Tax avoidance, has really changed my opinion of someone

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For clarity, I am a moderately high earner, paying higher rate tax. I do take advantage of legal tax savings by paying into ISAs and a pension, but generally recognise that tax is necessary if we want things to work and am happy to pay my share. I don't, for example, vote according to where I think I'll pay less tax.

Friends of mine have 6 children, all went to the very ordinary local comp, most have decent but ordinary jobs.

One son does "something" in the city. His dad talks about him and his success and wealth all the time. It sometimes makes me cringe for the other DC, but his pride is understandable. He also gives rather too many details of exactly how much the son is worth for my liking, but I was raised never to discuss money.

Anyway, so is due a big bonus (low millions) which will be paid next tax year. Dad was telling me about a clever scheme involving living off shore for 9 months so that he doesn't have to pay any tax on it. Dad is thrilled at the idea. This is a man I used to have a lot of respect for - we have similar career paths ourselves.

I felt really disappointed. I understand it's a lot more money than the few thousands I am "happy" to pay in tax, but he's a young man enjoying immense good fortune (albeit worked for) and he's going to avoid putting anything back.

This is obviously his choice, but I am disappointed that my friend, his dad is so thrilled about it, especially (but maybe not relevant) as they are a family which has been very costly to the taxpayer over the years, lots of children, education, medical care, two of the adult children currently claiming benefits etc. He and his wife are first to complain that DF is having to pay care fees, but where do they think the money should come from? It's changed things and I couldn't speak at the time. I was hardly going to tell him I think his pride and joy is a terrible person, but equally, I couldn't be pleased about it.

I would be examining whether I still wanted to have a friend whose values are so opposed to my own. This is not a good person IMO. Sometimes we just have to face that about a friend and let the person go.

Let's not forget Mrs Sunak who was non dom until she was forced into paying tax on her UK income.
@Pedallleur That's not strictly true, anything she earned here she'd have paid tax on - she claimed non dom status to avoid paying UK tax on her foreign earnings (dividends) from her dad's company. I assume she paid some tax on wherever she was paid it as an India citizen (India, Cayman Isles or whatever, presumably at a lower rate. ). She's now had to relinquish that and pay UK tax here on her foreign earnings too .

On the flip side, the ways that successive governments spend (and waste) taxpayers’ money on makes many feel less proud to pay it than they were.

Well if you're happy to do your own 'legal' tax avoidance savings, so should he. I don't care how you rationalise it as long they're both legal, you really cannot point fingers at someone doing something that you also do...only at a bigger (and less acceptable by those who can't) scale.

I don't think you're any better for using your own loophole available to you just as he is.

Look on the bright side, what he saves in UK tax he will more than pay out for the expense of living in Dubai. Plus if he wants to repatriate the money to the UK, he will pay tax on it at that point.

I also cannot get in a froth about someone arranging their affairs to limit their tax expenditure- I too have an ISA, private pension etc and I dare say if I earned millions I would be looking at creative , legal ways , to make that efficient too

why would his employer be happy to see him disappear for 9 months?

have you heard about WFH?

I think either you think it is acceptable to use legal means to reduce your tax bill or you don't, the amount should be irrelevant. So it can't be okay when you do it (ISA and pension contributions) and not okay for others because it is for a larger amount.

Lots of UK financial institutions have branches in Dubai @Bruisername .

If I was young, single, could work anywhere in the world and was about to get a bonus worth millions, you can bet your bottom dollar I would be in Dubai faster than you like!

why would you not?

wfh is very different from work from Dubai and there can be reg and tax consequences for the employer

The fact people like this have probably contributed more in deductions than I’ll earn in The next 3 years
couldn’t get worked up about it

over tax people and they will find away to avoid the lot

I have quite legitimately used periods of time I have not being living / tax resident in the UK to ensure I don't pay any more tax than I am required to. But I have always paid all of the taxes I am required to pay in the UK. If the option legitimately exists then I am not sure its reasonable to judge anyone for taking advantage of it, partuculary as you are happu to also use legitimate tax avoidance techniques. After all, we elect the government to work for us...we are not serfs working for the government and required to give them most of what we earn!

There’s the famous story of the rock star (someone from led zeppelin I think) who was living abroad to avoid the 99% tax rate in the seventies. His wife was in a car accident and he jetted in to see her and his accountants made sure he jetted out again that evening as it would have tipped his days the wrong way

He would have to be considered non resident for it to work. If he’s still working for his same employer it’s not that straightforward. I have worked overseas before and you don’t pay tax if you’re not resident on your foreign wages (eg if you work full time for an overseas employer and live in that country). I think that’s fair enough to be honest- it’s right to pay taxes in the country you work and live in on your salary you make there.

That wouldn’t be enough to make him non resident. Presumably he is being transferred to the Dubai branch or company of his employer

https://www.gov.uk/tax-uk-income-live-abroad

it’s wages on a uk job so it will still get taxed

if the employer colludes to change his contract and the period of time the bonus relates to then they will probably have to declare it to HMRC as a tax avoidance scheme

people tell BS stories all the time

Why don’t you just calmly present your POV next time you see him, I would, I’d have said it at the time in fact.

It would irk me too OP (legal or not). My neighbour who is a significant beneficiary of government services does everything to avoid paying tax. I’m not sure who he thinks should be paying for government services … Anyone but him I guess 🤷‍♀️

Of course is, the law and morality are two separate things.

The UK allows a lot of people and organisations to dodge tax they shouldn’t. The proper thing would be to not take the loopholes.

(And no I don’t take the loopholes I could.)

No it’s not. You have misunderstood your link. That’s about trying to hide money that is taxable.

if you are tax resident in the uk you must pay tax on all your global income (exception is certain non domiciled individuals which is being abolished anyway).

If you are non tax resident in the uk you do not have to pay tax on your non uk income. Being considered non resident by HMRC is not straightforward but working full time for a foreign employer in an overseas place where you live would usually be enough.

Gosh Dubai. I mean that is quite the punishment. Have you been there?

Is it a loophole that you don’t have to pay uk tax on money you earn in an overseas job while living overseas? I don’t think so. It’s just sensible. You do have to pay local tax.

Avoidance is not the same as evasion. IMO the tax system needs a complete rewrite.