Exhibit One
I don't like Inheritance Tax, and I don't like tax breaks for charities either, but let's accept that the system is the way it is; we have Inheritance Tax and if you leave things to charity in your will, unlike other beneficiaries, the charity pays no Inheritance Tax.
Georgie is going one better (see here at 13:19): "From April 2012, people leaving 10% or more of their estate to charity will enjoy 10% reduction in inheritance tax, benefiting charities by £300 million."
OK, so maybe somebody just left you £1,000,000 in his will and the nil rate band for IHT was allocated to other beneficiaries. You're looking at paying 40% x £1,000,000 in IHT = £400,000 IHT and netting £600,000 unless you can do something clever, like varying the will within two years.
So you get in touch with your mate at a tame charity and chat about allocating £100,000 to his charity. In return you end up paying 36% IHT on £900,000 = £324,000 and netting £576,000. Hey! You'd only be £24,000 worse off but your mate's tame charity would be £100,000 better off!
So you agree with your mate at the tame charity that you'll split the difference and he'll bung you £50,000 in a brown paper envelope; his charity ends up £50,000 better off and you end up £26,000 (compared to the position if you hadn't varied the will and made this gift).
Exhibit Two
Unlike most in the Blue Wing of the Home-Owner-Ist party, Georgie is relatively liberal about lifting restrictions on new construction, at least as far as it pertains to new commercial premises. To back this up, they've agreed that local councils can keep all the extra Business Rates income for 25 years. All good stuff so far.
But as a populist nod to the land owners, inefficient owner-occupier businesses, NIMBYs, Greenies and other enemies of progress, they've extended Business Rates reductions for 'small businesses'. This is supposed to 'help' small businesses (it does no such thing of course, it 'helps' their landlords and owner-occupying businesses which are inefficient).
Now, don't these two measures more or less cancel out? If a local council has a choice of allowing some big commercial units to be built which will be let to branches of multinationals, then the council gets to keep all the Business Rates, but if the local council says that small units should be built instead, to be rented to 'small local businesses' then the council gets to keep nothing, because there will be little or no Business Rates payable on those new units.
The same sort of logic applies to demolishing small units and replacing them with bigger ones. The chances are that small businesses will find it harder to find premises in future, and hence will end up paying higher rents...
Unless that's the whole point?
Get involved with AI says Starmer
2 hours ago
20 comments:
Unless that's the whole point?
Life really is stranger than fiction so putting the smalls out of business is the outcome of choice!
Exhibit One only works if both parties are corrupt.
W, most of these rules which superficially favour 'small local businesses' actually act as barriers to growth; the remainder act as barriers to entry.
BE, the trustee is not corrupt as he has raised a net £50,000 for good causes. The donor is merely engaging in tax arbitrage.
I note the TPA did some "special pleading" on the rates issue, and it would appear that "they have the ear of government" - so I am quite surprised they didn't enter another bit of special pleading along the following lines :-
"My Estate Agent informs me the value of my house has gone down ! How can this possibly be true !!! And if, by some inexplicable and unfathomable quirk I just can't quite believe, it is true well shouldn't I then at minimum be getting a big big 100% rebate on my council tax, if not some cash compensation from my local authority for allowing this house price drop to take place ?????"
Anon, the TPA are great at highlighting wasteful spending, but for some reason they are absolutely obssessed with Council Tax and Business Rates, despite those are the least bad taxes (along with Fuel Duty).
They appear to fall for The Big Fat Lie that "My council tax pays for local services" or something, but as ever, you cannot base a coherent policy on a lie.
#1: Nah, nah, nah: no brown envelopes required. It's just that the Chairman of the charity turns out to be - your daughter. The high pay that she draws is pure coincidence.
D, that's for beginners.
You're out of pocket by £24,000 and your daughter is up by £42,553 net of tax and NI, it's barely worth doing to squeeze out £18,553, which shared is £9,271 each. The solicitor and accountant who arrange all this will charge you that much in fees.
Mark, The trustee must be corrupt if he diverts money entrusted to the charity back to the donor. It doesn't matter that he keeps something back for charitable uses. Or am I missing something?
Also the 10% should be of the whole estate and we are already told that the nil rate band has been used up. It doesn't change the principle but doesn't the beneficiary need to donate £132,500?
Iain: "Or am I missing something?"
OK, let's turn this around: charity fund raiser pays £50,000 for a fund raiser dinner, complete with dancing girls and after dinner comedy speaker; the dinner raises £100,000 in new donations.
Is that OK, from the point of view of the charity's other trustees? Yes.
Let's rework that a bit: charity fund raiser pays £50,000 for a fund raiser dinner [including £20,000 rent for a hall belonging to one of their major donors and a £20,000 catering contract with a company which happens to belong to a major donor's daughter and a £10,000 speaker's fee for a major donor's son, who happens to be a non-taxpayer], complete with dancing girls; the dinner raises £100,000 in new donations.
Is that OK, from the charity trustees' point of view? Again, the answer must be yes.
And so on.
I will link to you, I promise. Soon. Honest.
On my old Livejournal blog, I was only allowed 30 entries in my blogroll, so A LOT of people were left out. I have a lot of catching up to do.
Mark
Yes that makes more sense, as long as the costs etc are reasonable, which they must be if all the trustees have agreed to it.
But to my mind that is a long way from being handed £50,000 in a brown paper bag.
Ah yes, on the side of some tax avoiders BUT he is going after Wayne Rooney's hooker money with the changes in relation to loans which are never paid back.
Iain, I do this for a living, I don't literally mean 'a brown paper bag', that's a crime and I do not want me or my clients to go to jail.
SW, he THINKS he's going after tax evaders. By and large he's invented as many loopholes as he's shut, whether inadvertently or not.
"SW, he THINKS he's going after tax evaders. By and large he's invented as many loopholes as he's shut, whether inadvertently or not."
Oh yeah always happens like that, what I dislike the most is that he's being such a pussy over merging tax & NI because of how it could adversely affect certain things if not done carefully. The thing could be up and running by April 2012 (actually sooner of course but they like changing things to start with a new tax year rather than in year changes)
SW, I dare say he's being a pussy about merging income tax and NI, because the two biggest political lobbies, landlords and bankers, won't like it. Currently income from property and financial investments is not subject to NI "contributions", so those who make their money therefrom will be hardest hit. Of course all the talk is of pensioners paying extra, because no-one in their right mind is going to feel sorry for bankers, but pensioners are an easy exemption, you either are on or you're not.
Ironically: Charity feeds poverty
SW, B, for employees and self-employed, income tax bands and rates are more or less aligned.
It would be a doddle to just announce that employees henceforth pay 32% income tax, self-employed pay 29%, and rental, interest income or pension income is taxed at 20%.
Now, politically I can see why we'd peg the rate at 20% for interest and pension income (which the banks and insurance companies just deduct at source, they can change the relevant field in their computer at the touch of a button), but I see no harm in averaging out the rate for employment, self-employment and rental income at (say) 30% and have done with it.
RS, maybe it does, maybe it doesn't.
"I don't literally mean 'a brown paper bag', that's a crime..." Well exactly that's my point. But if you mean "bung £50,000 in a brown paper envelope", which is how it appeared in the original blog post, is meant figuratively you will have to make that clearer to simple souls like me who are a bit more literal.
That aside your point is absolutely on the nail. This is likely to open up no end of tax avoidance schemes.
"Ironically: Charity feeds poverty"
Means tested benefits bloody well do! Try convincing a rampant lefty of this basic undeniable fact though..... good luck to ya!
Iain, I'm not giving away trade secrets for free :-)
SW, the lefties like means testing because it creates jobs for means-testers; the right wingers like means testing because they think it saves taxpayers' money; the BNP like it because it's authoritarian.
The bitter irony is that 'means testing' as a concept is more or less the opposite of the 'contributory principle', and again the lefties like the CP because it's teh old fashioned 'workers solidarity' concept; the right wingers like CP because it's a bit like a tax rebate and the BNP like CP because it's authoritarian and enables them to exclude Johnny-Foreigner-Come-Lately.
Post a Comment