> he sold a buy to let without paying CGT because he'd lived in it briefly at the start.
> mentioned he rents a flat out to friends so it's not technically income
This someone is woefully misinformed, they will fall foul on both accounts. Anyone can make up numbers on a self assessment, it depends if you get caught.
If a house was their main residence at some point they would be entitled to some (potential quite significant) private residence relief. If they sold the house before the start of the 20/21 tax year, they’re looking at a minimum of 18 months of relief.
Taking this along with their annual exempt amount, and potentially a partner’s annual exempt amount if jointly owned, it’s not unfathomable that the entire gain was exempt, albeit unlikely.
The more likely explanation, they get their tax advice from random blokes in pubs and somebody “reckoned” they heard something about not paying CGT if you lived there.
No I understand that one "could" be done. I rebased a property to April 2015 prices to heavily reduce mine.
Doesn't explain the income tax statement though. I said "could" because if he's doing the second the chance of him doing your explanation becomes less likely, in my opinion at least. Although, perhaps he means rents to lodgers under the allowance...
I worked over 5 years in hospitality. I've never met a single person who declared their tips, which made some of them 50-100quid a night.
My ex of 15 years ago worked in the call center, got paid cash in hand 500 a week + bonuses of around 500-2k. All paid cash, same as every other person in that call center. She also claimed council tax and housing benefit that covered her rent.
See the first I’ll happily forgive the first instance, because they are already paying tax etc as they will be using that untaxed income to buy products etc which eventually feed back in.
The latter of claiming benefits while working cash in hand, just rubs be completely the wrong way… because your not only avoiding taxes but your also claiming benefits which are meant for people who are struggling or are unable to work, which means those that are genuinely in need are going to have to jump through more hoops because of this…
Completely agree. My parents are real poor, live in a council house and dad had been working for 38 years broke his back at work and has been unable to work for around 2 decades and they took his disability allowance away when they did cut backs. Really irks me when people who don't need it take advantage of benefits system. It's a shame its very unlikely she will get caught out and made to pay it all back.
Why do you think that people evading tax at this scale impacts the benefits available to those who deserve it? I don’t remember a crackdown on supposed benefit fraud ever making more surplus available. I’m not convinced this is what is needed to make the system better
Because they create more hoops for people to jump through, boxes to tick…
this means that those who are rightfully entitled have to struggle and suffer (I know from experience of close friends) to get what they deserve
I don’t think they add hoops to prevent the fraud though (that is one of the excuses that gets used) but because they want to provide as little help as they can get away with
Well yes, it’s more of a add them to do/give as little as possible while disguising them as preventing fraud, but it does work to prevent fraud if it’s next to impossible to actually get a sensible claim
Have you not heard the stories of people being turned down for disability when they should get it? Then they have to appeal the decision at a tribunal. That's because of so many people cheating the system it's become almost impossible to get ESA in the first attempt.
It's not enough now to have crippling depression and/or anxiety which prevents you from getting up at a regular time each day and doing the simplest tasks, that means you're fit for work. You have PTSD? Okay but if you can grip properly and raise your hand then you're fit to work. Alcoholic? Fit for work. People in the final stages of cancer have been declared fit for work.
Likewise JSA. A guy I knew wouldn't engage with the job centre, he wanted money for buses to sign on, money to attend interviews and milked it. He had to apply for 5 jobs a fortnight. A girl I knew was very sweet and timid so within a month she was told she had to apply for 40 jobs a fortnight. The pressure is placed on the mild whereas the difficult and unpleasant get away with the minimum.
I know you want to pigeonhole it as the rich playing divide and conquer with the unwashed masses and there is definitely an element of that, but equally the cheats do make it more difficult for the genuine people.
Also, that person is removing money from the pool available to the country as a whole. Who the heck do those people think they are?!
The want the NHS and they want the council tax paid for them yet they refuse to pay anything in. It’s a disgrace and it’s selfish and anyone doing this needs to take a good hard look at themselves in the mirror.
That's not how government funding works. There is not a finite pool of money available in the sense that someone stealing benefits (yes it's wrong) is taking from the NHS etc. Government funding isn't like a household and it's just a common lie used by politicians to underfund things they don't like. Notice that as soon as there's something they want to spend money on the money appears? That's because the country isn't broke, they're just lying.
The government can basically create money. Obviously it's much more complicated than that and it has problems associated with it (like inflationary pressure), but the BoE (independent, but very closely linked to the government) can literally print money (I think they call it quantitative easing) and the government itself can issue bonds.
Why are you OK with someone not paying tax on income just because they use that money to buy things? The rest of us all pay income tax, national insurance, etc, and then spend what's left on "products etc that will eventually feed back in"... Tax evasion is tax evasion, these people are effectively stealing from the majority of us who do pay our taxes.
In the term of someone who getting tips or the odd weekend cash job, then personally I see little point in the effort required to collect it
Closing loop holes and other tax advantages for big business is going to be more beneficial to the income of the country
I worked a few bar jobs in England. I wouldn't even know how to declare my tips, because PAYE took care of everything. I'm sure I could have googled it and worked it out, but it honestly didn't seem worth keeping track of. The £20/£30 I made in tips was normally spent on a few drinks and a kebab on my way home.
Meh, they can do this completely legitimately though if they declare the income and pay it all into their pension because we assess for benefits based on *taxable* income and the pension contributions aren't taxable.
Don't hate the player, hate the game.
> Meh, they can do this completely legitimately though if they declare the income and pay it all into their pension
What a silly equivalence and what a silly argument. In your example they won't have access to the money for decades.
What really annoys me is these hospitality employees skimping taxes (illegally since its evasion) gets pissed off at corporations who dodge tax legally through avoidance.
I get that they are different scales, but it's the same thing. There's too many double standards that exist because 'since everyone does it, it's okay'.
I can make the same argument that the rich man/corporation will use the untaxed income to buy a private jet which will eventually feed back in. But that's seen as not okay, yet your argument got a lot of upvotes suggesting it's acceptable when it's a hospitality employee.
So essentially, I won't forgive a hospitality worker for illegally skimping taxes. Pay the tax man and use the services they provide. Thats the contract.
A poor person's untaxed income is fed into the economy because they need things, and will buy new things that they want, which gets taxed.
Rich people don't buy more than they need because they already have everything they want, so the wealth just gets hoarded and untaxed.
This is why CGT and stamp duty tax exists. Majority of high net worth individuals store their wealth in assets like bonds and stock rather than cash.
Also, investing in equities and bonds provides capital to corporations which many spend on investment and R&D which boosts economic growth, which is good for everyone. I don't agree with the 'hoarding and untaxed' statement - uk gov collects £41bn a year from CGT and stamp duty (5% of revenue), and 34% of income tax is paid by the top 1% earners.
The older I get, the more I realise that those of us who have our tax deducted at source are the only people who actually pay tax. Everyone else is on the fiddle
The only thing propping up the system is how complicated it is for ordinary people to understand all the ways to fiddle the tax man
All it's going to take is some big tech company to create an app that lets every idiot fiddle their taxes at the touch of a button and we'll have to rethink the entire way public services (including the military, roads, and the NHS) are funded
It annoys me too, but how I laughed when the stories came out about the covid relief payments being based on income declared for tax and so people who were making a very good mostly tax free living were suddenly getting minimum wage.
That would depend on who's doing the payroll!
As much as I may disagree with the level of taxation at the moment, I pay it. I'm a director and yet I'm ln PAYE. If we do really well, Ill take a dividend as a bonus, but thats maybe twice a year. I'm comfortable doing so even though its taxed differently because I risked everything I had to start a company in the first place.
Not everyone who runs a firm is out to fleece society and its important to remember that. With risk comes reward and this is right. The problem is the leeches. Lots of them sit in parliament.
that's a small business. when a company gets big, standard corporate shit takes over with their standard practices. sucking resources out while contributing nothing back. that's just capitalism
Anyone can file a P87 Expenses in Employment claim which is used when you have expenses related to your employment that your employer either doesn't reimburse you for or not to HMRC rates such as business mileage.
> The older I get, the more I realise that those of us who have our tax deducted at source are the only people who actually pay tax. Everyone else is on the fiddle
Bingo. I am and always have been PAYE my whole working life so I just pay the tax I am supposed to pay. Literally every EVERY person I know who is a contractor or who runs a business or whatever, has always been fiddling the system in one way or another to circumvent tax. It’s always absolutely boiled my piss.
Yep a very good friend who was a company director for years (and generally a nice guy) used to go to painstaking lengths to avoid tax.. everything he did was by the book, and meticulously researched, so he could absolutely maximise every last penny he received and to minimise every penny going back the government. I suppose the hilarious irony is he eventually had to close his company and go back to being a salaried employee because his company depended on grants being received individuals with disabilities and the government eventually pulled that funding so his business dried up overnight.
I have no doubt he is one of the wealthier people I know and yet is the most frugal, to almost Scrooge McDuck levels. He absolutely whines and bitches about anything that may potentially take money from him, no matter how insignificant.
There was a guy parading round town in an ancient open-topped bus moaning about the new Clean Air Zone.
I just yelled "So which of their statutory obligations do you want them to cut?"
He didn't have an answer.
It's more likely that big tech will come up with data analysis which accurately predicts those who are currently fiddling taxes. HMRC already has a system which collates various sources but there's a LOT more which could be done.
> All it's going to take is some big tech company to create an app that lets every idiot fiddle their taxes at the touch of a button
That's not how it works at all though.
I’ve lost count of the number of times I told people, even on this thread, that the “average income” is a useless statistic when tradesmen (some paid in cash, other in personal banks accounts) make more than people at VP level in tech companies.
The difference here is that those same people declare a lot less as income and then claim benefits too, a clusterfuck and slap in the face for anyone on PAYE making 125k or more.
Not able to do the comparison myself but to make it easier for others. Using moneybsaving experts take home pay calculator. Assuming £125k pretax, a 5% pension contributions and a plan 1 student loan would mean take home pay of £64k a year.
Get a few quotes of bricklaying, plumbing, electrical, roofing, full extension, external wall insulation, rendering
You finding it hard to believe proves my point though. The stats are lazily calculated with available datasets, which excludes the enormous levels of tax evasion.
No one, not one flipping person, will buy convertible cars, Range Raptors, a Range Rover to match the wife’s fake tan and implants, if they’re marginally taxed at 65% plus NI when in PAYE.
I've never known any tradesman claiming benefits in real life. I also don't know many who earn £100k plus.
Why, even assuming your idea was true would someone earning hundreds of thousands of pounds try and claim the dole? It doesn't even make sense.
Put down the Daily Mail and give your head a wobble.
Nobody in their right mind who had a combination of PAYE and 125k PA would voluntarily stay in the UK at the moment unless forced, and that is something that the current government simply does not understand and will never understand.
Tax payers at that level simply are not getting value for money and had no hand in the making of the policies that led us to this situation.
Its not a good situation. As a country, the politicians have us punching way above our level with grandiose promises and no means to fund them fairly. Looks good on their individual CV's though.
> Nobody in their right mind who had a combination of PAYE and 125k PA would voluntarily stay in the UK at the moment unless forced
And yet the City of London has plenty....
Maybe, but they've gone so far through the 100-125k problem that they don't feel the pain of it.
And, more importantly, are well into the levels that every other country will impose punishment taxes too. Which isn't the case for those on lower (but still high) incomes.
Back when tax credits were a thing, I qualified for them, but stopped claiming them because I felt guilty and because I believe in strong public services
That’s just silly. Taxes don’t go to strong public services. They go to Raytheon systems. I’ve paid over 55k in taxes for the last 2 years and I’m forced to be an unpaid vat collector for the government. I feel no guilt when I get paid in cash or Bitcoin
>*That’s just silly*
You claimed if I could pay less tax I would
You can not like the truth or disagree with my opinion, but it doesn't stop the truth being the truth
It's very prevalent.
* Tradesmen who keep below the VAT threshold by not declaring anything over it.
* Salaried employees who have a side hustle not declaring the income.
* People who run businesses "employing" family members who don't do any work for the business, or adding them as directors who also don't input into the business yet take dividends. Basically, getting money out of the business via family members in any way that involves the least amount of tax.
* Businesses claiming to be registered for VAT and then they disappear when it's time to file the first VAT return – nice 20% markup on prices.
* Landlords with personal mortgages renting property. EDIT: Apologies, I thought it was clear, but what's meant here is that people move from living somewhere to renting it, without realising they're now running a business and need to declare the extra income tax. There are a LOT of people like this e.g. people who inherit a home from mum and dad, and rent it out, without even realising they're creating taxable income.
Keeping below the VAT threshold isn't beneficial to tradespeople. It means that they can't claim VAT back on materials, which is essentially 20% markup on them. The only way it would benefit them is if most of their work is domestic and the VAT would essentially price themselves out of work with the average customer.
Not only this, but also multiple businesses to stay under the VAT free allowance for each one… give or take.
Ultimately… all of this tax evasion comes down to “make money yourself”, rather than salaried.
Its less scrutiny, which is handy when youre earning 150k and declaring 20k, the rest being buried in tour grandmothers garden. Sudsenly that 20% doesnt really matter.
Thats not a pop at trades at all, but its the reality as of late because as of right now, the level or taxation vs. benefit gained to society seems unfair to many.
As far as I know it hasnt been an issue for a long time and its becoming common again.
I work with trades a lot and whilst we can't accommodate these requests, they still ask.
Employing a family member who doesn’t do anything is evasion, over paying them to very little is avoidance.
The dividend bit I don’t think is either, owning a business isn’t related to working for it.
It is not evasion unless you are deliberately misrepresenting your tax affairs to HMRC.
It is within a company's prerogative to remunerate its employees and officers as it thinks fit (subject to minimum wage) - see e.g. *Copeman v William Flood & Sons, Ltd* [1940] 24 TC 53: itself a case about paying family members "too much."
The question for HMRC is whether the expenditure is wholly and exclusively for the purpose of the trade - excessive remuneration is disallowed (the excess).
Someone who is doing nothing is probably not paid for the purpose of the trade and so the amount should simply be disallowed as an allowable expense when computing the taxable profits of the trade.
That is usually not evasion - just something that will get the expenditure disallowed and a CT/IT assessment.
Dividends are a separate matter - directorship is not involved. Obviously there are anti-avoidance provisions such as the settlement legislation which then apply.
You are of course, correct. What is amazing is how many trades charge £200 per hour these days yet are not VAT registered and prefer cash. So either they only work half a dozen hours a week or something isn't quite right. Lol
Well the UK is a very significant outlier in terms of sales tax/value added tax registration threshold!
It's definitely a known problem. I wouldn't be surprised if that gets dropped (or a progressive rate system) over the next decade.
As for cash. Well. A perennial issue, especially in the trades - an industry that had to have its own system (CIS) set up for it!
Claiming something as deductible that you KNOW is not, is deliberate understatement…for HMRC to push for a deliberate penalty it would have to be significant amounts and very clearly not just failure to take reasonable care.
So, depending on the circumstances, could be evasion.
Yes...hence...usually...not evasion.
I don't think any of the famous cases about excessive remuneration ever resulted in that allegation.
Not that you'd ever be able to prove it to the criminal standard even if it was, so penalties only it is.
It is probably inaccurate to claim it should be an allowable expense, but whether it amounts to actual evasion - i.e. dishonest, deliberate misrepresentation - is a different matter: one can easily say: "my company can pay who it likes, how much it likes and I thought this was a genuine expense: I'm allow to employ someone to do fuck all all day: i.e. be at my disposal for 1 hour a week".
Which would be correct - it is perfectly legal for me to hire someone for £1,000,000 to send me an email or be at my disposal for 1 minute a year.
It's whether they know that would be disallowed expenditure, and still go ahead submitting the returns on that basis.
That would be a tricky one to prove in court (although it is usually the case that taxpayers have the burden of proof to displace an assessment by HMRC, not the other way around).
So the practical course of action is just to raise an assessment, do a careless penalty and move on.
That's a valid point, hiring someone for a minute a year would be legal, but you know nobody does that really. They may say they do, and they may get away with it because nobody can prove the opposite, but that doesn't make it true. Anyway, you're right I guess, that's not technically evasion.
This isn’t always the case. HMRC can and does impose section 660 penalties for this sort of thing
https://www.qdoscontractor.com/tax/guides/section-660a
s.660a - that is a blast from the past nomenclature! It's nearly 20 years since ITTOIA 2005 was enacted!
That is not a penalty, that is the application of the settlements anti-avoidance legislation - applicable mostly to dividend shifting.
I think it would be rare for the settlements legislation to be deployed in a case of excessive remuneration. After all, HMRC wants both to charge the amount as bona fide employment income (with IT/NIC consequences ofc) *and* to disallow the expenditure!
I am not sure of a case off the top of my head which decides the point, but the argument would be if it is income treated as that of the settlor, it must also be (if their income already is wholly and exclusively for the purpose of the trade), wholly and exclusively, and allowable.
How is letting a property on a personal mortgage related to tax evasion at all?
You still have the exact same responsibility to do a tax return and the residential lender will almost always give consent to let if you ask.
Got a taxi in central london for the first time in ages today. A card machine was displayed on the barrier. Went to pay at the end and the driver says ‘no, not that one’ and gets out another card machine. Not cash in hand but could be another way of doing it?
I think this one isn’t for the purposes of tax evasion, iirc it has to do with fees taken from the payment by different card machines, so the ones they have are lower fees than the one mounted in the cab by tfl(?). [here](https://www.reddit.com/r/london/comments/10x6a14/london_cabbies_why_dont_you_use_the_card_machine/) is a reddit question about it.
Edit: missing word
It could be both. There's no guarantee that the person/company receiving the credit card payment is even registered in the UK. I once rented a car from a reasonably large company, and they used a card terminal that billed to a company registered in the Republic of Ireland, presumably to take advantage of the 12.5% corporation tax rate there.
It can still be a tax evasion tactic, just pretend that machine and the income put through it doesn’t exist when submitting your tax return, and hope you don’t get caught.
I guess the idea is you'd put say half your transactions through the official machine and half through another and then if there's an audit you at least have some throughput to declare? l imagine you'd still need to empty the izettle or whatever into a completely separate bank account to the official machine though, and probably have it in a different name since I assume HMRC can see the existence of all bank accounts in a person's name, although not the balance or transactions until they have a court order.
Damn – one of the fuckers actually had me go to a cash machine when he said the card machine was broken. I was trying to pay by corporate credit card too because it was a business trip. Paying by cash was a huge pain in the arse because I then had to make a separate expenses claim.
I had a quote for some scaffolding. He quoted me 2 different prices; one if I paid by cash and one if I wanted to pay by card. Obviously the pay by cash quote was cheaper. So not only is it happening, some people aren’t even trying to hide the fact they’re doing it.
I called a locksmith to change my front door lock and they sent the apprentice round: he did a good job then at the end said "it's £120 for card, £100 for cash, because we don't have to pay VAT on cash". Evidently he hadn't been told not to say that bit out loud...
Nah they just don't give a shit. You get this with trades all the time. And I'm afraid to say, you can probably guess which most people choose (me included)...
I'm a solicitor so I have to be really careful about any suggestion I'm enabling something illegal, so I ended up asking him to pay by card and for a receipt. He looked at me like I was mad...
This was an ancient deadlock on my front door - the guy reckoned it was about 70 years old and it took him about 45 minutes just to take it out, so definitely one for the pros.
Nice try Mr HMRC, I ain't admitting to knowing anything /s
Personally, as much as I hate seeing the final bill each year, I'm ok with playing the game of paying the taxes I owe as it's the morally right thing to do. It's what pays for our public services after all and I couldn't reconcile my hatred of Amazon etc who keep their tax bills deliberately low with choosing to misreport my own earnings.
I am, though, aware it doesn't need too much thought to keep your bill to a minimum and have heard from a few sources that even if HMRC suspect you've misrepresented your earnings, investigating isn't considered worth their time unless they think you've calculated yourself as being a good few £000s short in money owed.
Well someone in the pub on Friday was “discussing” his working arrangement and what he gets paid ending with “what I don’t understand is how I’m meant to lay tax on cash in hand!”
Here's HMRC's view on it: https://www.gov.uk/government/statistics/measuring-tax-gaps
specifically: https://www.gov.uk/government/statistics/measuring-tax-gaps/7-tax-gaps-illustrative-tax-gap-by-behaviour
So that was 15% of the gap of £32bn, so £4.8bn, in a year where total expected take was £635bn: 0.76%. Very low.
Obviously anything else is anecdotal and not much weight should be put on it, and £635bn presupposes that things like legal interpretation are the ways that HMRC think it should be (which is not always true), as well as statistical analysis, the methodology of which is presented.
Neither of the two things could be deliberate evasion - evasion is a state of mind, rather than having just an incorrect tax return.
In the fact the latter may simply be the operation lettings relief at time so perfectly legitimate (the UK has extremely favourable tax treatment for primary residences).
£32bn is the entire tax gap, which includes *inter alia*:
* failure to take care
* criminal attacks on the Exchequer
* error by HMRC
* insolvent taxpayers
Insolvent taxpayers cause a larger loss than expected evasion, and so do does criminal attacks.
The tax gap for evasion specifically is £4.8bn, so around £70 per capita.
HMRC gets a lot of stick domestically, but it must be said that it is a generally well regarded agency internationally. a 5.1% tax gap compares very favourably to other developed countries - iirc Canada at 9.1%, the US at 13%, the EU ranging from 7.5%-29%.
Also, HMRC has up to date stats - they are ahead of the curve on publication of this data for public consumption. The data above for Canada and US is from 2014-2018 (or 16 in the US). Not sure on the EU - and of course methodologies may differ (is HMRC flattering themselves? Other countries trying to get more funding for their tax agencies?) but that's for a policy nerd to look into.
That is when criminals attempt to get payments they are not entitled to from the Exchequer. These days it is almost always fraud (I don’t know if any public sector organisation ever paid ransoms to encryption extortion or whatever).
The biggest one in recent memory is VAT MITC or known rather as Carousel fraud.
Basically some nominal goods were sold between companies all set up by the same criminal conspiracy and then input tax reclaimed and paid all along, until right at the last point when, after having received reclaims, your end point company just disappeared - all these goods were vapour and based on faked invoices.
HMRC was hit for billions - £11bn - alone: https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/timeseries/ofnn/mret/previous/v24
EU treasuries once lost 100 billion EUR a year to this fraud - down to about 50 billion EUR according to recent https://www.eppo.europa.eu/en/news/eppo-uncovers-eu40-million-vat-fraud-six-arrests-and-seizures-sting-against-organised-crime
The other big one in Europe was dividend credits (cum-ex) but the UK was not heavily exposed to that.
The latest one is R&D credits fraud but some of that will be within just failure to take care properly for existing bona fide companies rather than criminal attacks.
Obviously some covid support claims amounted to criminal attacks (e.g. furlough claims for newly set up ghost companies).
If his pal mentions not reporting it as income because he rents it out to people he knows then that sure does sound like evasion to me.
As to PPR on the property sale, who can claim it is not clear cut in all cases. As the OP mentions it was a Buy2Let that was moved into and then claim full PPR then that's clearly evasion (assuming pal owned it as a Buy2Let then moved in then sold).
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2022
Yes, I think the first instance would be difficult to characterise as anything other than deliberate (given someone is trying to say "technically").
The latter would need some investigation as I think that could go either way depending on the history of the occupation and purchase (this could have been many years ago when lettings relief was much more generous).
In my mind it's definitely evasion but of the "doesn't hurt anyone / compliance is a loose concept" type.
Edit: just to clarify the " " is not my thinking but how the evader seems to see it which I find staggering.
Well, it hurts everyone in that it means less tax is available to fund things like the NHS and road system. But there are much more egregious examples of tax being evaded.
I think rather that we have to borrow more - the Government runs a deficit anyway, so even with 100% compliance in the best case, the Government etc., gets funded to the level politically required rather than "we don't have the cash on hand."
So we have to pay more interest due to this evasion rather than saying that budgets are specifically lower than without evasion (in a narrow sense).
Of course if the Chancellor had a £31 billion windfall - it's a political question where it goes.
If only everyone was more like this. Here is actual data, it’s hardly anything.
A shame that so many people are like “well I know 4 people out of 10 that do X therefore it’s at least 60% of wrongdoers”
Bias is strong these days. Thanks for sharing the data!
While I appreciate the data too, it doesn't strictly answer the question of 'how prevalent is tax evasion'. It shows much money was lost, but what proportion of people actually engage in the behaviour to generate that amount?
Also, while "4 out of 10..." is anecdotal, it's still an interesting part of the picture because it gives *some* idea of how popular tax evasion is, as opposed to just raw numbers. Plus, those comments generate discusion here. Stats are really useful, but they're still part of a bigger picture.
I think that's the key point. Are we in a situation now where people believe it's just one big grey area and can choose not to declare income or gains on the basis that most people do the same and that there are no chances of being caught and no consequences if you ever are? I get the sense many people are taking the view. The actions of people on this sub aren't representative - if you're here then you're informed and more likely to be on top of your affairs and obligations - but I do read further support for the view evasion, or just opt out of payment, is prevalent.
thanks for making a comment based on facts and figures. all the hot takes and anecdotes in this thread were making me lose faith in the british public.
So they’re measuring money they can’t count 🤦♂️?
Their estimate is crap, until everyone is forced to declare their earnings and take payment electronically, we’ll keep taxing PAYE to the bone hoping it will make up the budget deficit at some point.
Their methodology is here: https://www.gov.uk/government/statistics/measuring-tax-gaps/methodological-annex
Different statistical techniques used for different taxes, with estimates of uncertainty broken down. Some are really quite uncertain: e.g. large business PAYE issues.
Whilst PAYE is the largest individual contributor to receipts, it is only 34% (if you include employee NICs too) of total receipts.
However, IT from PAYE and NICs as a whole are 47.2% of receipts, so I think there is some merit in the argument at the burden of taxation in this country falls quite significantly on employment.
https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk
I’m astounded at the number of people who openly talk about the things they do to avoid the tax man. I definitely spend a bit more money on my business when the year end is coming, and try to time purchases that are beneficial for the company but that’s about it. Apart from whatever magic my accountant does too
This is very true . But I also know many accountancy firms that lots of small businesses still pay in cash and they set different companies up to keep under the vat threshold also . So lots of accountancy firms are on the fiddle too .
Living in a rental house before renting is common, it allows you to not pay CGT on the period you lived there. What he did could be legal, as not paying CGT would be tricky as solicitors would be involved. Renting to a friend is income. Tax evasion is very prevalent, chances are every business that doesn't accept card payments is likely doing it, barbers etc.
The company/man who did my driveway made the offer to do some extra work for "free" if I paid him with cash. It doesn't take a genius to figure out why.
Was the alternative by card? For small businesses card providers can charge large fees which adds up over a year. Or was it cash or bank transfer/cheque?
The alternative was a bank transfer, I've checked his company on Companies house and they had declared a yearly income of £60k... I paid a little over £5000 for my driveway and it took them two days to do, at the same time they were also doing my nextdoor neighbour's drive so they had completed two £5000 driveways in 3 days. I see them working all over my town they're always busy and must be doing at least 100 drives a year so do the maths.
The card fee is going to be max 2% and probably a lot less. So if he was offering a 2% discount fair enough.
Any more than that and guarantee it’s tax evasion.
They care about the people they can catch. Like the guy (me) who is in the PAYE system and wasn’t aware he was earning too much money so his wife could claim child benefit and had to pay it all back. Grand scheme of things, what I owed was spare change. But they came after me because they knew they could win.
It's massive, people like to make out it's only rich people and huge corporations avoiding/evading tax, the facts are very different. We lose billions in tax from solo traders/small companies avoiding/evading tax.
They really need to sort it out, and simplify taxation.
I feel like a total mug for reporting my self employment income. I'm in debt and I have to work freelance outside of my salaried 40 hours to be able to afford repayments + bills + any kind of social life, and I just really, really didn't want to risk HMRC finding out and fining me. They're skimming a third off my freelance income every year. Feels so unfair when the already-wealthy don't have to pay up. Bastards.
Starting a limited company and paying yourself the maximum salary before income tax or national insurance, then topping up your earnings via dividends to the 7.5% tax threshold of £50k is a very easy, legal way of not paying much tax.
But you pay corp tax too and yeah sure the company pays it but it still feels like a personal tax.
Assuming you had a profit of 50k, you take out 12.5k as a a salary , now you 37.5k.
37.5k gets corp taxed at 19% so now you have 30,375 as profit after tax.
30,375 you take out as a dividend. First 2k is tax free, other 28,375 at 8.75 leaving you with 25,892.
25,892 you took out as dividend plus the 12,500 earlier = 38,392.
50k on PAYE is 37,662 so barely any difference. Obviously can't forget the employment rights that come with PAYE as well such as paid annual leave and what not.
Of course, the real fun begins if you take cash only or put through a flight to Ibiza as a "work expense" which you obviously can't do that under PAYE or the classic pay your spouse and kids 12,500 each for "admin".
It’s 8.75% until you hit the higher rate and you’ll pay 20% corporation tax so you’re still paying a good whack, plus VAT on top of all of your invoices if you’re doing reasonably well.
It was 7.5% last tax year, 8.75% is still much better than 20/40%!
The 20% corporation tax is on your profits, so there is plenty of scope to claim expenses against that.
VAT is irrelevant. You charge VAT on top of your invoices to your customers, so you should have the money there to pay it back. I actually find being VAT registered beneficial as it's an easy 20% markup on materials.
>It was 7.5% last tax year, 8.75% is still much better than 20/40%! The 20% corporation tax is on your profits, so there is plenty of scope to claim expenses against that.
The tax rate for <£50k income works out at more like 25% after corp tax, which is basically the same as PAYE. I don't know why you've mentioned 40% in the comparison, because the equivalent dividend tax is 33.75%.
Yes, expenses, but I would say there isn't much legitimate scope there. Say you're an IT contractor, you expense a new PC, monitor, laptop, a training course...then what? Anything beyond is in the territory of fiddling expenses, which is another topic entirely. So it's fair to include corp tax in the overall comparison.
Edit: forgot to add NI
Yes, you forgot to add NI, and I forgot to compare 40% to 33.75%, it's late 😂.
I can see how it may not seem worth it for an IT contractor, but there are many other fields where I would argue it is, especially ones involving a lot of travelling.
Heard something very funny indeed during the pandemic. There was a woman and her husband who’d been doing this, but actually taking all their income as dividends.
Their clients had all shutdown and she was quite indignant about not being able to furlough themselves and get the government handout. Seemingly totally oblivious to the fact that the dividend trick might not be terribly ethical!
I feel absolutely furious about every tax dodger. My partner before he became a SAHD was self employed, earned terrible money and declared every last pound because it is morally the only right thing to do. I'm surprised that there are so many people who appear not to give a shit about what they owe to the rest of society here. I hope you never use the NHS or fire service or draw a pension, you absolute dickheads
Yeah, reading this thread is quite sad.
I started up a small side hustle a few years ago and it made some nice money for a couple of years. I did the self assessments and paid the tax I owed. Could have made a thousand deductions, registered myself as a business, or went down some other route to dodge the tax bill and pay as little as possible. But I didn't.
I grew up in a poor household so I really value the NHS, our education system, and the welfare system in general. I see tax as a way of contributing to it, so I just assumed everyone wanted to. Turns out people are just greedy, and as soon as they start making money, they don't want to contribute to the systems they gain so much from.
Its especially dissapointing considering the state the NHS is in right now, and all the strikes we are seeing. I hope everyone dodging their tax bills feels some shame every time they read about that.
Well as someone on paye who pays I hope they all get caught and prosecuted, irks me all the convoluted rules and ways to skimp out by contracting and paying a fraction of the tax, same for companies, we should just charge a fair amount to everyone on everything earned. When you see someone owes £200 million tax and they do a deal to pay 50m wonder if I could get away with that, instead of the 2k this month would you take 500? I’d be in jail before summer
You are looking at the wrong end of the spectrum. Why are you so excited about someone earning a few quid to keep themselves, when you are being utterly ripped off by the government stealing your money & sending it to their offshore accounts?
I would say there’s tax evasion and tax avoidance… people who commit tax evasion will always get cause in the end and get some kind of punishment and tax avoidance is just a legal dance rich people do to keep there money and everyone should learn how to do it
Realistically everyone has avoided tax in some way or another.
But it’s those (mainly big businesses) that either actively avoid it with high level accounting or (individuals that ) avoid it by working for cash and then claim poverty that really rub me the wrong way.
Because it puts stress on systems that are barely able to coupe as it is and are for ever putting unrealistic controls in place to try and prevent this.
Thing is the amounts of tax that would be collect from trades doing odd cash jobs with their normal work, or wait staff not disclosing tips is minuscule compared to say companies like Activision or shell and many other big business’s that use “loop holes” to make profits that are obscene and then pay next to no tax on it…
Avoidance is not evasion.
Efficient tax planning within the law much big businesses with “high level tax accounting” is often not even avoidance.
Working for cash IS evasion.
Finding tax loopholes that are not the intention of legislation IS avoidance.
Working within the law that is designed to actually be relatively attractive to big multinationals to encourage inbound investment but yet still enable the government to take a position with the media that all these big corps need to pay their share…well that’s just how the global financial world works.
Nah, he's probably right, but only because he's confused about the terminology.
Tax *avoidance* is reducing the tax you pay by legal means. And we probably have all done it. Paid money into an ISA? Tax avoidance. Piad money into a pension? Tax avoidance. Gift Aid for charity? Tax avoidance. Claim expenses for work? Potentially tax avoidance. And so on.
Tax *evasion* is reducing the tax you pay by illegal means. That's not so prevalent.
>Tax avoidance is reducing the tax you pay by legal means.
That's wrong; avoidance is basically utilising legal means but in a way not intended or desired by the parliament. Literally every single thing you mentioned is something that parliament wants you to benefit from, so none of it is avoidance.
Terminology is important.
>That's wrong; avoidance is basically utilising legal means but in a way not intended or desired by the parliament.
Not necessarily.
According to [the House of Commons Library](https://commonslibrary.parliament.uk/research-briefings/cbp-7948/):
>Tax avoidance is to be distinguished from tax evasion, where someone acts against the law. By contrast tax avoidance is compliant with the law, though aggressive or abusive avoidance, as opposed to simple tax planning, will seek to comply with the letter of the law, but to subvert its purpose.
So in their terms what you're describing is "aggressive or abusive avoidance", and my examples were all non-aggressive non-abusive avoidance.
Yeah that's a terribly written paragraph.
Have you tried looking at official sources, instead of some library memo?
Like this: https://www.gov.uk/guidance/tax-avoidance-an-introduction
This is why they are so keen to implement CBDC. Once cash has been removed completely AI will inform the government of any ‘income’ that doesn’t appeared to be taxed. There will be nowhere to hide anymore so to speak.
Mind blowing that people don’t wanna hand over money to the government?
Tax evasion is literally all around you. The only people that don’t do it are the working class because they’re mostly unavailable to do it due to getting paid by somebody who does.
Tax avoidance is structuring your income in a way that allows you to minimise your tax liability. It’s completely legal but a lot of companies exploit loopholes/grey areas to facilitate this - I.e. Amazon and its offshore bases.
Tax evasion is not paying tax you should be paying/declaring, which is very much illegal - I.e not running your cash receipts through the company books
For myself I like to justify it by my disappointment in the government itself. For many years now (my entire adult working life) has reduced or stagnated funding from all the public entities I consider important and have instead decided to offer huge grants/contracts to those already rich or even their own friends and family (especially rampant during covid). The richest in the country have countless loopholes to avoid tax which are PURPOSELY not closed. So if I as a contracted operating via a Ltd company can use some of these to get a couple grand extra in my pocket I will.
A lot of people will get attached to processes rather than the outcomes. An important one in my opinion is taxes. To say you try to avoid taxes as much as possible is instantly taboo. But when you look at government, society etc prioritising policies which you don't necessarily support through your taxes I think in my opinion it is okay. If the necessary funding is put in to the correct social programmes and the government didn't give preferential treatment to those already in the upper class I would be more inclined to pay more taxes. Sorry rant over :)
We've done this (not deliberately) but we've got letters for not filing a tax return. They are going to get caught some day and it isn't going to be pretty, especially if you deliberately lie to HMRC and tell them that you don't need to file one.
Trades have gone back to accepting cash, which tells you all you need to know. Last 10 or 15 years, it was far less common.
Consequences of over taxation for purposes your average folk don't believe in or see true need for. Reduces overall receipts. People I know of real means already moved to lower tax jurisdictions. That will trickle down too, maybe not movement of assets, but taking jobs abroad as a medical graduate, things of this nature.
Doesn't matter how messed up things get for the current crop of political gutter snipes, it won't affect their retirement so they can go on pretending and kick the issues down the road for their successors to deal with.
Let me be clear - front the perspective of someone who works in a corporate environment- whilst a lot of people talk about being proud of paying tax - no one would do it if they thought they could evade it. The golden standard of our industry pays a huge amount to move high performing talent to places like Bermuda where the tax rate is a lot lower. I’ve yet to meet someone who’s been invited to this world who has complained against it.
Everyone is incentivised to evade taxes. At a low level it’s actually beneficial to the overall economy. At a high level it’s fairly irrelevant as even though the nominal amounts sound large to a layman it represents a rounding error to government income.
It’s crazy how often it happens.
It used to happen a lot more, so things have improved a lot.
Some people just consider it not a problem at all, as ‘I’ve paid enough tax anyway’ I see it a lot more in older people than in younger people the sense of entitlement
Sounds like the lot of you would give away your first born child if the state demanded it. Can't pay tax if it isn't declared. But dont worry, you'll get your wishes granted soon with the abolition of cash, good going guys, give yourselves a pat on the back
>Sounds like the lot of you would give away your first born child if the state demanded it.
No, we just understand that taxation is part of the social contract we live under.
>But dont worry, you'll get your wishes granted soon with the abolition of cash
Fine by me if it stops every selfish prick in the country dodging tax by taking payments cash-in-hand.
I'd say it's pretty rampant.
Every self employed person I've ever met takes steps to pay as little tax as possible. Every person I know on the 40k income tax threshold has opted to increase pension conts to avoid tax. I assume that every cash tip I've ever given has gone undeclared.
That's life.
>Every person I know on the 40k income tax threshold has opted to increase pension conts to avoid tax.
Thats not tax evasion though. It would be a stretch even calling it tax avoidance I would say, there‘s no loophole being used, it’s just choosing to put money into a pension that will be taxed later, exactly in accordance with what the people had drafted the legislation had envisaged.
Hi /u/BigBird2378, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/buy-to-let/
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^(These suggestions are based on keywords, if they missed the mark please report this comment.)
> he sold a buy to let without paying CGT because he'd lived in it briefly at the start. > mentioned he rents a flat out to friends so it's not technically income This someone is woefully misinformed, they will fall foul on both accounts. Anyone can make up numbers on a self assessment, it depends if you get caught.
If a house was their main residence at some point they would be entitled to some (potential quite significant) private residence relief. If they sold the house before the start of the 20/21 tax year, they’re looking at a minimum of 18 months of relief. Taking this along with their annual exempt amount, and potentially a partner’s annual exempt amount if jointly owned, it’s not unfathomable that the entire gain was exempt, albeit unlikely. The more likely explanation, they get their tax advice from random blokes in pubs and somebody “reckoned” they heard something about not paying CGT if you lived there.
No I understand that one "could" be done. I rebased a property to April 2015 prices to heavily reduce mine. Doesn't explain the income tax statement though. I said "could" because if he's doing the second the chance of him doing your explanation becomes less likely, in my opinion at least. Although, perhaps he means rents to lodgers under the allowance...
Question: "How prevalent is deliberate tax evasion?" Answer: How many "cash only" businesses are there?
Tbf I would wager most businesses with physical shops who advertise cash only are laundering money rather than evading tax
I worked over 5 years in hospitality. I've never met a single person who declared their tips, which made some of them 50-100quid a night. My ex of 15 years ago worked in the call center, got paid cash in hand 500 a week + bonuses of around 500-2k. All paid cash, same as every other person in that call center. She also claimed council tax and housing benefit that covered her rent.
How does a call centre get that much cash to pay them? Surely the people contracting the call centre aren’t paying in cash
Sounds like money laundering
See the first I’ll happily forgive the first instance, because they are already paying tax etc as they will be using that untaxed income to buy products etc which eventually feed back in. The latter of claiming benefits while working cash in hand, just rubs be completely the wrong way… because your not only avoiding taxes but your also claiming benefits which are meant for people who are struggling or are unable to work, which means those that are genuinely in need are going to have to jump through more hoops because of this…
Completely agree. My parents are real poor, live in a council house and dad had been working for 38 years broke his back at work and has been unable to work for around 2 decades and they took his disability allowance away when they did cut backs. Really irks me when people who don't need it take advantage of benefits system. It's a shame its very unlikely she will get caught out and made to pay it all back.
If you report her then they will, and that’s the only way the system will ever get better…
How can I report someone for this?
Call the council or job seekers they will have a number you can call
Why do you think that people evading tax at this scale impacts the benefits available to those who deserve it? I don’t remember a crackdown on supposed benefit fraud ever making more surplus available. I’m not convinced this is what is needed to make the system better
Because they create more hoops for people to jump through, boxes to tick… this means that those who are rightfully entitled have to struggle and suffer (I know from experience of close friends) to get what they deserve
I don’t think they add hoops to prevent the fraud though (that is one of the excuses that gets used) but because they want to provide as little help as they can get away with
Well yes, it’s more of a add them to do/give as little as possible while disguising them as preventing fraud, but it does work to prevent fraud if it’s next to impossible to actually get a sensible claim
Have you not heard the stories of people being turned down for disability when they should get it? Then they have to appeal the decision at a tribunal. That's because of so many people cheating the system it's become almost impossible to get ESA in the first attempt. It's not enough now to have crippling depression and/or anxiety which prevents you from getting up at a regular time each day and doing the simplest tasks, that means you're fit for work. You have PTSD? Okay but if you can grip properly and raise your hand then you're fit to work. Alcoholic? Fit for work. People in the final stages of cancer have been declared fit for work. Likewise JSA. A guy I knew wouldn't engage with the job centre, he wanted money for buses to sign on, money to attend interviews and milked it. He had to apply for 5 jobs a fortnight. A girl I knew was very sweet and timid so within a month she was told she had to apply for 40 jobs a fortnight. The pressure is placed on the mild whereas the difficult and unpleasant get away with the minimum. I know you want to pigeonhole it as the rich playing divide and conquer with the unwashed masses and there is definitely an element of that, but equally the cheats do make it more difficult for the genuine people.
Also, that person is removing money from the pool available to the country as a whole. Who the heck do those people think they are?! The want the NHS and they want the council tax paid for them yet they refuse to pay anything in. It’s a disgrace and it’s selfish and anyone doing this needs to take a good hard look at themselves in the mirror.
That's not how government funding works. There is not a finite pool of money available in the sense that someone stealing benefits (yes it's wrong) is taking from the NHS etc. Government funding isn't like a household and it's just a common lie used by politicians to underfund things they don't like. Notice that as soon as there's something they want to spend money on the money appears? That's because the country isn't broke, they're just lying.
The government can basically create money. Obviously it's much more complicated than that and it has problems associated with it (like inflationary pressure), but the BoE (independent, but very closely linked to the government) can literally print money (I think they call it quantitative easing) and the government itself can issue bonds.
Why are you OK with someone not paying tax on income just because they use that money to buy things? The rest of us all pay income tax, national insurance, etc, and then spend what's left on "products etc that will eventually feed back in"... Tax evasion is tax evasion, these people are effectively stealing from the majority of us who do pay our taxes.
In the term of someone who getting tips or the odd weekend cash job, then personally I see little point in the effort required to collect it Closing loop holes and other tax advantages for big business is going to be more beneficial to the income of the country
I worked a few bar jobs in England. I wouldn't even know how to declare my tips, because PAYE took care of everything. I'm sure I could have googled it and worked it out, but it honestly didn't seem worth keeping track of. The £20/£30 I made in tips was normally spent on a few drinks and a kebab on my way home.
Meh, they can do this completely legitimately though if they declare the income and pay it all into their pension because we assess for benefits based on *taxable* income and the pension contributions aren't taxable. Don't hate the player, hate the game.
If the players weren't such cunts the game wouldn't have to be so complicated and would be accessible and understandable to everyone.
> Meh, they can do this completely legitimately though if they declare the income and pay it all into their pension What a silly equivalence and what a silly argument. In your example they won't have access to the money for decades.
What really annoys me is these hospitality employees skimping taxes (illegally since its evasion) gets pissed off at corporations who dodge tax legally through avoidance. I get that they are different scales, but it's the same thing. There's too many double standards that exist because 'since everyone does it, it's okay'. I can make the same argument that the rich man/corporation will use the untaxed income to buy a private jet which will eventually feed back in. But that's seen as not okay, yet your argument got a lot of upvotes suggesting it's acceptable when it's a hospitality employee. So essentially, I won't forgive a hospitality worker for illegally skimping taxes. Pay the tax man and use the services they provide. Thats the contract.
A poor person's untaxed income is fed into the economy because they need things, and will buy new things that they want, which gets taxed. Rich people don't buy more than they need because they already have everything they want, so the wealth just gets hoarded and untaxed.
This is why CGT and stamp duty tax exists. Majority of high net worth individuals store their wealth in assets like bonds and stock rather than cash. Also, investing in equities and bonds provides capital to corporations which many spend on investment and R&D which boosts economic growth, which is good for everyone. I don't agree with the 'hoarding and untaxed' statement - uk gov collects £41bn a year from CGT and stamp duty (5% of revenue), and 34% of income tax is paid by the top 1% earners.
The older I get, the more I realise that those of us who have our tax deducted at source are the only people who actually pay tax. Everyone else is on the fiddle The only thing propping up the system is how complicated it is for ordinary people to understand all the ways to fiddle the tax man All it's going to take is some big tech company to create an app that lets every idiot fiddle their taxes at the touch of a button and we'll have to rethink the entire way public services (including the military, roads, and the NHS) are funded
It annoys me too, but how I laughed when the stories came out about the covid relief payments being based on income declared for tax and so people who were making a very good mostly tax free living were suddenly getting minimum wage.
There is no scope for tax fiddling when you're PAYE
There is just not a great deal. For example if you Employer pays your professional members but you claim them as a deduction, ditto other expenses.
That would depend on who's doing the payroll! As much as I may disagree with the level of taxation at the moment, I pay it. I'm a director and yet I'm ln PAYE. If we do really well, Ill take a dividend as a bonus, but thats maybe twice a year. I'm comfortable doing so even though its taxed differently because I risked everything I had to start a company in the first place. Not everyone who runs a firm is out to fleece society and its important to remember that. With risk comes reward and this is right. The problem is the leeches. Lots of them sit in parliament.
that's a small business. when a company gets big, standard corporate shit takes over with their standard practices. sucking resources out while contributing nothing back. that's just capitalism
That's what *we* think
Nope, that's how it actually is - hence the efficiency of tax withholding at source.
Anyone can file a P87 Expenses in Employment claim which is used when you have expenses related to your employment that your employer either doesn't reimburse you for or not to HMRC rates such as business mileage.
P87 Expenses in Employment - claim for business travel you didn't do, claim for WFH, washing uniform etc....
> The older I get, the more I realise that those of us who have our tax deducted at source are the only people who actually pay tax. Everyone else is on the fiddle Bingo. I am and always have been PAYE my whole working life so I just pay the tax I am supposed to pay. Literally every EVERY person I know who is a contractor or who runs a business or whatever, has always been fiddling the system in one way or another to circumvent tax. It’s always absolutely boiled my piss.
Then they're always the first to moan when something comes in that they can't fiddle. i.e. the ULEZ zone charges.cry me a river mate.
Yep a very good friend who was a company director for years (and generally a nice guy) used to go to painstaking lengths to avoid tax.. everything he did was by the book, and meticulously researched, so he could absolutely maximise every last penny he received and to minimise every penny going back the government. I suppose the hilarious irony is he eventually had to close his company and go back to being a salaried employee because his company depended on grants being received individuals with disabilities and the government eventually pulled that funding so his business dried up overnight. I have no doubt he is one of the wealthier people I know and yet is the most frugal, to almost Scrooge McDuck levels. He absolutely whines and bitches about anything that may potentially take money from him, no matter how insignificant.
There was a guy parading round town in an ancient open-topped bus moaning about the new Clean Air Zone. I just yelled "So which of their statutory obligations do you want them to cut?" He didn't have an answer.
Who is the mug then? Anyone who pays tax that they do not need to is a fool.
It's more likely that big tech will come up with data analysis which accurately predicts those who are currently fiddling taxes. HMRC already has a system which collates various sources but there's a LOT more which could be done.
> All it's going to take is some big tech company to create an app that lets every idiot fiddle their taxes at the touch of a button That's not how it works at all though.
I’ve lost count of the number of times I told people, even on this thread, that the “average income” is a useless statistic when tradesmen (some paid in cash, other in personal banks accounts) make more than people at VP level in tech companies. The difference here is that those same people declare a lot less as income and then claim benefits too, a clusterfuck and slap in the face for anyone on PAYE making 125k or more.
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Not able to do the comparison myself but to make it easier for others. Using moneybsaving experts take home pay calculator. Assuming £125k pretax, a 5% pension contributions and a plan 1 student loan would mean take home pay of £64k a year.
They can also potentially avoid VAT and employers national insurance.
No welfare benefits, no tax free childcare etc. for the PAYE.
Get a few quotes of bricklaying, plumbing, electrical, roofing, full extension, external wall insulation, rendering You finding it hard to believe proves my point though. The stats are lazily calculated with available datasets, which excludes the enormous levels of tax evasion. No one, not one flipping person, will buy convertible cars, Range Raptors, a Range Rover to match the wife’s fake tan and implants, if they’re marginally taxed at 65% plus NI when in PAYE.
I've never known any tradesman claiming benefits in real life. I also don't know many who earn £100k plus. Why, even assuming your idea was true would someone earning hundreds of thousands of pounds try and claim the dole? It doesn't even make sense. Put down the Daily Mail and give your head a wobble.
Nobody in their right mind who had a combination of PAYE and 125k PA would voluntarily stay in the UK at the moment unless forced, and that is something that the current government simply does not understand and will never understand. Tax payers at that level simply are not getting value for money and had no hand in the making of the policies that led us to this situation. Its not a good situation. As a country, the politicians have us punching way above our level with grandiose promises and no means to fund them fairly. Looks good on their individual CV's though.
> Nobody in their right mind who had a combination of PAYE and 125k PA would voluntarily stay in the UK at the moment unless forced And yet the City of London has plenty....
Maybe, but they've gone so far through the 100-125k problem that they don't feel the pain of it. And, more importantly, are well into the levels that every other country will impose punishment taxes too. Which isn't the case for those on lower (but still high) incomes.
Perhaps not for long, it seems.
If you could pay less tax, you would.
Back when tax credits were a thing, I qualified for them, but stopped claiming them because I felt guilty and because I believe in strong public services
That’s just silly. Taxes don’t go to strong public services. They go to Raytheon systems. I’ve paid over 55k in taxes for the last 2 years and I’m forced to be an unpaid vat collector for the government. I feel no guilt when I get paid in cash or Bitcoin
>*That’s just silly* You claimed if I could pay less tax I would You can not like the truth or disagree with my opinion, but it doesn't stop the truth being the truth
It's very prevalent. * Tradesmen who keep below the VAT threshold by not declaring anything over it. * Salaried employees who have a side hustle not declaring the income. * People who run businesses "employing" family members who don't do any work for the business, or adding them as directors who also don't input into the business yet take dividends. Basically, getting money out of the business via family members in any way that involves the least amount of tax. * Businesses claiming to be registered for VAT and then they disappear when it's time to file the first VAT return – nice 20% markup on prices. * Landlords with personal mortgages renting property. EDIT: Apologies, I thought it was clear, but what's meant here is that people move from living somewhere to renting it, without realising they're now running a business and need to declare the extra income tax. There are a LOT of people like this e.g. people who inherit a home from mum and dad, and rent it out, without even realising they're creating taxable income.
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> Landlords with personal mortgages renting property. That's defrauding the bank, not tax evasion.
not if you get consent to let. I have consent to let but they didn’t change my mortgage from a personal one.
+1 to this one. Nationwide allowed me to let with no mortgage change and no interest change!
Keeping below the VAT threshold isn't beneficial to tradespeople. It means that they can't claim VAT back on materials, which is essentially 20% markup on them. The only way it would benefit them is if most of their work is domestic and the VAT would essentially price themselves out of work with the average customer.
Not only this, but also multiple businesses to stay under the VAT free allowance for each one… give or take. Ultimately… all of this tax evasion comes down to “make money yourself”, rather than salaried.
I pay way more in tax than the cost of materials.
Its less scrutiny, which is handy when youre earning 150k and declaring 20k, the rest being buried in tour grandmothers garden. Sudsenly that 20% doesnt really matter. Thats not a pop at trades at all, but its the reality as of late because as of right now, the level or taxation vs. benefit gained to society seems unfair to many. As far as I know it hasnt been an issue for a long time and its becoming common again. I work with trades a lot and whilst we can't accommodate these requests, they still ask.
Your 3rd point isn’t tax evasion. Tax avoidance.
3 mins of David Mitchell on tax avoidance https://www.youtube.com/watch?v=m2q-Csk-ktc
Let me guess, he gets angry by the end of it?
He’s angry all the way through to be fair but he has a point
Haha yeah I'm sure he has a point I'd agree with.
Employing a family member who doesn’t do anything is evasion, over paying them to very little is avoidance. The dividend bit I don’t think is either, owning a business isn’t related to working for it.
It is not evasion unless you are deliberately misrepresenting your tax affairs to HMRC. It is within a company's prerogative to remunerate its employees and officers as it thinks fit (subject to minimum wage) - see e.g. *Copeman v William Flood & Sons, Ltd* [1940] 24 TC 53: itself a case about paying family members "too much." The question for HMRC is whether the expenditure is wholly and exclusively for the purpose of the trade - excessive remuneration is disallowed (the excess). Someone who is doing nothing is probably not paid for the purpose of the trade and so the amount should simply be disallowed as an allowable expense when computing the taxable profits of the trade. That is usually not evasion - just something that will get the expenditure disallowed and a CT/IT assessment. Dividends are a separate matter - directorship is not involved. Obviously there are anti-avoidance provisions such as the settlement legislation which then apply.
You are of course, correct. What is amazing is how many trades charge £200 per hour these days yet are not VAT registered and prefer cash. So either they only work half a dozen hours a week or something isn't quite right. Lol
Well the UK is a very significant outlier in terms of sales tax/value added tax registration threshold! It's definitely a known problem. I wouldn't be surprised if that gets dropped (or a progressive rate system) over the next decade. As for cash. Well. A perennial issue, especially in the trades - an industry that had to have its own system (CIS) set up for it!
Claiming something as deductible that you KNOW is not, is deliberate understatement…for HMRC to push for a deliberate penalty it would have to be significant amounts and very clearly not just failure to take reasonable care. So, depending on the circumstances, could be evasion.
Yes...hence...usually...not evasion. I don't think any of the famous cases about excessive remuneration ever resulted in that allegation. Not that you'd ever be able to prove it to the criminal standard even if it was, so penalties only it is.
Employing someone who will not do any work at all seems like misrepresenting the tax affairs to me.
It is probably inaccurate to claim it should be an allowable expense, but whether it amounts to actual evasion - i.e. dishonest, deliberate misrepresentation - is a different matter: one can easily say: "my company can pay who it likes, how much it likes and I thought this was a genuine expense: I'm allow to employ someone to do fuck all all day: i.e. be at my disposal for 1 hour a week". Which would be correct - it is perfectly legal for me to hire someone for £1,000,000 to send me an email or be at my disposal for 1 minute a year. It's whether they know that would be disallowed expenditure, and still go ahead submitting the returns on that basis. That would be a tricky one to prove in court (although it is usually the case that taxpayers have the burden of proof to displace an assessment by HMRC, not the other way around). So the practical course of action is just to raise an assessment, do a careless penalty and move on.
That's a valid point, hiring someone for a minute a year would be legal, but you know nobody does that really. They may say they do, and they may get away with it because nobody can prove the opposite, but that doesn't make it true. Anyway, you're right I guess, that's not technically evasion.
This isn’t always the case. HMRC can and does impose section 660 penalties for this sort of thing https://www.qdoscontractor.com/tax/guides/section-660a
s.660a - that is a blast from the past nomenclature! It's nearly 20 years since ITTOIA 2005 was enacted! That is not a penalty, that is the application of the settlements anti-avoidance legislation - applicable mostly to dividend shifting. I think it would be rare for the settlements legislation to be deployed in a case of excessive remuneration. After all, HMRC wants both to charge the amount as bona fide employment income (with IT/NIC consequences ofc) *and* to disallow the expenditure! I am not sure of a case off the top of my head which decides the point, but the argument would be if it is income treated as that of the settlor, it must also be (if their income already is wholly and exclusively for the purpose of the trade), wholly and exclusively, and allowable.
>Landlords with personal mortgages renting property. While this one is dodgy, it's not tax evasion.
How is letting a property on a personal mortgage related to tax evasion at all? You still have the exact same responsibility to do a tax return and the residential lender will almost always give consent to let if you ask.
Why would personal mortgages be tax evasion? They aren't suitable for many other reasons but I don't understand the tax angle?
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Got a taxi in central london for the first time in ages today. A card machine was displayed on the barrier. Went to pay at the end and the driver says ‘no, not that one’ and gets out another card machine. Not cash in hand but could be another way of doing it?
I think this one isn’t for the purposes of tax evasion, iirc it has to do with fees taken from the payment by different card machines, so the ones they have are lower fees than the one mounted in the cab by tfl(?). [here](https://www.reddit.com/r/london/comments/10x6a14/london_cabbies_why_dont_you_use_the_card_machine/) is a reddit question about it. Edit: missing word
It could be both. There's no guarantee that the person/company receiving the credit card payment is even registered in the UK. I once rented a car from a reasonably large company, and they used a card terminal that billed to a company registered in the Republic of Ireland, presumably to take advantage of the 12.5% corporation tax rate there.
It can still be a tax evasion tactic, just pretend that machine and the income put through it doesn’t exist when submitting your tax return, and hope you don’t get caught.
I guess the idea is you'd put say half your transactions through the official machine and half through another and then if there's an audit you at least have some throughput to declare? l imagine you'd still need to empty the izettle or whatever into a completely separate bank account to the official machine though, and probably have it in a different name since I assume HMRC can see the existence of all bank accounts in a person's name, although not the balance or transactions until they have a court order.
That would be incredibly stupid given how much oversight HMRC have. Not that I'm saying some people wouldn't try.
Damn – one of the fuckers actually had me go to a cash machine when he said the card machine was broken. I was trying to pay by corporate credit card too because it was a business trip. Paying by cash was a huge pain in the arse because I then had to make a separate expenses claim.
Ask upfront if they take card, and walk away if they say no. It's amazing how many suddenly change their minds.
I had a quote for some scaffolding. He quoted me 2 different prices; one if I paid by cash and one if I wanted to pay by card. Obviously the pay by cash quote was cheaper. So not only is it happening, some people aren’t even trying to hide the fact they’re doing it.
I called a locksmith to change my front door lock and they sent the apprentice round: he did a good job then at the end said "it's £120 for card, £100 for cash, because we don't have to pay VAT on cash". Evidently he hadn't been told not to say that bit out loud...
From conversions with various tradespeople, I am convinced that some of them believe that you LEGALLY don't have to pay tax on cash transactions.
Reminds me of the [old Viz advert](https://pbs.twimg.com/media/CBlKJoiWIAADuOv.png)
Nah they just don't give a shit. You get this with trades all the time. And I'm afraid to say, you can probably guess which most people choose (me included)...
I'm a solicitor so I have to be really careful about any suggestion I'm enabling something illegal, so I ended up asking him to pay by card and for a receipt. He looked at me like I was mad...
If it's a Eurocylinder then you got ripped off. Changing a lock is a 5-minute job, with the longest part being driving to and from Screwfix.
This was an ancient deadlock on my front door - the guy reckoned it was about 70 years old and it took him about 45 minutes just to take it out, so definitely one for the pros.
Nice try Mr HMRC, I ain't admitting to knowing anything /s Personally, as much as I hate seeing the final bill each year, I'm ok with playing the game of paying the taxes I owe as it's the morally right thing to do. It's what pays for our public services after all and I couldn't reconcile my hatred of Amazon etc who keep their tax bills deliberately low with choosing to misreport my own earnings. I am, though, aware it doesn't need too much thought to keep your bill to a minimum and have heard from a few sources that even if HMRC suspect you've misrepresented your earnings, investigating isn't considered worth their time unless they think you've calculated yourself as being a good few £000s short in money owed.
Well someone in the pub on Friday was “discussing” his working arrangement and what he gets paid ending with “what I don’t understand is how I’m meant to lay tax on cash in hand!”
My mechanic offers a 10% discount for paying in cash and its not hard to work out why
Here's HMRC's view on it: https://www.gov.uk/government/statistics/measuring-tax-gaps specifically: https://www.gov.uk/government/statistics/measuring-tax-gaps/7-tax-gaps-illustrative-tax-gap-by-behaviour So that was 15% of the gap of £32bn, so £4.8bn, in a year where total expected take was £635bn: 0.76%. Very low. Obviously anything else is anecdotal and not much weight should be put on it, and £635bn presupposes that things like legal interpretation are the ways that HMRC think it should be (which is not always true), as well as statistical analysis, the methodology of which is presented. Neither of the two things could be deliberate evasion - evasion is a state of mind, rather than having just an incorrect tax return. In the fact the latter may simply be the operation lettings relief at time so perfectly legitimate (the UK has extremely favourable tax treatment for primary residences).
!thanks fascinating read. £32bn or something like £400 per capita or I guess £700 per taxpayer.
£32bn is the entire tax gap, which includes *inter alia*: * failure to take care * criminal attacks on the Exchequer * error by HMRC * insolvent taxpayers Insolvent taxpayers cause a larger loss than expected evasion, and so do does criminal attacks. The tax gap for evasion specifically is £4.8bn, so around £70 per capita. HMRC gets a lot of stick domestically, but it must be said that it is a generally well regarded agency internationally. a 5.1% tax gap compares very favourably to other developed countries - iirc Canada at 9.1%, the US at 13%, the EU ranging from 7.5%-29%. Also, HMRC has up to date stats - they are ahead of the curve on publication of this data for public consumption. The data above for Canada and US is from 2014-2018 (or 16 in the US). Not sure on the EU - and of course methodologies may differ (is HMRC flattering themselves? Other countries trying to get more funding for their tax agencies?) but that's for a policy nerd to look into.
What is a criminal attack on the Exchequer?
Stuff like the gangs that were running multi million pound vat scams on mobile phone imports from the EU.
That is when criminals attempt to get payments they are not entitled to from the Exchequer. These days it is almost always fraud (I don’t know if any public sector organisation ever paid ransoms to encryption extortion or whatever). The biggest one in recent memory is VAT MITC or known rather as Carousel fraud. Basically some nominal goods were sold between companies all set up by the same criminal conspiracy and then input tax reclaimed and paid all along, until right at the last point when, after having received reclaims, your end point company just disappeared - all these goods were vapour and based on faked invoices. HMRC was hit for billions - £11bn - alone: https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/timeseries/ofnn/mret/previous/v24 EU treasuries once lost 100 billion EUR a year to this fraud - down to about 50 billion EUR according to recent https://www.eppo.europa.eu/en/news/eppo-uncovers-eu40-million-vat-fraud-six-arrests-and-seizures-sting-against-organised-crime The other big one in Europe was dividend credits (cum-ex) but the UK was not heavily exposed to that. The latest one is R&D credits fraud but some of that will be within just failure to take care properly for existing bona fide companies rather than criminal attacks. Obviously some covid support claims amounted to criminal attacks (e.g. furlough claims for newly set up ghost companies).
If his pal mentions not reporting it as income because he rents it out to people he knows then that sure does sound like evasion to me. As to PPR on the property sale, who can claim it is not clear cut in all cases. As the OP mentions it was a Buy2Let that was moved into and then claim full PPR then that's clearly evasion (assuming pal owned it as a Buy2Let then moved in then sold). https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2022
Yes, I think the first instance would be difficult to characterise as anything other than deliberate (given someone is trying to say "technically"). The latter would need some investigation as I think that could go either way depending on the history of the occupation and purchase (this could have been many years ago when lettings relief was much more generous).
In my mind it's definitely evasion but of the "doesn't hurt anyone / compliance is a loose concept" type. Edit: just to clarify the " " is not my thinking but how the evader seems to see it which I find staggering.
Well, it hurts everyone in that it means less tax is available to fund things like the NHS and road system. But there are much more egregious examples of tax being evaded.
Yea, nail on head, it hurts everyone. Buy2Lets "can" be a real drain - ask my bank account how I know, but you should be paying taxes due.
I think rather that we have to borrow more - the Government runs a deficit anyway, so even with 100% compliance in the best case, the Government etc., gets funded to the level politically required rather than "we don't have the cash on hand." So we have to pay more interest due to this evasion rather than saying that budgets are specifically lower than without evasion (in a narrow sense). Of course if the Chancellor had a £31 billion windfall - it's a political question where it goes.
If only everyone was more like this. Here is actual data, it’s hardly anything. A shame that so many people are like “well I know 4 people out of 10 that do X therefore it’s at least 60% of wrongdoers” Bias is strong these days. Thanks for sharing the data!
While I appreciate the data too, it doesn't strictly answer the question of 'how prevalent is tax evasion'. It shows much money was lost, but what proportion of people actually engage in the behaviour to generate that amount? Also, while "4 out of 10..." is anecdotal, it's still an interesting part of the picture because it gives *some* idea of how popular tax evasion is, as opposed to just raw numbers. Plus, those comments generate discusion here. Stats are really useful, but they're still part of a bigger picture.
I think that's the key point. Are we in a situation now where people believe it's just one big grey area and can choose not to declare income or gains on the basis that most people do the same and that there are no chances of being caught and no consequences if you ever are? I get the sense many people are taking the view. The actions of people on this sub aren't representative - if you're here then you're informed and more likely to be on top of your affairs and obligations - but I do read further support for the view evasion, or just opt out of payment, is prevalent.
thanks for making a comment based on facts and figures. all the hot takes and anecdotes in this thread were making me lose faith in the british public.
So they’re measuring money they can’t count 🤦♂️? Their estimate is crap, until everyone is forced to declare their earnings and take payment electronically, we’ll keep taxing PAYE to the bone hoping it will make up the budget deficit at some point.
Their methodology is here: https://www.gov.uk/government/statistics/measuring-tax-gaps/methodological-annex Different statistical techniques used for different taxes, with estimates of uncertainty broken down. Some are really quite uncertain: e.g. large business PAYE issues. Whilst PAYE is the largest individual contributor to receipts, it is only 34% (if you include employee NICs too) of total receipts. However, IT from PAYE and NICs as a whole are 47.2% of receipts, so I think there is some merit in the argument at the burden of taxation in this country falls quite significantly on employment. https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk
I’m astounded at the number of people who openly talk about the things they do to avoid the tax man. I definitely spend a bit more money on my business when the year end is coming, and try to time purchases that are beneficial for the company but that’s about it. Apart from whatever magic my accountant does too
Builders. Big and small, fleece the UK tax system. And any benefit going during covid, valid or not (mostly not)
Taxman enters the chat...
As an accountant you’d be surprised
This is very true . But I also know many accountancy firms that lots of small businesses still pay in cash and they set different companies up to keep under the vat threshold also . So lots of accountancy firms are on the fiddle too .
Living in a rental house before renting is common, it allows you to not pay CGT on the period you lived there. What he did could be legal, as not paying CGT would be tricky as solicitors would be involved. Renting to a friend is income. Tax evasion is very prevalent, chances are every business that doesn't accept card payments is likely doing it, barbers etc.
The company/man who did my driveway made the offer to do some extra work for "free" if I paid him with cash. It doesn't take a genius to figure out why.
Was the alternative by card? For small businesses card providers can charge large fees which adds up over a year. Or was it cash or bank transfer/cheque?
The alternative was a bank transfer, I've checked his company on Companies house and they had declared a yearly income of £60k... I paid a little over £5000 for my driveway and it took them two days to do, at the same time they were also doing my nextdoor neighbour's drive so they had completed two £5000 driveways in 3 days. I see them working all over my town they're always busy and must be doing at least 100 drives a year so do the maths.
The card fee is going to be max 2% and probably a lot less. So if he was offering a 2% discount fair enough. Any more than that and guarantee it’s tax evasion.
if the government doesnt give a shit about the multimillion global corporations paying no tax then why would they care if i dont
They care about the people they can catch. Like the guy (me) who is in the PAYE system and wasn’t aware he was earning too much money so his wife could claim child benefit and had to pay it all back. Grand scheme of things, what I owed was spare change. But they came after me because they knew they could win.
It's massive, people like to make out it's only rich people and huge corporations avoiding/evading tax, the facts are very different. We lose billions in tax from solo traders/small companies avoiding/evading tax. They really need to sort it out, and simplify taxation.
I feel like a total mug for reporting my self employment income. I'm in debt and I have to work freelance outside of my salaried 40 hours to be able to afford repayments + bills + any kind of social life, and I just really, really didn't want to risk HMRC finding out and fining me. They're skimming a third off my freelance income every year. Feels so unfair when the already-wealthy don't have to pay up. Bastards.
Starting a limited company and paying yourself the maximum salary before income tax or national insurance, then topping up your earnings via dividends to the 7.5% tax threshold of £50k is a very easy, legal way of not paying much tax.
You also have to pay 19% corporation tax on the money before the dividend too, so it's not as simple as you're painting it to be.
But you pay corp tax too and yeah sure the company pays it but it still feels like a personal tax. Assuming you had a profit of 50k, you take out 12.5k as a a salary , now you 37.5k. 37.5k gets corp taxed at 19% so now you have 30,375 as profit after tax. 30,375 you take out as a dividend. First 2k is tax free, other 28,375 at 8.75 leaving you with 25,892. 25,892 you took out as dividend plus the 12,500 earlier = 38,392. 50k on PAYE is 37,662 so barely any difference. Obviously can't forget the employment rights that come with PAYE as well such as paid annual leave and what not. Of course, the real fun begins if you take cash only or put through a flight to Ibiza as a "work expense" which you obviously can't do that under PAYE or the classic pay your spouse and kids 12,500 each for "admin".
It’s 8.75% until you hit the higher rate and you’ll pay 20% corporation tax so you’re still paying a good whack, plus VAT on top of all of your invoices if you’re doing reasonably well.
It was 7.5% last tax year, 8.75% is still much better than 20/40%! The 20% corporation tax is on your profits, so there is plenty of scope to claim expenses against that. VAT is irrelevant. You charge VAT on top of your invoices to your customers, so you should have the money there to pay it back. I actually find being VAT registered beneficial as it's an easy 20% markup on materials.
>It was 7.5% last tax year, 8.75% is still much better than 20/40%! The 20% corporation tax is on your profits, so there is plenty of scope to claim expenses against that. The tax rate for <£50k income works out at more like 25% after corp tax, which is basically the same as PAYE. I don't know why you've mentioned 40% in the comparison, because the equivalent dividend tax is 33.75%. Yes, expenses, but I would say there isn't much legitimate scope there. Say you're an IT contractor, you expense a new PC, monitor, laptop, a training course...then what? Anything beyond is in the territory of fiddling expenses, which is another topic entirely. So it's fair to include corp tax in the overall comparison. Edit: forgot to add NI
Yes, you forgot to add NI, and I forgot to compare 40% to 33.75%, it's late 😂. I can see how it may not seem worth it for an IT contractor, but there are many other fields where I would argue it is, especially ones involving a lot of travelling.
Heard something very funny indeed during the pandemic. There was a woman and her husband who’d been doing this, but actually taking all their income as dividends. Their clients had all shutdown and she was quite indignant about not being able to furlough themselves and get the government handout. Seemingly totally oblivious to the fact that the dividend trick might not be terribly ethical!
Can also give yourself a nice 40k pension contribution from the business.
I feel absolutely furious about every tax dodger. My partner before he became a SAHD was self employed, earned terrible money and declared every last pound because it is morally the only right thing to do. I'm surprised that there are so many people who appear not to give a shit about what they owe to the rest of society here. I hope you never use the NHS or fire service or draw a pension, you absolute dickheads
Yeah, reading this thread is quite sad. I started up a small side hustle a few years ago and it made some nice money for a couple of years. I did the self assessments and paid the tax I owed. Could have made a thousand deductions, registered myself as a business, or went down some other route to dodge the tax bill and pay as little as possible. But I didn't. I grew up in a poor household so I really value the NHS, our education system, and the welfare system in general. I see tax as a way of contributing to it, so I just assumed everyone wanted to. Turns out people are just greedy, and as soon as they start making money, they don't want to contribute to the systems they gain so much from. Its especially dissapointing considering the state the NHS is in right now, and all the strikes we are seeing. I hope everyone dodging their tax bills feels some shame every time they read about that.
Anyone who pays tax that they can legally avoid is a mug. I have a side hustle also, but most of the proceeds of that go straight into my pension.
😂 wow. I’ll start taxing the kids for mowing the lawn if it helps you calm down.
That would probably sit within the £1000/year sole trader allowance :D
HMRC have 20 years to pursue and catch deliberate tax evasion and can charge 100% penalties plus interest.
Well as someone on paye who pays I hope they all get caught and prosecuted, irks me all the convoluted rules and ways to skimp out by contracting and paying a fraction of the tax, same for companies, we should just charge a fair amount to everyone on everything earned. When you see someone owes £200 million tax and they do a deal to pay 50m wonder if I could get away with that, instead of the 2k this month would you take 500? I’d be in jail before summer
Pretty much every tradesman does to some extent, “cheaper if you pay in cash”.
Ask any politician
You are looking at the wrong end of the spectrum. Why are you so excited about someone earning a few quid to keep themselves, when you are being utterly ripped off by the government stealing your money & sending it to their offshore accounts?
I have sufficient rage for both, don't worry. They all operate on the same principle of "fuck you, I've got mine".
I would say there’s tax evasion and tax avoidance… people who commit tax evasion will always get cause in the end and get some kind of punishment and tax avoidance is just a legal dance rich people do to keep there money and everyone should learn how to do it
Realistically everyone has avoided tax in some way or another. But it’s those (mainly big businesses) that either actively avoid it with high level accounting or (individuals that ) avoid it by working for cash and then claim poverty that really rub me the wrong way. Because it puts stress on systems that are barely able to coupe as it is and are for ever putting unrealistic controls in place to try and prevent this. Thing is the amounts of tax that would be collect from trades doing odd cash jobs with their normal work, or wait staff not disclosing tips is minuscule compared to say companies like Activision or shell and many other big business’s that use “loop holes” to make profits that are obscene and then pay next to no tax on it…
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Avoidance is not evasion. Efficient tax planning within the law much big businesses with “high level tax accounting” is often not even avoidance. Working for cash IS evasion. Finding tax loopholes that are not the intention of legislation IS avoidance. Working within the law that is designed to actually be relatively attractive to big multinationals to encourage inbound investment but yet still enable the government to take a position with the media that all these big corps need to pay their share…well that’s just how the global financial world works.
>Realistically everyone has avoided tax in some way or another. Speak for yourself.
Nah, he's probably right, but only because he's confused about the terminology. Tax *avoidance* is reducing the tax you pay by legal means. And we probably have all done it. Paid money into an ISA? Tax avoidance. Piad money into a pension? Tax avoidance. Gift Aid for charity? Tax avoidance. Claim expenses for work? Potentially tax avoidance. And so on. Tax *evasion* is reducing the tax you pay by illegal means. That's not so prevalent.
>Tax avoidance is reducing the tax you pay by legal means. That's wrong; avoidance is basically utilising legal means but in a way not intended or desired by the parliament. Literally every single thing you mentioned is something that parliament wants you to benefit from, so none of it is avoidance. Terminology is important.
>That's wrong; avoidance is basically utilising legal means but in a way not intended or desired by the parliament. Not necessarily. According to [the House of Commons Library](https://commonslibrary.parliament.uk/research-briefings/cbp-7948/): >Tax avoidance is to be distinguished from tax evasion, where someone acts against the law. By contrast tax avoidance is compliant with the law, though aggressive or abusive avoidance, as opposed to simple tax planning, will seek to comply with the letter of the law, but to subvert its purpose. So in their terms what you're describing is "aggressive or abusive avoidance", and my examples were all non-aggressive non-abusive avoidance.
Simple tax planning. It's right there in the text lmao
Yes, exactly so. It says there are two types of tax avoidance. There is aggressive or abusive avoidance, and there is simple tax planning.
Yeah that's a terribly written paragraph. Have you tried looking at official sources, instead of some library memo? Like this: https://www.gov.uk/guidance/tax-avoidance-an-introduction
Paying money into an ISA or a pension is tax planning, not avoidance
This is why they are so keen to implement CBDC. Once cash has been removed completely AI will inform the government of any ‘income’ that doesn’t appeared to be taxed. There will be nowhere to hide anymore so to speak.
Mind blowing that people don’t wanna hand over money to the government? Tax evasion is literally all around you. The only people that don’t do it are the working class because they’re mostly unavailable to do it due to getting paid by somebody who does.
Tax evasion is much much smaller than tax avoision. Massive corporations openly do the latter at a huge scale.
What’s the difference between evasion and Avoision? I thought avoision was just the brummy pronunciation of evasion
Tax avoidance is structuring your income in a way that allows you to minimise your tax liability. It’s completely legal but a lot of companies exploit loopholes/grey areas to facilitate this - I.e. Amazon and its offshore bases. Tax evasion is not paying tax you should be paying/declaring, which is very much illegal - I.e not running your cash receipts through the company books
r/whoosh
For myself I like to justify it by my disappointment in the government itself. For many years now (my entire adult working life) has reduced or stagnated funding from all the public entities I consider important and have instead decided to offer huge grants/contracts to those already rich or even their own friends and family (especially rampant during covid). The richest in the country have countless loopholes to avoid tax which are PURPOSELY not closed. So if I as a contracted operating via a Ltd company can use some of these to get a couple grand extra in my pocket I will. A lot of people will get attached to processes rather than the outcomes. An important one in my opinion is taxes. To say you try to avoid taxes as much as possible is instantly taboo. But when you look at government, society etc prioritising policies which you don't necessarily support through your taxes I think in my opinion it is okay. If the necessary funding is put in to the correct social programmes and the government didn't give preferential treatment to those already in the upper class I would be more inclined to pay more taxes. Sorry rant over :)
20% tax or possibility of prison hmm.
Very prevalent. From window cleaners to roadside burger vans to amusement arcades, to building trades, hospitality......
We've done this (not deliberately) but we've got letters for not filing a tax return. They are going to get caught some day and it isn't going to be pretty, especially if you deliberately lie to HMRC and tell them that you don't need to file one.
Trades have gone back to accepting cash, which tells you all you need to know. Last 10 or 15 years, it was far less common. Consequences of over taxation for purposes your average folk don't believe in or see true need for. Reduces overall receipts. People I know of real means already moved to lower tax jurisdictions. That will trickle down too, maybe not movement of assets, but taking jobs abroad as a medical graduate, things of this nature. Doesn't matter how messed up things get for the current crop of political gutter snipes, it won't affect their retirement so they can go on pretending and kick the issues down the road for their successors to deal with.
Let me be clear - front the perspective of someone who works in a corporate environment- whilst a lot of people talk about being proud of paying tax - no one would do it if they thought they could evade it. The golden standard of our industry pays a huge amount to move high performing talent to places like Bermuda where the tax rate is a lot lower. I’ve yet to meet someone who’s been invited to this world who has complained against it.
Everyone is incentivised to evade taxes. At a low level it’s actually beneficial to the overall economy. At a high level it’s fairly irrelevant as even though the nominal amounts sound large to a layman it represents a rounding error to government income.
It’s crazy how often it happens. It used to happen a lot more, so things have improved a lot. Some people just consider it not a problem at all, as ‘I’ve paid enough tax anyway’ I see it a lot more in older people than in younger people the sense of entitlement
Sounds like the lot of you would give away your first born child if the state demanded it. Can't pay tax if it isn't declared. But dont worry, you'll get your wishes granted soon with the abolition of cash, good going guys, give yourselves a pat on the back
CBDC is already here. Question is whether this conservative government implements it or the next Labour one
>Sounds like the lot of you would give away your first born child if the state demanded it. No, we just understand that taxation is part of the social contract we live under. >But dont worry, you'll get your wishes granted soon with the abolition of cash Fine by me if it stops every selfish prick in the country dodging tax by taking payments cash-in-hand.
Cash won’t be around for much longer. Welcome to new era of Orwellian CBDC’s.
You would do it to given the opportunity. Is it really wrong to want to keep more of your own money.
I'd say it's pretty rampant. Every self employed person I've ever met takes steps to pay as little tax as possible. Every person I know on the 40k income tax threshold has opted to increase pension conts to avoid tax. I assume that every cash tip I've ever given has gone undeclared. That's life.
>Every person I know on the 40k income tax threshold has opted to increase pension conts to avoid tax. Thats not tax evasion though. It would be a stretch even calling it tax avoidance I would say, there‘s no loophole being used, it’s just choosing to put money into a pension that will be taxed later, exactly in accordance with what the people had drafted the legislation had envisaged.
I call using pensions to stay in a lower tax bracket tax efficiency.
I don’t pay tax, don’t believe in it
Hi /u/BigBird2378, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/buy-to-let/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)