[abarro81]

"Fiddling the books" and avoiding tax using cash are, surely, not legal, not particularly decent, and by definition very dishonest? I assume you and they all vote Tory? At least that would be internally consistent. I'm endlessly amazed by the number of people who vote for pro-redistribution parties (e.g. Labour) but try quite aggressively to minimize tax and don't recognize the irony. I find this especially true for inheritance tax - surely the most equitable of them all. For some reason I don't view pension tax relief (on the way in, at least) in quite the same way, though I'm not sure why. Presumably because I can see the logic in the incentivization there (unlike some of the inheritance tax minimization schemes I've stumbled across); though this isn't true for pensioners not paying NI - that I don't understand.

[spidermonkey09]

Liam's builder mates aren't the chancellor of the exchequer though. Its one thing doing a bit of work for cash, quite another using a questionable nondom status to safeguard family wealth when your day job is to be responsible for everyone else paying their taxes. Its rank hypocrisy.

I see where you're coming from Barrows but there are obviously degrees to it; cash goes back into the economy immediately and so the 'damage' is fairly minimal. The incentives of being self employed and therefore being able to pay yourself by dividend, without NC contributions are to incentivise entrepreneurship (i guess?). am sure there are numerous examples of these which others will know far better.

[User deactivated.]

I assume you and they all vote Tory? At least that would be internally consistent.

You think I should vote conservative because I chose to enter a salary sacrifice pension to reduce my tax contribution? Weird. I don't think my mates vote.

For some reason I don't view pension tax relief (on the way in, at least) in quite the same way

internally consistent.

 

[abarro81]

I wrote that to point out the flaw/irony in my thinking - I suspect most "left leaning" people are the same to some extent, despite it requiring either burying your head in the sand or some mental gymnastics. Maybe it's similar to how we're all concerned about climate change but still fly away on holiday.

I've been struck in a few conversations recently about Labour/Green voters putting high level of effort into minimizing inheritance tax, which seems to my mind hard to justify. I guess as spidermonkey points out most tax minimization has some kind of incentivization behind it, though with the schemes I've stumbled across it just seems more like exploiting loopholes than a coherent incentive.

if you were dodging tax by getting paid in cash then yes, I would think you should vote Conservative. Otherwise it's just "I want high public spending but don't want to pay for it". I also think that's neither decent nor honest.

And yeah, obvs it's fair to hold the chancellor to a higher standard. 

P.S. surely pension contributions are tax free by default, since it either comes our pre tax or the provider claims it back as standard? Oh, I guess unless you're in a higher rate tax band in which case maybe it's extra effort to claim back the extra?

[Bonjoy]

But, I'm sure Johnson lied to all his MPs who went out to defend him,  and it was only when Lord Macdonald contradicted him that they were presented with irrefutable evidence that he was lying. 

Eh?!  The idea they didn't all know he was lying is absolutely risible. You and I knew it; the idea the cabinet didn't is absurd.

Anyway, no need to keep going over old ground as we aren't going to agree, but theres not a lot here convincing me that the preference for Sunak isn't largely based on aesthetics rather than substance. Which is a bit sad but nothing we didn't know already.

Unfortunately, like it or not, aesthetics matter.
...

The science agrees with you - https://www.psychologytoday.com/us/blog/caveman-politics/202003/schoolyard-politics-the-role-height-in-elections

[seankenny]

Liam's builder mates aren't the chancellor of the exchequer though. Its one thing doing a bit of work for cash, quite another using a questionable nondom status to safeguard family wealth when your day job is to be responsible for everyone else paying their taxes. Its rank hypocrisy.

I see where you're coming from Barrows but there are obviously degrees to it; cash goes back into the economy immediately and so the 'damage' is fairly minimal.

This is a luxury belief based on living in a modern, advanced state in which most people live and work within the formal economy. States which struggle to collect tax also struggle to provide services for their citizens, and at the extreme suffer very high levels of debt and default. Look at the current mess Sri Lanka is in to see what happens when lots of people don’t pay tax but still demand a degree of state capacity. The damage is far from minimal.

As for Liam’s dodgy mates, I suspect they use public services far more often than Sunak has ever used them. And yet they don’t want to pay for them. At very best that’s freeloading.

[kac]

So far the only evidence I am seeing that sunak is a competent and decent person is that he isn't Johnson. The inheritance tax point is interesting and I wonder what age the people you have had discussions with. Without planning my partner and young kids would be in a pretty shitty position if anything happened to me.  I'm still a labour voting leftie and hope the whole tax is reformed to make it fairer. It won't be under the Tories as it's their supporters/funders who benefit from the current loopholes. Tax planning is not the same as tax avoidance. The difference between tax avoidance and evasion seems to often come down to just whether you have paid an expensive tax expert to come up with the scam. Both cost the country a fortune both in lost tax and the cost of defending the dodgy schemes. To have the chair of the party as an active tax avoider is just awful.

[User deactivated.]

I wrote that to point out the flaw/irony in my thinking - I suspect most "left leaning" people are the same to some extent, despite it requiring either burying your head in the sand or some mental gymnastics. Maybe it's similar to how we're all concerned about climate change but still fly away on holiday.

I've been struck in a few conversations recently about Labour/Green voters putting high level of effort into minimizing inheritance tax, which seems to my mind hard to justify. I guess as spidermonkey points out most tax minimization has some kind of incentivization behind it, though with the schemes I've stumbled across it just seems more like exploiting loopholes than a coherent incentive.

if you were dodging tax by getting paid in cash then yes, I would think you should vote Conservative. Otherwise it's just "I want high public spending but don't want to pay for it". I also think that's neither decent nor honest.

And yeah, obvs it's fair to hold the chancellor to a higher standard. 

P.S. surely pension contributions are tax free by default, since it either comes our pre tax or the provider claims it back as standard?

I get where you are coming from with the bit in bold, it just doesn't apply to myself or any of the people I spoke about (as your first response assumed).

As stated before, I'm not really a man of politics. I've only voted once in my life but it wasn't conservative - I was born in Doncaster, my dad was a miner, and I was a steelworker (before going to university to study physics). I do wish for a 'fairer society' and will likely vote for Labour at the next election. Simultaneously, I also grumble about how much tax I'm paying and jumped at the chance to reduce it by entering a salary sacrifice pension scheme. I put as much money as I can into a stocks and shares ISA to legally avoid paying tax on the capital gains. Recently, I purchased an item from abroad and I did not get charged VAT. I don't think any of those examples of tax avoidance make me a bad person but you might disagree. It's highly likely that my views on politics are inconsistent, often contradictory, and unintellectual, but I expect I'm not in the minority; most people I know only have a superficial understanding of politics at best.

[Johnny Brown]

I've been struck in a few conversations recently about Labour/Green voters putting high level of effort into minimizing inheritance tax, which seems to my mind hard to justify.

Sounds a bit like the perspective of someone with no skin in the game? I vote Green. My Dad did quite well in life and although he seems very keen on spending it all - 'No pockets in a shroud Adam' - we have had some conversations about it. His perspective is he didn't inherit a penny, and everything he might leave has already either been taxed at higher rates (income - ~40%) or twice (profits - corp tax then div tax, currently ~20% each). I think for a lot of people paying 40% tax on money that has already been taxed at 40% will stick in their craw. OTOH you could argue it's a different person being taxed, but he feels very strongly the tax has already been paid. He was also a more decent employer than most so his hard work also provided jobs.

My impression is that anyone with serious inter-generational cash generally has it squirrelled away from the tax man - a lot of my peers at school had their fees paid by 'trusts'. Such millions tend to justify the not inconsiderable expense of managing them, whereas those of people who have simply worked hard (my Dad was a grafter by any standards) are not likely to. So there is the 'squeezed middle' element there too.

My own view is as long as the Royal family and farmers are exempt no one should be paying any. Inheritance tax should focus on unearned wealth of exactly their sort - have a read of 'Who Owns England for more. A land tax is almost certainly needed as part of the solution. There would be some knock on effects to sort but just look at the government for the really rich's attitude to tax. The growing inequality in the country is not reflected in the thresholds which would have you believe the successful grafters running small businesses are all 'the rich', just the same as the landed gentry and multi-millionaires. This is classic Tory divide and rule tactics, intentionally focusing the working classes on cutting down their tall poppies while the super-rich make their own rules.

[remus]

I'm endlessly amazed by the number of people who vote for pro-redistribution parties (e.g. Labour) but try quite aggressively to minimize tax and don't recognize the irony. I find this especially true for inheritance tax - surely the most equitable of them all.

Personally I don't think it is particularly ironic. When it comes to how tax is collected, I think government should aim for clarity around what is taxed and people should aim to reduce the amount of tax they owe within the law. Otherwise, how else should people arrange their tax affairs? Via some vague moral obligation to pay "a decent amount of tax"?

[spidermonkey09]

This is a luxury belief based on living in a modern, advanced state in which most people live and work within the formal economy. States which struggle to collect tax also struggle to provide services for their citizens, and at the extreme suffer very high levels of debt and default. Look at the current mess Sri Lanka is in to see what happens when lots of people don’t pay tax but still demand a degree of state capacity. The damage is far from minimal.

As for Liam’s dodgy mates, I suspect they use public services far more often than Sunak has ever used them. And yet they don’t want to pay for them. At very best that’s freeloading.

This is fair enough. I agree it is hard to justify wanting better public services but minimising your tax contribution.

It's highly likely that my views on politics are inconsistent, often contradictory, and unintellectual, but I expect I'm not in the minority; most people I know only have a superficial understanding of politics at best.

I guess its not unreasonable to point out the contradictions though? Just as it isn't when people don't like immigration but also complain that theres a staff shortage.

[seankenny]

As stated before, I'm not really a man of politics. I've only voted once in my life but it wasn't conservative - I was born in Doncaster, my dad was a miner, and I was a steelworker (before going to university to study physics). I do wish for a 'fairer society' and will likely vote for Labour at the next election.

 

Simultaneously, I also grumble about how much tax I'm paying and jumped at the chance to reduce it by entering a salary sacrifice pension scheme. I put as much money as I can into a stocks and shares ISA to legally avoid paying tax on the capital gains. Recently, I purchased an item from abroad and I did not get charged VAT. I don't think any of those examples of tax avoidance make me a bad person but you might disagree. It's highly likely that my views on politics are inconsistent, often contradictory, and unintellectual, but I expect I'm not in the minority; most people I know only have a superficial understanding of politics at best.

What's wrong with engaging in legal tax reduction schemes? Absolutely nothing, no one expects anything else, and anyhow they can well have a broader purpose than just making you better off, eg encouraging investment. All good! But this is absolutely not the same as working cash in hand which is definitely illegal and hypocritical.

As for "paying too much tax", generally the overall amount we in the UK are taxed is just under the average for the OECD countries (ie the rich ones). So that's 33.5% of the UK's GDP in 2021. But it's less than some other European countries: Netherlands at 39.7% or Sweden at 42.6%. So we can moan about tax, or we can moan about the NHS or schools or whatever. But moaning about both is refusing to accept that trade offs exist in life and we have to deal with them.

[abarro81]

The inheritance tax point is interesting and I wonder what age the people you have had discussions with.

Pensioners (i.e. old enough for this to be relevant)

I get where you are coming from with the bit in bold, it just doesn't apply to myself or any of the people I spoke about (as your first response assumed).

Ah, sorry, I read your first post as one of your mates asking to be paid in cash, not the builder you're using - my bad!

. It's highly likely that my views on politics are inconsistent, often contradictory, and unintellectual, but I expect I'm not in the minority

Oh yeah, my thoughts are definitely half-baked

Sounds a bit like the perspective of someone with no skin in the game?

What counts as skin in the game? If all my elderly relatives died tomorrow (fingers crossed they don't!) then I'd be paying a bill, but it would be minor compared to what some would pay no doubt. Actually it astounds me how high the threshold is once you include passing on a house - if I were a benevolent dictator that would probably be far lower! (Though I take your point that the big difference would be to go after the big inheritances not the ones just over the threshold)

Has your dad really paid high tax on most wealth or is a lot in a house? Most of my elderly relatives have most wealth in properties - wealth that hasn't really been "earned", and AFAIK hasn't really been taxed at high levels.

I think I broadly agree with what you've said about the super-rich, royalty etc.

[Wellsy]

Switching to a Salary Sacrifice scheme or using an ISA or whatever is not against the wishes of the government, they give tax breaks on those things because they want to promote them. That's the point. You aren't pulling a fast one over HMRC by using as much of your Annual Allowance as you can, it's good for society for you to have invest in your pension!

Builders not paying tax on their income isn't the same as that, they should do, and I bloody well hope they get caught, but it isn't the same as using perfectly legitimate tax breaks.

Now there are of course tax breaks that are legal but not socially helpful or desirable and essentially wealth owning class cronyism. Those should be dealt with, I think it definitely is very much a strike against these wealthy politicians that they're avoiding tax in ways which are not socially desirable.

I can see the argument about inheritance tax but if I had my way it'd be even higher. Think of how much good we could do if we managed to use that money for the public benefit? Much more useful than its current purpose.

[mrjonathanr]

I've been struck in a few conversations recently about Labour/Green voters putting high level of effort into minimizing inheritance tax, which seems to my mind hard to justify.

A good proportion of people whose estate might owe IHT are in that position because of rising house prices. If your family had to sell their home to pay HMRC if you died, would you still hold that view just the same? Or would you start wondering why they should be required to sell the home that had been bought with taxed income so that it could be taxed again?

Our crazy housing market distorts the IHT issue in the majority of cases I expect.

[ali k]

Picking out the single point that essentially no decent and honest person would utilize legal tricks to reduce their tax contributions, well if that's true then I don't know many decent and honest people!

All my mates in trades are fiddling their books, putting allsorts down to expenses. The builder currently working on my house asked if I could pay him partly cash. These are all decent people. I get that Sunak is in a different position to us plebs and should be held to a different standard, but you said 'no decent person...'

Just to be clear, when I said “that tax situation” isn’t justifiable I was referring to the specific case of the chancellor’s wife using tricks to reduce her UK tax liability, and Sunak defending that position. In that role as ‘chief tax collector’ for the UK he was setting an example to the rest of the country, which seems to be to use whatever dubious means you can to avoid paying tax.

Beyond that, I can’t be arsed to get into the justifications or morality of every single tax reduction scheme. Clearly it’s a sliding scale. It shouldn’t be, but that’s how it is.

‘Fiddling books’ and being paid in cash to avoid tax are illegal and indefensible though, so I wouldn’t consider those decent people. They’re freeloading off other taxpayers. But unfortunately, if the example being set from the top is to avoid tax by whatever means then I can kind of see why they feel justified in doing it, hence why Sunak (and his wife’s) position is/was repugnant to me.

IMO the wealthiest in society using tax loopholes and dubious practices involving specialist tax lawyers to avoid paying tax is equivalent in moral terms to tradesmen doing cash in hand work. Both are damaging to society and the public services we all want to improve.

[seankenny]

The issue of IHT and being taxed twice is a bit of a distraction. Inheritance is a very good way of increasing inequality - I've seen a paper suggesting that the massive reduction in estate taxes in the US is a key driver in the increasing wealth gap there (though it doesn't seem to have an effect on consumption and income inequality). The question is, do we want wealthy households to have wealthy descendents? Given that in the UK we hold our wealth in property this has a lot of knock on effects in terms of overall economic performance as well as individual life chances (it gets hard to move to where the good jobs are as the wealthy households bid up property prices there). Or do we want a more equal society? In which case IHT has a role to play. Only 1 in 20 estates pay it anyhow at the moment.

The "what if you had to sell your home to the tax man if you died" argument also ignores that we can create equity release schemes...

I should note that the Green Party want to abolish IHT - clearly more money in knitting yoghurt than I thought.

[abarro81]

A good proportion of people whose estate might owe IHT are in that position because of rising house prices. If your family had to sell their home to pay HMRC if you died, would you still hold that view just the same?

If I had kids and I left them a house with a current value of >£1m I think it would be fair for them to have to pay some inheritance tax! Or at least I think I would think that, who really knows until you're in that situation. I guess the issue is pertinent for couples that aren't married/civil partnership but not really otherwise, unless I've missed something?

[mrjonathanr]

The £1m figure applies for a married couple leaving a home to direct descendants. For a single person, that figure is £500k and if not left directly to a descendant becomes £325k.The average uk house is currently worth around £295k.
A lot of areas in the country will have higher values, by definition. There'll be a lot more people faced with that scenario than just the very rich.

[seankenny]

A lot of people will also run through their capital as they spend the ends of their lives in care homes, which are eye-wateringly expensive and will reduce their estate considerably.

[Yossarian]

https://amp.theguardian.com/money/2016/aug/11/inheritance-tax-why-the-new-duke-of-westminster-will-not-pay-billions

The more money someone has, the greater the chances are that their accountants organised an inheritance strategy decades before any IHT might be due…

[abarro81]

If your family had to sell their home to pay HMRC if you died, would you still hold that view just the same?

There'll be a lot more people faced with that scenario than just the very rich.

Surely the number of single people (but not through death) whose family (but not child or grandchild or step/adopted/foster child/grandchild) lives with them, in a house worth >325k, and considers that property their "home" is quite small? Or am I forgetting a big batch of people somehow? In any case, I think I would still think that if you're going to inherit a 300k+ house simply through someone dying it would be fair enough to pay some tax, even if that means you have to sell! It seems far fairer than, say, NI.

Stuff like that Guardian article is, presumably, something that we can all agree is bullshit that benefits no-one but the super rich!

[kac]

I'm single in the not married sense and in the position I think your describing Alex. I'd be more inclined to agree it's fair my partner has to sell family home to pay the tax bill if the loop holes were closed that enable the wealthy to avoid the tax. I'm surprised the green party want to abolish it - do they want a wealth tax instead that includes lifetime gifts of wealth? If so I can see the reasoning.

[mrjonathanr]

Surely the number of single people (but not through death) whose family (but not child or grandchild or step/adopted/foster child/grandchild) lives with them,

Not quite- you'd need to leave it to the child, an unmarried partner could not receive the estate.

all agree is bullshit that benefits no-one but the super rich!

Absolutely, yes, we can all see what this means for the distribution of UK assets.

[TobyD]

Phew that's a lot of discussion about tax morality.
Re Zahawi, I hadn't been fully aware of his use of SLAPPs against journalists especially Dan Neidle when I partially defended him earlier. That's just as bad as the taxes in my book, particularly as the journalists were correct.