Monday, 9 February 2015

Interesting Comparison

Exhibit 1 from the Telegraph

How to Avoid Tax On Houses  (Apparently OK)

Exhibit 2 from the Telegraph (and elsewhere if you look around a bit)

PWC Industrial Scale Tax Avoidance (Apparently not OK)

I was going to make a comment, but really it all speaks for itself and I am lost for words.


A K Haart said...

Yes, it's just too blatant for anything but a shrug.

Mark Wadsworth said...

Depressing but not surprising. But fair enough, Homey logic says it's OK to tax incomes as much as you like but not land values.

mombers said...

Luckily if the house is worth anything more than £500k it's subject to ATED from April 2016 though? You can get an exemption if it's rented out (which is a cock up but that's another story). But once it's let out, you lose the CGT relief.
I'm a bit flummoxed as to why on earth CGT relief is given to principal residences, never mind residences owned in a 'tax-efficient' manner like this. CGT is a bad tax, but the exemption makes it worse as it distorts decisions.

Dinero said...

The tone of the article is a bit odd. She used the word "loophole". Thats a strange way of presenting it. I wouldn't be suprised if the Telegraph pulled it. The way the article is written is odd though. The article does not avoid CGT. The children are the beneficiaries to the trust and so they are the beneficiries to the cash from the sale. So the parents didn't avoid CGT on the sale of the house. They gave the house to the children. They didn't avoid CGT they avoided the gift CGT tax.Why would the children then "save for a deposit" .They have been given a house. The sub headline of the article is "Here's how you can buy a second property completely free of CGT - and give your adult children a rent-free home"Why would the children then "save for a deposit", as it says. They have been given a house.

Dinero said...

Has anyone else read the article carefully. It seems to be incorrect.
Its not the Trustees that benefit from the capital gains of a Trust, its the beneficiaries of a Trust that benefit from the capital gains of a Trust.

Random said...

Dave says business rates will go up under Labour.
Ah, pro business Tories who raise VAT 2.5%.

Mark Wadsworth said...

M, the ATED doesn't yet apply to domestic owner-occupiers, the ATED is a trade-off for not having to pay Inheritance Tax or SDLT. But if you are liable to ATED you are liable to CGT. Those are the rules.

In which case, sign me up, I'd rather pay a bit more each year than worry about IHT and SDLT.

Begs the question, why not can the lot and have low level LVT or Domestic Rates for all homes and completely level the playing field? i.e. in place of all these random taxes that apply?

Din, it's full of wholes, of course it is.

R, not just 2.5% extra VAT but 2% extra NIC (two times 1%) and then the 3% semi-compulsory pension contributions. Then these f-ers wonder why wages are going down..?

Mark Wadsworth said...

Din, I have read the article, and actually there aren't too many obvious mistakes.

Apart from it's just an advertorial for smart arse solicitors.

The easy and more or less tax-free answer to this "Want to buy a second property that your children can live in rent-free, while also avoiding capital gains tax?" is clearly "Well give them the f-ing money for the desposit and let them get on with it"

That triggers no tax at all and probably reduces it.

Or even better "Vote YPP and your kids will easily be able to afford their own house."