Ken Livingstone, London Mayoral candidate and previous critic of personal tax avoidance through company structures, has been unveiled as no better than those he sought to criticise from his moral high ground. He even went as far to say that tax avoiders should not be allowed to vote.
Red Ken set up a personal company with himself and his wife as shareholders and earned thousands of pounds in the years 2009 and 2010. This arrangement, so the Daily Telegraph reported, enabled Mr Livingstone to avoid £50,000 of tax, that being the difference between the lower rate of corporation tax than under income tax and through dividend payments. The ex-London Mayor, however, claims that the corporation tax together with the tax on his payout from the business meant that the effect was the same as if his income had simply been subjected to income tax.
Whilst the former MP has not done anything illegal and simply organised his affairs in a tax efficient manner, given his previous comments about tax avoidance, this is a case of pot, kettle, black (not red)!
“… that being the difference between the lower rate of corporation tax than under income tax and through dividend payments.”
Come off it you have to do better than that as a contractor site!!!
He does NOT avoid income tax. Surely everyone here knows that at the end of each tax year HMRC assess tax returns and look at total drawdown and total earned income. If the effective gross salary would exceed the upper earning limit (UEL) i.e. the 40% start point, then they simply issue a demand for the difference.
He may well be ABLE to avoid NI, but you’d have to look at exactly how he chose to make payments to himself.
The key point here is that this started in 2009 – the year AFTER he was mayor. The income is for things like speaking engagements – what’s wrong with that? Who do you suggest is his “employer” in this scenario?
I’m no fan of Ken, but I don’t see much wrong here (yet).
The article clearly states that Mr Livingstone had done nothing wrong & that he simply arranged his affairs in the most tax efficient manner. The whole point of this article is to highlight the dichotomy of what Mr Livingstone does & what he says. It is a paradox that is surely obvious.
Upper earnings limits relate to NIC thresholds. The 40% tax rate is known as the higher rate.