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.

As always with threads of this nature there are many people on here who don’t understand the uk tax law. Sigh.

@DaisyNGO nope...quite the opposite

@friendlycat

As always with threads of this nature there are many people on here who don’t understand the uk tax law. Sigh.

Indeed.

Doesn't stop them getting stuck in, though!

[quote flamebuoy]@DaisyNGO nope...quite the opposite [/quote]
Oh right
That doesn't annoy me 😂

If I could turn back time, I'd have been an accountant.

I appreciate that's not a statement you hear often.

@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.

Tax is payable on dividends.

@friendlycat

As always with threads of this nature there are many people on here who don’t understand the uk tax law. Sigh.

Yup I'm an accountant and don't have the time nor energy to attempt to correct some of the crap spouted on this thread

So my assumption is that the properties are all registered in the names of offshore companies and he therefore pays very little or no tax. Go into Land Registry to see who the properties are owned by (if you're interested). Remember poor people pay tax for the rich who can afford accountants to work the system to their advantage.

Remember poor people pay tax for the rich who can afford accountants to work the system to their advantage

This isn’t true at all, the majority of tax is paid by a significantly smaller proportion of individuals. Lower paid people would find their taxes increase if all the rich people decided to move elsewhere.

@Straighttalking1

Top 1% of earners pay a third of income tax:
www.google.co.uk/amp/s/amp.theguardian.com/business/2019/nov/13/richest-britain-income-tax-revenues-institute-fiscal-studies

@Straighttalking1 really?? who are these poor ppl who pay for the rich...some ppl don't even earn over the tax free threshold and so therefore pay no income tax...some ppl get a heap of benefits and then therefore probably take back whatever they put in in the first place!! Quite the opposite I would think to be honest!!

@Thursdaymiami

it’s virtually impossible to pay no tax.

Paradoxically it is much easier when you are very wealthy. But it is a choice.

[quote NigellaAwesome]@Knickynackynoo - the people we knew put a lot of their personal travel through as AGMs & fact finding trips. Others in that group were installing new kitchens in their homes and putting it through as a business expense against rental property.

They run the risk of it being queried by HMRC, but as far as I know, they have never been investigated.[/quote]
Claiming a kitchen for their own home is illegal tax evasion.

Luckily most people are honest with their self assessment tax returns.

Though it is a shame that HMRC are so hopeless and inefficient that they do VERY few proper investigations into tax returns.

@fuddleducks

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.

Blair/Brown's 13 years weren't much different either, so it's not a party political problem.

Much tax income has been remarkably flat for the past three years considering the social and economic changes around Brexit.
Income tax and National Insurance bring in £330bn each year, Corporation Tax £53-54bn and VAT which had been £136-£137bn was hammered in 20-21, dropping to £122bn when we were locked down.
Overall, Rishi collected £609bn in 20-21, £28bn less than a year earlier and 83p in every pound collected came from employees and their employers, either before or after they received their wage packet.
MPs were unimpressed when the Chairman of the BBC pointed out that they had a poor understanding of fiscal reality, few of us write to HMRC thanking them for their dilligence on our behalf (it cost £0.0059 to collect each £1 in 20-21) but if we are to hold our politicians to account we need to be better informed ourselves.

assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1035552/HMRC_Annual_Report_and_Accounts_2020_to_2021_Web.pdf

@Straighttalking1

So my assumption is that the properties are all registered in the names of offshore companies and he therefore pays very little or no tax. Go into Land Registry to see who the properties are owned by (if you're interested). Remember poor people pay tax for the rich who can afford accountants to work the system to their advantage.

In which case he doesn't own property, he owns companies: the original post is wrong, and that's more than a pedantic distinction, it's very important legally and for tax purposes. He's not receiving any rent, the company is. Since 6/4/20 the offshore landlord company must pay UK corporation tax on the rent (previously it paid income tax under the non-resident landlord scheme). And the only way he can extract any money for himself is through dividends or share sale, both of which will trigger tax payable by him.

These sorts of schemes might sometimes be more tax efficient than alternatives. But often they're not. And they come nowhere absolving the individual from paying tax as claimed. And they are usually so complicated to operate that any tax saving is not worth the trouble.

@Straighttalking1 - as has already been said even if the properties are owned by offshore companies he would be paying tax on any income he gets from those companies if he lives in the uk. Offshore companies are often liable for withholding tax on rents too.

Tax is payable on dividends.

Yes, it is, lower rate than income from PAYE though.

Absolutely YANBU. Every penny the squad at HMRC earns from closing loop holes and chasing fraud and making taxation fairer - I hope they plough back into the teams to chase down loop holes and tax havens etc.

It's not fair.

@Zotter

Tax is payable on dividends.

Yes, it is, lower rate than income from PAYE though.

But in a lot of cases they are also liable for corporation tax too. Putting money through a limited company really isn't as big a deal as people seem to think it is, the government clocked on to what people were doing so there is now little difference in tax due.

yes, it is, lower rate than income from PAYE though

Dividends can only be taken on profit. Profit means what is left after tax.
That money will already have been taxed as corporation tax and then you pay the dividends tax on top of that.

Ok

So.

I pay 20% VAT on everything that comes into my business. They say the customer pays that but it’s not actually true because I am competing with non bay registered businesses, there’s only so much I can charge so it’s coming out of my pocket not the customers in reality,

Then I pay national insurance on all my employees wages.

Then I pay national insurance on my wage, both as an employer and an employee.

Then I pay cooperation tax on all my profits.

Then I pay tax on my dividends.

I pay a lot of tax.

I don’t mind paying tax, it’s nice to have hospitals and a welfare system.

However I do really hate it when people who have no idea about the British tax system claiming I pay no tax.

@Zotter

Tax is payable on dividends.

Yes, it is, lower rate than income from PAYE though.

But corporation tax at 19% has been paid on the profits which are paid as dividends, so total tax paid is around 25% being both corporation tax and dividend tax (at basic rate) or closer to 45% (higher rate)

I love these batshit threads where soooooo many people don’t understand paye, corporation tax, tax on dividends, employer NI to name just a few.

But it’s terribly amusing to hear of all the wannabe accountants on here. Thankfully Chartered Accountants normally know a thing or two in the real World.

Why isn't tax taught at schools? Why do we have so many thoroughly ignorant people who really seem to actually believe that self-employed pay no tax? They cannot all be stupid - it must be that pps are simply ignorant. They have not learned about tax.

This should be taught in schools. I see it again and again on the relationship boards - a wife is told by her soon to be ex that he will become self employed in order to avoid paying maintenance for DC. And the wife BELIEVES him and doesn't chase for CM but put up with the odd £50 here and there.

A few generalisations and sweeping statements, but if the crux of your point is that the well off with wealth and assets pay proportionately less tax compared to income tax then YANBU.

Remember all of those company directors who paid themselves "tax efficient" dividends rather than a salary and then couldn't access as much furlough funding as they'd have liked. My heart wept for them.