Readers Question: Does anyone know if it is still true that £120bn is lost through tax avoidance/evasion.
There is a big difference between tax avoidance and tax evasion
- Tax avoidance involves legal means to reduce your tax bill.
- Tax evasion involves illegal means to reduce your tax bill.
Examples of Tax Avoidance
A perfectly legal way to avoid paying taxes in the UK could include:
- Putting shares in your wife’s name. If your wife pays a lower income tax bracket, the family will pay fewer capital gains tax than if you are eligible for paying the higher rate of income tax.
- Avoiding inheritance tax by giving money/assets to your children more than 7 years before your passing.
- Setting up a company and paying yourself dividends rather than paying income tax and national insurance.
- Moving to another country (or the Channel Islands, Isle of Man) and spending more than half the year living abroad. This avoids paying income tax
- income paid in the form of offshore assets.
