I used to like Jimmy Carr

[frankus]

I learned from my accountant that ear plugs are not tax deductible because you might use them at a gig you go to for pleasure instead of as your job. WTF??

Duality of purpose - it sucks!

[jalapeno]

Bet there'd be less love for Jimmy Carr if he'd gone to Eton

Mind you, a string of Grammar schools and Caius College, Cambridge ......

[Fretwired]

err, that is what he said:

OK I didn't make it clear - it's the 'error of judgement' and the backing down in the face of criticism. If this hadn't been brought to the attention of the public he'd still be using the scheme. I don't like the bloke, but I don't like the public hounding of someone who earned their money honestly and who then uses a legitimate way to avoid tax. Cameron should close the loophole and not whip up a media storm against those who use it. And while he's at it I like his views on Philip Green, the billionaire who gives generously to the Tory party but pays virtually no tax - I wonder if the two things are connected.

I also bet some Cameron jokes make it into Carr's act before long.

[ESBlonde]

Jimmy has got his lump tax free and won't do it again!

I know it has a plethora of potential pitfalls, but the idea of allowing people to use legal tax avoidance is OK but there should be a ceiling or threshold around which some tax must be paid. So for example you can use any scheme or schemes you like in combination but must still pay say 15% of all your earnings over the 40% threashold (currently £34,370) in tax. That way Entrepreneurs can 'invest' in pensions or property of off shore saving or ISAs but will still pay some tax. Don't forget that some of their spending of tax free cash pays VAT and fuel tax and creates further employment for someone.

Moral minefield, yes. Lots of us poor people telling the rich to give up what they have accumulated.

[Pendragon]

and make those who can afford it simply pay up. There is just no reason for any of it other than to allow the rich to pay less tax than they should.

I'm not looking for argument, or wishing to be provocative, but can you please explain why people who are fortunate enough to earn a good salary should pay more in taxation than someone on a lower income?

Clearly, I'm not understanding this line of reasoning. It seems to me there is a widely held belief that someone who is rich, whether by endeavour or birthright, is expected to contribute more money towards the upkeep of this country than his/her less fortunate brethren. Yet the person who is rich is more likely to pay for his children's' education, not need public libraries, not require any welfare assistance/help/subsidy, etc. Bearing this in mind, is not an affront to ask them to pay more just to appease a distorted social conscience?

[melj]

I think the issue is that the rich don't pay their tax in paye as we do, they take advantage of the many and varied loopholes they have access to so that in many cases they don't even pay 40%...

Personally I think avoiding tax wherever you can is something of a civic responsibility, in a similar way to restricting kids pocket money....it just gets frittered away on useless rubbish otherwise.

[Sporky_McGuffin]

I think the issue is that the rich don't pay their tax in paye as we do, they take advantage of the many and varied loopholes they have access to so that in many cases they don't even pay 40%...

There are an awful lot of people who are paid enough to get into the 40% bracket, but not enough to pay for an accountant to get out of paying most of that. Most of the tax avoidance is by people earning an awful lot more than £44k a year.

[fretmeister]

There are an awful lot of people who are paid enough to get into the 40% bracket, but not enough to pay for an accountant to get out of paying most of that. Most of the tax avoidance is by people earning an awful lot more than £44k a year.

Yup.

When the 40% rate was introduced it was aimed at the top 5 or 10% of earners.

Now it catches about 30% because it hasn't moved with inlfation.

I hate to think what Jimmy's accountants fees are to administer the K2 scheme.

[roundthebend]

I think it's worth pointing out (though I could be wrong in my claims here) that "schemes" such as the K2 one that Jimmy Carr was using are not created within the tax system, they are created to take advantage of the tax rules. With that in mind, it goes without saying that those rules exist for a reason - probably (hopefully) one which is genuinely required to make allowance for a certain set of circumstances where HMRC believe that tax relief should be enabled.

What I'm saying is, that with about 26 million income tax payers in the country, then all the other forms of tax, you've got a massive variety of circumstances which HMRC need to ensure they tax fairly. This leads to those tax rules whereby one person can take advantage of it, but others may suffer. If you close those "loop holes" then you might get the cash from those who were taking advantage, but you might let a whole load more people pay less tax.

As an example of this, the IR35 rules that were introduced 12 or so years ago had an affect on many people in the IT industry. In brief, as I understand it, Consultancies will charge out their services to a company at one rate, then pay staff a portion of that as salary. The staff member clearly only pays income tax on their salary. But, if an individual sets up their own consultancy then they were able to charge one fee for services, pay themselves a smaller amount as salary then take the remainder as a dividend which only attracts corporation tax (not employee's/employer's national insurance).

So, it's all very well saying "close the loopholes", "stop these schemes", "change the rules", but we have to be aware that it's a complex field out there.

FWIW, I'm in favour of a higher personal allowance and then a flat rate of tax for all. But I accept that it wouldn't solve all or any of the problems, I just think it's the correct way to do it. Especially since I discovered that I'm on a higher rate of tax than I thought

[Vim Fuego]

personally I'm in favour of the rich being turned into boullion and the poor to be ground up into pet food. Those in the middle will be force fed corn and have their livers turned into fois gras.