Tax avoidance/minimisation – what's realistic?
Well put geetee1972.
TJ – plenty of people who work for listed companies have shares in them, not just senior management. We have a family friend who worked for Bank Of Scotland for 30 years as branch staff then later as a branch “troubleshooter”.
He’d put money into shares most of his working life, and held a large part of his wealth as HBOS shares when he retired in 2008. You can probably work the rest out – he’s not having the retirement he had hoped for.Posted 6 years agoMSPSubscriber
OK say someone works for a private company, gets paid 50k a year, and earns a bonus of 50k in shares, sells the shares but takes a loss and only gets 40k for them
8k taxable allowance
taxed 20% on 29,500 = 5900
taxed 40% on 12,500 = 5000
10k capital gains allowance
taxed 28% on 30,000 = 8400
Then say you have a Doctor employed direct by the health authority earning 80k
8k taxable allowance
taxed 20% on 29,500 = 05900
taxed 40% on 42,500 = 17500
total = 23400
The reality is the person getting the shares, even after making a loss on those shares, still earns 10k more and pays less tax. And that’s at the 40% tax rate and not taking into account NI. We all get a raw deal from this, we have to pay more tax to make up the shortfall of these loopholes.Posted 6 years ago
Its not just a matter of taking capital gains up to the income tax levels, they could meet somewhere in-between. Levelling the playing field between income and capital gains tax and allowances would give a boost to the income of the majority of the country.MSPSubscriber
Actually I think I got that wrong, I seem to recall shares are taxed as income on issue, but not at the full value of the share, in fact usually far lower then the shares true value. iirc the value, as well as being low to start with, can be set some time in advance, and agreed with the HMRC at that point.Posted 6 years agonick1962Member
Surely the aim for HMRC and the government should be to move as many people as possible to be regular PAYE that way avoiding all this tax avoiding rigmarole?Posted 6 years ago
And the “progressive” tax system mentioned earlier is surely a euphemism.High earners pay more tax even if they are taxed at the same basic rate so why penalise them with higher levels?RioSubscriber
Either my employer and HMRC have got this wrong or shares are taxed as income when released from a share scheme. When I cash in shares from my share incentive scheme it’s paid through the normal payroll system and I have to pay income tax on it. Even the capital gain on any increase in value of the shares goes through PAYE so is taxed as income, as are any reinvested dividends. Even if I take the shares as shares I have to pay income tax on them. Do any of those who think its taxed as a capital gain actually have share incentive schemes or are you making this up?Posted 6 years agoNZColSubscriber
TJ PWC is a limited liability partnership (LLP), it’s not the same structure as a Ltd company or a PLC. The meaning differs around the world, but ultimately, if you make equity partner (in PWC or any law firm which also uses LLP as its structure) then ostensibly you have to buy in. This costs a small fotune, so much that usually it’s facilitated by taking a big discount against your salary/share structure of some time.
So all in, there is a significant investment and therefore risk (even if the LLP shields you as an individual).
I can categorically tell you that not one part of that is actually accurate. I’m a Partner at PwC.Posted 6 years ago
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