Best Tax Avoidance Tips UK

Tax avoidance is legal and differs from illegal tax evasion which is where you are liable for taxes but evade them by hiding assets or income. What a lot of self employed contractors and expats do is to set themselves or a trading entity up with a base in a low tax environment.

Tax avoidance zones

For example a lot of highly paid racing drivers and business men locate themselves in Monaco as it has no income tax. It does however have 33 percent corporation tax. Another destination is Andorra, which again has no income tax. You do however need to be a resident in both countries for at least 6 months of the year to count as a resident, so you need to be sure that the benefits of tax avoidance don't get in the way of forcing you to live somewhere just for the sake of it. The Isle of Man is a corporation tax free zone, so a lot of financial services firms and pension consultants are located there. It's currently under review as one could argue that taking assets or income to one of these lower tax regions is a form of tax evasion, especially the countries that don't have agreements to share financial information with other governments. Although some of these tax refuge countries have nominal tax levels, some of them also don't share personal data & there is no transparency in the legal provisions so they do have a dubious moral standing as they attract tax evaders and those wishing to hide assets from scrutiny.

As mentioned before an alternative way to avoid tax can be made by transferring any assets you hold into a trust or holding entity. The holding is made up to be a resident in the tax haven. Therefore, if the company isn't resident in the high tax jurisdiction, then it does not attract tax in this country. This is done mainly to avoid property taxes or inheritance tax on the death of an individual.

Tax avoidance with timber

In the UK a gifted asset or money can be exempt from inheritance tax if it has been made at least 7 years before the persons passing. With a gift of forestry or woodland the tax free window is shortened to just 2 years after the persons passing. This is why investing in timber is one of the best tax avoidance tips available today in the UK.  Combine that with the capital gains tax rollover relief and you can see the advantages of being a timber investor.