Only the employed seem to pay tax?

[Taxevasion]

This is annoying me. Met a person recently that owns a lot of property (multi-million) that is let out in various ways but doesn’t pay any tax. Whatever they do is legal but the fact is they don’t pay tax so don’t contribute to the costs of running the country.

So am I being unreasonable in thinking this is very unfair? It seems that only those of us who are employed and pay tax paye fully contribute.

Assuming that this individual is telling the truth, I imagine he must have some sort of company/ companies set up in such a way as to deliberately avoid tax. Of course the great majority of SE people do pay tax though, even those earning very small amounts.

It is certainly a major fault of the system that work (labour) is taxed much more heavily than assets/ wealth. I can't see that changing at least while the Tories remain in power. The government that promised not to raise taxes has raised national insurance, frozen tax bands and will be raising corporation tax but not touched capital gains tax which is already at a much lower rate nor inheritance tax both of which are paid by the wealthy and much less so by the rest of the population. Not much levelling up there.

Ah I just won't bother with the 200+ tax returns I need to do by the end of January then as they apparently don't pay tax

[quote CayrolBaaaskin]@Mouseonmychair - how do you avoid tax by holding property in a limited company? Corporation tax is payable as is income tax on dividends and salary.[/quote]
The individual doesn't "avoid" tax on the rental property as they don't own it. As the property is owned by the company corporation tax is due on the rental income.

As you say if the shareholder takes dividend and salary this is taxable on them as individuals but the rental income is not.

I'm self employed and pay a lot of tax. Don't judge everyone on one person. What a ridiculous thing to say!

@Taxevasion

I’m not going to say what it was *@DaisyNGO*

@Taxevasion

The thread is pointless! You have been told by people who understand taxation politely and (at least now) bluntly that you are talking nonsense, either because you have been told nonsense which you have believed, or for some other motive.

Beyond that simple fact, no one can explain the exact nature of your error because you can't or won't explain how you think someone can legally avoid paying income tax on large amounts of rent on properties which they own and rent at a profit!

@CayrolBaaaskin

The problem is the difficulty in tracking who owns what with banking secrecy and complex structures.

It most likely sounds that they have their property in a Limited company.

I do know what the OP means. Out of a group of fiends, me & DH were the only 2 in employment. The others were self employed, and one couple in particular were very wealthy. (I know, I know, you can never tell from someone's outwards appearance what their finances are, but they definitely cultivated a very wealthy persona).

I was pretty pissed off when one night the topic of child benefit came up. When we said that we were no longer entitled to it, the others virtually pissed themselves laughing, saying that they still got it, because they only drew so much from their company in salary. I suspect that a lot of their personal spending was routed through the company, and it is the fact that this can happen which makes it seem so unfair to PAYE.

I'm all for paying my taxes, but it doesn't seem right that some people seem to be able to game the system.

TBH, DH & I have taken a step back from this group, precisely because their attitude of the rules not applying to them grated on us a bit.

@Unsure33 Stop being disingenuous - I'm sure people employed would LOVE the dividend tax rates of 7.5% (basic) or 32.5% (higher) on their salary rather than the 20%/40% they pay.

I’m a landlord and pay a lot of tax!

@FOTTFSOFTFOASM You expect sympathy for your friend? She choose to set her income/business up like that, so why should she get support?

@Flapjacker48

Its remarkable the number of people who are self employed who pay themselves a salary £12,570 (i.e no tax to pay) and the rest in dividends.

Eh? If you are self employed you can’t take dividends or pay yourself a salary. What utter rubbish

@FOTTFSOFTFOASM You expect sympathy for your friend? She choose to set her income/business up like that, so why should she get support?

Its remarkable the number of people who are self employed who pay themselves a salary £12,570 (i.e no tax to pay) and the rest in dividends

But you have to pay corporation tax on any profit the company makes before you can take dividends, and possibly VAT on your entire income.
You also have to pay national insurance as an employee and and employer (unless you don’t want a state pension.)

These threads always make me laugh. The amount of people who think you can actually legally get away with earning loads and not paying tax.

The combined dividend/corporation tax rate means that at the top end there’s not much difference anymore.

Anti avoidance rules mean you can’t just shunt things offshore

Residential property sales, to the extent not covered by PPR are already subject to an additional rate ofCGT (28% not 20%)

Anyone (individual or company) resident abroad selling U.K. property is taxed in the U.K.

Wealth taxes create hardship and dry tax charges almost inevitably leading to debt.

Your friend is either holding property through a company (subject to tax) or being suspect.

DH has a limited company which is just him ( the kind of work he is in he can’t have anything but a limited company). Despite the fact he earns everything himself he still has to pay a shit tonne of corporation tax before he even gets to paying himself. So whilst some may look at the fact he pays himself in dividends mostly which are taxed at a lower rate they don’t see the whole picture and it’s works out pretty even to being self employed.

[quote Flapjacker48]@FOTTFSOFTFOASM You expect sympathy for your friend? She choose to set her income/business up like that, so why should she get support?[/quote]
Eh? No - I think she got her just desserts!!

@fuddleducks You set yourself up as a PLC which I'm sure you know.

Get so fed up with the assumption the wealthy don't pay tax. We pay tons*

You’re not wealthy enough then sweetheart.

[quote Flapjacker48]@FOTTFSOFTFOASM You expect sympathy for your friend? She choose to set her income/business up like that, so why should she get support?[/quote]
My point was that I - who am reliant on property - pay all my taxes, and she thinks she can play the system, only it turned out she couldn't. I like her very much, but have no sympathy at all for her in this regard, as I have told her!

@NigellaAwesome

It most likely sounds that they have their property in a Limited company.

I do know what the OP means. Out of a group of fiends, me & DH were the only 2 in employment. The others were self employed, and one couple in particular were very wealthy. (I know, I know, you can never tell from someone's outwards appearance what their finances are, but they definitely cultivated a very wealthy persona).

I was pretty pissed off when one night the topic of child benefit came up. When we said that we were no longer entitled to it, the others virtually pissed themselves laughing, saying that they still got it, because they only drew so much from their company in salary. I suspect that a lot of their personal spending was routed through the company, and it is the fact that this can happen which makes it seem so unfair to PAYE.

I'm all for paying my taxes, but it doesn't seem right that some people seem to be able to game the system.

TBH, DH & I have taken a step back from this group, precisely because their attitude of the rules not applying to them grated on us a bit.

There are negative tax consequences for routing personal expenses through a limited company. The company is charged tax on this as it a directors loan, if the director owes the company more than 10k in a tax year, they are also charged tax on a p11d which increases their salary for tax purposes and is included for child benefit purposes too.

Lots of people increased pension contributions in order to maintain child benefit.

I think its a rather simplistic view. We have a successful company which we're then employed by, but in your eyes I think we wouldn't pay any tax....we pay a fuck tonne more than you'll ever pay - income, corporation, and VAT, you can thank people like me next time you need some medical treatment or anything else state funded as I'm sure we'll have probably paid in more proportionally than you have.

Some people don't pay what they should be paying proportionally but it's mostly legal, and these aren't you're normal Joe blogs self edited or small business owner, you have to be making a shit tonne of money, more than you could probably contemplate to hire kind of accountants and legal advisors who can advising on the necessary structures, succession planning etc. so that you can keep a far bigger proportion of that money.

@Taxevasion

No *@icedcoffees* they don’t pay tax, they have some arrangement that means they don’t have an income that is taxable. They pay the usual fuel tax council tax etc but as I have repeatedly said that isn’t what I’m talking about.

So they run it through a property company and the money is not available to them as an income so no income tax. If they ever draw it out of the company then they will pay income tax. Or they are carrying forward capital losses to offset against their current income but when they are gone there will be tax to pay. You cannot earn an income and not pay tax unless your earnings are under the taxable threshold. There is no magic offset for rich (cash or asset) people

DH has a limited company which is just him ( the kind of work he is in he can’t have anything but a limited company). Despite the fact he earns everything himself he still has to pay a shit tonne of corporation tax before he even gets to paying himself.

That’s rubbish, wages are paid as an expense and thereafter CT is paid on profit. Yes he has to pay CR before a dividend but not before ‘paying himself’ as salary.

[quote Flapjacker48]@fuddleducks You set yourself up as a PLC which I'm sure you know.[/quote]
It would be a limited company but you are then no longer self employed. You are a director of a limited company.

So based on one person, you've made a sweeping statement about everyone who is not employed ie all the self employed pay no tax according to you.