UK TAX - Tricks?

I've been recently doing some figures with tax bands and what not and er, well.. I'm a bit stumped.

Currently, and correct me if I'm wrong, the UK tax bands are:

• 22% on the first £32,400
• 44% for all that's over £32,400

Now, say we we're pulling in £15,000/month (£180,000/year) in online revenue, I work that out as:

£32,400 taxed @ 22% = £7,128 Tax to pay for the standard band
£147,600 taxed @ 44% = £107,928 Tax to pay for the higher band

Is this correct - we'd be paying £72,072 in TAX for the year, knocking the £180,000 you earnt down to a measly £107,928? What kind of scam is that.

How does one go about avoiding bending over and pulling ones nickers down for the tax man here in the UK, as I my knowledge is thin in this area.

And what's with the Isle of Man and online revenues, because it seems to me like you could rent a small office there and just run your flippin' business from over here on your computer at home. I don't understand that, either.

Any insight from the more experienced in these issues?

Pete

 

Form a limited company and pay yourself in dividends - you don't pay 44% tax on those.

If you're really pulling in that sort of revenue I think you can afford a decent accountant to take care of these things for you

Hate to plug my own site but there's a thread on this here.

 

Plug away man it's relevant, interesting thread too hmmm.. hell that's a lot of tax and it's barely saving much as LTD and all that complicated pollava.

The UK really does stink in regards to VAT. I wonder how those over the pond compare.

Aye - I aren't earning nowhere near that it's just a figure I have in my head. I talked to an accountant a while back and it was all going *over* my head - I'm not one for figures, percentages and such but that seems pretty clear there.

If my earnings do raise to a nice level I think I'll definately consider hopping on a plane and hopping off this island.

I think I'll trawl your forums for Isle of Man and other 'tax haven' information. Discussions provide a lot more insight then those 'guides' on the Google searches.

Pete

 

It is simple. gt yourself a delaware or a Nevada company (IBC). In Nevada there is no tax, in delaware youwill siply pay the local registration fees, (about $100 a year). you then set up a UK company (as stated above) pay yourself a basic wage that is equivalent to your personal tax allowance (that way there is no tax to pay on that portion, it will be about £5000 per year depending on circumstances). Beyond that pay yourself dividends as a company shareholder (currently taxed at 19%). The you can arrange to 'win' the employee of the year competition which will give you a holiday abroad etc (no tax on this as it is not benefit in kind). Ensure your holiday prize is outside of the uk, then while abroad draw your money from your company account on the corporate debit card, (you only have to declare as earnings for tax purposes money that you repatriate into the European Union).

Set up a trust fund for your family and place the money in those, (money held in trust is not owned by anyone so as such no one can pay tax on it) A perfect answer is to set up a trust fund for 'My children' (as you can have children at any time it can not be pinned on anyone for tax reasons). You can go the whole hog and make the beneficiaries 'my decentants' which goes on forever, and money held in trust does not attract inheritance tax either as it does not change hands. If the holding company is in an offshore jurisdiction that does not have inheritance or capital gains tax (like the Isle of Man) then you are set up for life, and beyond.

But my 2 best bit of advice to you are....

1) Get an accountant who understands the difference between tax avoidance and tax evasion and will make sure IR35 doesn't bite your ase and apply.

2) if you are launching a new business that you are certain is going to make a lot of money, and you intend to sell, then set it up offshore prior to going live, rather than transferring it after the fact. (this is the difference between tax avoidance (legal) and tax evasion (18 months to 5 years )

 

Heck, that's interesting stuff. Would love to have a few beers with you Welshguy. Is this how you're operating?

..And an above board, legitimate accountant would advise and help with this? I'm always hearing about those MP's and their off-shore trusts and getting nailed for something.

I'll have to look into this further..

Cheers,

Pete

 

Prime example, you set up a delaware company, the money goes to the account, you pay your fees, the company buyts a house in Florida, you get to stay in it anytime you want to.

You really need to consider the implications of tax, I paid an ugly amount of capital gains one year, and swore never again. Luckily I have a friend in Douglas who has helped me no end over the years.