Tax avoidance

Tanya Powley

You may not have paid much attention before to what the Liberal Democrats’ policies on tax consist of but now that they’ve taken a surprise lead in the polls it’s worth knowing exactly what they have proposed and how it might affect you. If a hung parliament is the outcome of the upcoming general election then the Lib Dems’ manifesto will be all the more significant.

Ellen Kelleher

Frustrated by the new 50 per cent income tax rate slapped on high-earners, accountants are encouraging clients to avoid paying it.

Here are two suggestions for ways to duck it from advisers at Baker Tilly:

Make full use of non-pension reliefs
In the last Weekly Tax Brief, we looked at pensions. Investing in other tax-efficient vehicles such as Enterprise Investment Scheme or Venture Capital Trust shares or Individual Savings Accounts should also be considered.
 
Each year, up to £200,000 could be invested into a VCT gaining tax relief at 30%.  EIS investment of up to £500,000 gives relief at 20% and, additionally, with capital gains tax deferral there is the prospect of 38% relief or 60% relief where the gain arose before 6 April 2008.
 
Remember that while those investments may bring tax advantages, they also carry inherent investment risks and independent financial advice is always needed.

Consider when to claim losses
Losses on subscriber shares in EIS-qualified companies can be claimed against income tax but qualifying shareholders should not always rush to claim their losses. If a loss has arisen but not been claimed yet, there is no requirement that the loss must be claimed now: the claim may be made in 2010/11, so providing relief at the top rate of tax, including the 50% additional rate where that applies.

Lucy Warwick-Ching

Yesterday’s Court of Appeal ruling in the Gaines-Cooper case has sent expats into a panic over the potential hidden tax liabilities that many of them might now have. 

The Court ruled that Mr Gaines-Cooper along with two other businessmen were all still liable to tax in the UK, despite living abroad in Mr Gaines-Cooper’s case for over 30 years and not coming back for more than 90 days a year.

The argument was that he hadn’t shown ‘a distinct break’ from the UK and that the ’centre of gravity of his life and interests’ remained here. Worryingly, there is no limit to the amount of tax that can be claimed back and in his case it could be as high as £30m.



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Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.

Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.

Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.

Ellen Kelleher has been a personal finance reporter in the UK for close to four years. Before arriving in London, she worked in the FT's New York bureau where she covered the insurance sector.

Steve Lodge is a personal finance reporter on FT Money specialising in savings.


Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for FT.com. Prior to working at the FT she was a news reporter for the ABC.

Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.

Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.

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