Bookmakers have to pay income tax the same as anyone else. Sometimes they have good days, and sometimes they have bad days, but on average they make a profit or they wouldn’t be in business at all. The Revenue allow them to offset the losses which they make on bad days against the profits which they make on good days, which is only fair considering the nature of their activity.
The Revenue views pensions as deferred pay. That is, if you save 10% of your income in a pension fund, then you will only pay income tax on the 90% which you declare as earnings this year, and the 10% in the pension will be taxed as income when it is paid in a future year.
This isn’t something which will affect many people around Carlisle, but let’s just explain it in a light-hearted way. Suppose that you are a prince in a country where alcohol and gambling are illegal. The night life is dull, so you head for London and take up residence in a hotel in Soho. While you reside in the UK, dividends from any British shares which you happen to own are taxed in the usual way, just like one of the natives. If you die in this country, then assets which you own in this country are assessed to inheritance tax, but assets which you own abroad escape the inheritance tax net. This is the privilege of being non-domiciled.
Suppose you have a pension fund and you think you could do better by reinvesting it as a pension fund elsewhere. You go to an Independent Financial Adviser to ask about doing this. This adviser needs to have passed an additional examination usually known by its code number as G60, and hardly anybody has done this.
We have previously argued that if you have a pension fund, then you must buy an annuity to insure yourself against the risk of living a long time and requiring the income to match. If you do live a long time, then you get a cross-subsidy from all the other pensioners who die before you, and this keeps your annuity going. I have tried some spreadsheet modelling on this, and there is no magic scheme which can guarantee a substantial lifelong income other than the standard annuity.
Most people reading this were born in the United Kingdom, have lived here all their lives, and still live here. They are obviously British. For the purpose of paying income tax, they need to declare their worldwide income, including income received from overseas. If their total income is substantial, then they may have to pay income tax at higher rates, known as surtax.
Public accountants face a big deadline on January 31st when they need to file electronic tax returns on behalf of their income tax clients. This keeps them very busy in December and January, and leaves them with little to do in February and March.
So what exactly are Digital Tax Accounts? They sound like a wonderful idea. Your bank’s computer looks at your sales income, works out how much tax you need to pay, and then deducts it. No more hassle. No more annual accounts or tax returns. No more accountancy fees. Me out of a job?
It’s time to remind ourselves that Napoleon lost the Battle of Waterloo. He was defeated, in part, by an innovative new tax called income tax, which was introduced as a temporary measure, and intended to be in substance a voluntary levy raised in order to defeat the common enemy.
Politicians love to moralise about how we should all be paying our fair share of taxes. Well, can anyone remember non-corporate distribution tax? This tax:
(1) Never appeared in any manifesto.
(2) Was introduced and repealed within the lifetime of one parliament.
(3) Is rather too complicated for the average MP who voted in favour of it to be able to do even the simplest calculations.