speech tomorrow (Thursday).
The death of Motability for many, many users really could be a lot closer than you think if this happens. The advance payment increases will be more ridiculous than they are now – and that’s saying something!
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@Glos Guy
Fully aware of that but as Denis Healey once said “The only difference between Tax Evasion and Tax Avoidance is the prison bars”. The fact is that tax avoidance is only for the rich and deprives the Treasury of badly needed funds that could be used to enhance the defence budget as well as the Welfare bill.
This Country is still the Fifth or Sixth largest economy in the World and should have a society that reflects that.
@Glos Guy Fully aware of that but as Denis Healey once said “The only difference between Tax Evasion and Tax Avoidance is the prison bars”. The fact is that tax avoidance is only for the rich and deprives the Treasury of badly needed funds that could be used to enhance the defence budget as well as the Welfare bill. This Country is still the Fifth or Sixth largest economy in the World and should have a society that reflects that.
I wouldn’t agree that tax avoidance is just for the rich. Any savvy tax payer, even those on very modest incomes, will utilise perfectly legal ways to avoid tax whenever the opportunity arises. Just a few of countless examples might be;
Transferring part of a lower earning partners personal tax allowance
Salary sacrifice schemes inc pensions, which not only save tax but can be used to keep people below the next tax band
Self employed people paying themselves through dividends rather than salaries
Gifting ‘unspent income’ which doesn’t count towards the 7 year rule
Leaving a proportion of your estate to charity, thus reducing the overall Inheritance Tax liability for your loved ones
I could list plenty more, but my point is that none of these things happen automatically. People will do them as a result of gained knowledge or advise (often from accountants or advisors) and are all opportunities to ‘avoid’ an element of tax – and are all perfectly legal and sanctioned by HMRC.
Here’s a thought: I remember when the government of the day was suggesting we should opt out of our pension and take out a private one. All those who followed that path will have a decent pension pot. They should now be excluded from the very pension they opted out of. Then all those who have private pensions providing more than the basic rate of tax (£45k or thereabouts) shouldn’t also be getting public support. Cut the triple lock and there has to be billions there saved. Meanwhile, we also have to acknowledge that there are pensioners who are struggling, so a boost to pension credit would be super supportive. Disabled people (as we all know) have to go through enough just to get PIP which means they should just stop this nonsense of high fraud and “free cars”.
Civil Servants never opted out of anything, they were told that part of their wages were being taken to contribute towards their civil service pension. Only when I retired, did I find that I had effectively opted out.
The effect being that my state pension, which I still contributed to, was reduced from £203 to £170 per week.
No one told us that this was going to happen.
And the CS pension was not large.
@Glos Guy
The tax efficient options you have identified are not Tax Avoidance schemes. They are examples of Legitimate Tax Mitigation.
Examples of Tax avoidance options are :-
Contractor Loan Schemes: Paying temporary workers or contractors a small taxable wage alongside a large non-taxable “loan” that is never intended to be repaid. GOV.UK
Offshore Trusts and Entities: Diverting income through multi-layer company chains or partnerships located in tax havens.
Director’s Loans: Taking company funds as director loans without proper repayment or writing them off at year-end to dodge regular income tax. Francis Wilks & JonesIncome Shifting: Distributing assets or dividends to a lower-taxed spouse or family members to artificially lower overall household liability.
There are a myriad of others and although my career in Finance ended 14 years ago Tax Avoidance was known as a grey area that while sticking to the letter of the law undermined the spirit of the legislation by contrived, complex methodology.
Inevitably, Tax Avoidance measures are made for the very rich to avoid paying taxes and not for the rest of us and should be addressed before cutting benefits for the most needy.
@Dafydd I think we are probably on the same page. The things that you detail seem morally wrong, even if they aren’t illegal. I was being a bit pedantic (my speciality) as I’ve always heard the saying that tax avoidance is legal whereas tax evasion is illegal, even though I don’t agree with some of the legal tax avoidance (or, to use your term, mitigation) schemes, particularly those deployed by self employed folk. I’ve seen up close how that can be abused and it’s always irritated me, having been screwed for zillions of pounds of tax throughout my career. Although I was a Director for the last portion of my career, as I was still an ‘employee’ of a company I always paid my fair share of tax, even as much as 50% at one stage, so when people get away with blue murder it grates somewhat.
I think that we are all agreed that targeting the most needy is wrong, and it saddens me that Labour, Conservatives and Reform (one, or a combination of, will inevitably form the next government) all have disabled people in their sights.
Contractor Loan Schemes are not a blanket write off of taxes and should be viewed as a grey area. Having known someone who received an accelerated payment notice from our Friendly HMRC.
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