vinyl Posted January 29, 2011 Share Posted January 29, 2011 The flip side of the coin is these people/companies are also classed as wealth/tax generators. Through the people they employ (who have to pay tax/NI in turn meaning these people will also not have to claim many or no beneifits). There is also VAT on the goods they supply. Any government has a fine balancing act in keeping wealth generators in this country (ie not taxing them too heavily) while still trying to tax them fairly. Unfortunately, we live in a world where tax laws vary from country to country, so tax a company too heavily and it will up sticks and move somewhere cheaper (ie China) Most people try and avoid paying tax. Was self employed for a while and a good accountant kept my tax liability to a minimum. If you consider the case of a Premier League footballer. Let's call him Wayne and assume he gets paid £250,000 per week. In an ideal world he would pay around £120,000/wk income tax, leaving him to spend £130K on VATable goods, and goods attracting excise duty from which HMG might well get £20K. Total tax collected £140K/week But of course this isn't an ideal world and Wayne takes just £50K/wk salary and has the rest paid into his private company as image rights. So in fact he pays around £20K income tax and his company pays £40K in corporation tax. The £200K is lent by his company to Wayne who is free to spend it on the same goods as before, but because he now has £190K to spend the VAT etc probably goes up to around £30K. Total tax collected £90K/week. This is a pretty standard loophole that is exploited by many footballers and celebrities. It wouldn't be hard for the government to close this loophole, but of course if they did Wayne would be away to play for Barcelona or some other clib where he gets to take home more of his pay. If this were to happen HMG would collect ZERO tax from Wayne. So there you have it. You can collect a massive £4.5 million in tax from Wayne by allowing him a tax break. In return you don't need to pay for his health care or his children's education because they are done privately. Alternatively you can close the tax loophole and get sod all from Wayne. Link to comment Share on other sites More sharing options...
taxman Posted January 29, 2011 Share Posted January 29, 2011 The ISA limit has only just been increased, there's no indication that ISAs, pensions, premium bonds, or capital gains are about to be abolished. The tax that would be payable on the interest that current ISAs generate, if it was to be made taxable, is miniscule. It would be a drop in the ocean compared to the tax that would be due if various high value avoidance schemes were targeted. Link to comment Share on other sites More sharing options...
vinyl Posted January 29, 2011 Share Posted January 29, 2011 The tax that would be payable on the interest that current ISAs generate, if it was to be made taxable, is miniscule. It would be a drop in the ocean compared to the tax that would be due if various high value avoidance schemes were targeted. Unless the beneficiaries of tax avoidance schemes simply cleared off to a more enlightened country and took their money, business and all the jobs that went with it. Didn't HSBC have its head office in this country a couple of years ago? Link to comment Share on other sites More sharing options...
Cyclone Posted January 29, 2011 Share Posted January 29, 2011 The tax that would be payable on the interest that current ISAs generate, if it was to be made taxable, is miniscule. It would be a drop in the ocean compared to the tax that would be due if various high value avoidance schemes were targeted. Not really relevant to my point though (although in a lifetime you can get a lot in a tax free ISA, say 50 years of saving, at 10k/year, that's 500 grand earning interest with no tax... That's about 10k a year lost in tax roughly) Link to comment Share on other sites More sharing options...
Cyclone Posted January 29, 2011 Share Posted January 29, 2011 If you consider the case of a Premier League footballer. Let's call him Wayne and assume he gets paid £250,000 per week. In an ideal world he would pay around £120,000/wk income tax, leaving him to spend £130K on VATable goods, and goods attracting excise duty from which HMG might well get £20K. Total tax collected £140K/week But of course this isn't an ideal world and Wayne takes just £50K/wk salary and has the rest paid into his private company as image rights. So in fact he pays around £20K income tax and his company pays £40K in corporation tax. The £200K is lent by his company to Wayne who is free to spend it on the same goods as before, but because he now has £190K to spend the VAT etc probably goes up to around £30K. Total tax collected £90K/week. This is a pretty standard loophole that is exploited by many footballers and celebrities. It wouldn't be hard for the government to close this loophole, but of course if they did Wayne would be away to play for Barcelona or some other clib where he gets to take home more of his pay. If this were to happen HMG would collect ZERO tax from Wayne. So there you have it. You can collect a massive £4.5 million in tax from Wayne by allowing him a tax break. In return you don't need to pay for his health care or his children's education because they are done privately. Alternatively you can close the tax loophole and get sod all from Wayne. I'd be surprised if his company was lending him money, any loan above 5k counts as a benefit in kind and attracts all sorts of HMRC interest and tax. Link to comment Share on other sites More sharing options...
Bassman62 Posted January 29, 2011 Share Posted January 29, 2011 you can close the tax loophole and get sod all from Wayne.And you wouldn't lose anything because the money that British tax payers had been paying him would still be in this country. Link to comment Share on other sites More sharing options...
Bassman62 Posted January 29, 2011 Share Posted January 29, 2011 The tax that would be payable on the interest that current ISAs generate, if it was to be made taxable, is miniscule. It would be a drop in the ocean compared to the tax that would be due if various high value avoidance schemes were targeted.Exactly, compared to the big fish it is a drop in the ocean, just like Thatchers tax cuts, £1k per week for the top earners £2.00 (just enough for a pint) for the workers. Link to comment Share on other sites More sharing options...
ricgem2002 Posted January 29, 2011 Share Posted January 29, 2011 I haven't condemned anyone you are slating people for putting into isa s etc yet are sticking up for the rich:huh:erm remind me again what that is Link to comment Share on other sites More sharing options...
vinyl Posted January 29, 2011 Share Posted January 29, 2011 I'd be surprised if his company was lending him money, any loan above 5k counts as a benefit in kind and attracts all sorts of HMRC interest and tax. http://www.guardian.co.uk/business/2011/jan/16/premier-league-footballers-tax-avoidance Link to comment Share on other sites More sharing options...
Bassman62 Posted January 29, 2011 Share Posted January 29, 2011 Quote: Originally Posted by Cyclone I haven't condemned anyone you are slating people for putting into isa s etc yet are sticking up for the rich:huh:erm remind me again what that is Unbelievable, all cyclone has done is likened the small amount made on ISAS to the £Billions syphoned away by the top paid. Link to comment Share on other sites More sharing options...
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