Is it wrong to avoid paying tax?

No, its not a choice about whether they use it. It just says that they have to depend on the kindness of others to get it.

With impeccable timing as usual, Boris has decided to renounce his US citizenship. He says it's because he wants people to know where his loyalties lie. However,

" Aides said the mayor’s priority was to avoid paying more to the US tax authorities, after he was recently forced to settle a large capital gains tax bill."

I don't understand this American rule that every US citizen - even if they're not living in the US - has to pay US taxes. Presumably, if they're working here, they also have to pay tax here too? How are they supposed to afford it? Does anybody on here know how this works? Is it just tax on assets rather than income?

I don't blame BJ for relinquishing his US citizenship but it's taken him a long time to want to show his loyalty lies here.

Oh, that means that he can't run for the presidency. What a disappointment for the good citizens of the USA!

TerriS - in what parallel universe does tax and NI amount to a third of your income?

TerriS - I work as a part time cleaner (for a whole six and a bit hours a week) - I am paid cash in hand by one client and straight into my bank for the other client, I log everything down on a spreadsheet and run my accounts through an accountant. I don't earn much at all, yes I don't end up paying tax, but I still pay an accountant and pay National Insurance.... it's not all jolly good fun and raking it in you know!

NannyGoat

Have I got this right?

You were 6 hours plus doing 2 cleaning jobs but you pay an accountant to do your books!

Is that because you want to pay NI on your income??

I didn't think I had a choice! I get a reminder to pay my NI quarterly (works out around £70 ish quid) else I don't get pension or prescriptions, no?

I know, I know, 50 squid for someone to do my accounts a year! I prob could do it online myself, my spreadsheet works out my mileage costs - I am a worrier, I don't want to do the wrong thing.

It's true, Nanny, that if you do not pay NI you do not get a pension. Not sure about prescriptions.
You can do it online yourself, without an accountant, though.
Does the accountant save you more than you pay him/her?
If not, it does not make sense to employ one.

I will prob attempt to do my own tax this year then, though when I started a couple of years ago, I had about six clients dotted about all over the place, but now I'm down to two, it should be a doddle (hopefully!). I know I looked at the online form once and it scared the bejeesus out of me... not that I own property, investments or anything, just confusing!

It's not as daunting as it looks Nannygoat but do remember to collect everything as you go along, even if you stuff it in an old shoe box. Most of it is quite straightforward as you'll have a record of money in, money out, invoices etc, in your own account book. It's little things like interest on bank accounts. shares, little annuities you might have, etc that can throw you at years end.

And don't miss the January deadline.

Free prescriptions absolutely nothing to do with whether you receive a pension. The online form is much easier than it looks at first sight- you answer some questions at the beginning and if you answer no - eg income from property abroad, then those pages do not come up. If you don't understand something, you can click onto an icon and an explanatory box pops up.

durhamjen I don't think my accountant saves me money, let alone what I pay her, but I do think she earns what I pay her for dealing with my somewhat complex tax situation with income from different sources and my living outside the UK. One of the last things I need is HMRC getting stroppy because I have filled in something incorrectly or omitted some information that I should have supplied. Peace of mind is invaluable.

Yes, but Nannygoat's doesn't sound all that complex.
I used to have an accountant when I had a business, but now it's just pensions and bank accounts it's easy.
I used to do all the accounts myself when I had a business, then the accountant checked my figures and saved me money knowing what extra I could allow for as tax-free. It saved me time as well as providing peace of mind.
A couple of years ago I had a letter from HMRC saying I owed them a couple of thousand because of mistakes when we sold the business. They sent a copy to the accountant, who was most upset that they had queried his professional competence. He was right, fortunately.

jen You have no idea what Nannygoat's situation is, and it's presumptuous to suppose that you do.
However I do agree that the Revenue can and do make mistakes, and when that happens having a professional on your side is invaluable.

She has actually told us that she only has two clients now, one of whom pays cash and the other straight into her bank account, so I am not presuming anything. She said herself she could probably attempt to do it herself this year. All I was saying was that Nannygoat's does not sound as complex as absent's. Do you have to attack me on everything I say?

The tax forms are much easier the second time around, when you know what you are doing. If you do the self-assessment online you can pause whenever you like and save what you have filled in so far. They have a list of which pages you have completed and which are still to come, and you can review the whole thing before sending it off irrevocably.

Well Ed Balls has told you what you should do.

Give your name and address and get a receipt when you pay in cash , even if it's for a tenner to get your hedge cut. He guarantees he does.

My window cleaner and gardener know my name and address, and give receipts. I trust them.

Of course he does, POGS. He needs a receipt to claim it back on expenses.

I never thought of that.

I have just had my attention directed to this.

"Where the Commissioners are of the opinion that the main purpose or one of the main purposes for which any transaction or transactions was or were effected was the avoidance or reduction of liability to the profits tax, they may, if they think fit, direct that such adjustments shall be made as respects liability to the profits tax as they consider appropriate so as to counteract the avoidance or reduction of liability to the profits tax which would otherwise be effected by the transaction or transactions. "

This was in the 1951 Finance Act.
Profits tax then is the same as corporation tax now.

If this was law then, why can't it be now?

Jen - you are right, to be honest, now with only 2 clients, it should be a doddle.... I use their materials so the only outlay I have is mileage expenses.

Like Elegran says, it just seems to be daunting the first time you do it on your own, but it's actually quite easy if you organise your receipts and mileage, etc.
The other problem is that so many people leave their tax return until the end of the year, then hurry to do it. If you do it as soon as you have all your bits of paper, and organise things before you go on the HMRC website, it's easy. Most of the answers are 0 anyway with such a small business.
I presume you do it because you are self-employed. That's why it's necessary to pay NI. It would save governments a lot of money if the self-employed did not pay extra NI.