This week George Osborne told The Telegraph that he was shocked by how the richest arranged their affairs in order to avoid paying income tax.
Following an HMRC report, the Government announced some measures that were designed to both prevent tax evasion (which is illegal) and discourage tax avoidance (which is not).
Firstly the rate of income tax for the highest earners is to be lowered after the report revealed that a large number of individuals found ways to avoid paying the increased rates.
Other measures include limiting charitable donations for higher earners, who once got unlimited tax relief for donations; Increasing stamp duty and cracking down on those who buy through offshore companies as well as scrutinizing the anonymous tax habits of the countries richest.Measures taken in the past included:
- Avoiding stamp duty by buying property through an offshore company.
- Giving large donations to charity.
- Putting money into a Swiss bank-account.
- Investing in offshore bonds.
Some tax dodgers go to extreme lengths. The Daily Mail recently reported that one wealthy individual spent his nights flying outside of UK airspace in order to stay in the UK longer without paying tax.