Did you watch Eye Spy on Channel 4 last night? It challenges our moral compass, and raises some important questions. It shows a banker and a builder saying the same thing and asks whether it’s more objectionable for one or the other to hide money from the tax man.
The press have lambasted large Corporations for avoiding UK Corporation Tax, and last night it was the turn of the NHS who have avoided VAT. So “is everyone doing it?”
I’m sure we all know of people who have paid cash for something, and it “probably” won’t be declared to the tax man. I am sure this country loses huge amounts to the black economy, but I’m not going to solve this in a blog.
I didn’t give tax avoidance much thought when I was “employed” because my PAYE and National Insurance disappeared before I received my pay. Once I started my own business I thought much more about how to reduce my personal tax bill and even more importantly looking for ways to help my clients.
A personal Limited Company is essentially a way of avoiding tax, because the majority of pay is taken as dividends rather than salary – but this is absolutely within the tax code and is perfectly legal. Someone who is self-employed pays 9% National Insurance whereas an employee pays 12% (plus the employers’ contribution). So is self-employment a way of reducing your liability to HMRC, or does it reflect that you work for yourself?
In the past tax evasion was bad, tax avoidance was clever. Now they seem to be blurring the boundaries. If you want help with your “tax planning” give us a call!!