ODE TO TAX

• How do I tax thee? Let me count the ways.
• I tax thee on your cars, homes and all I might
• Grab with my hands when not in sight
• For saving, working or owning a place
• I tax thee to the hilt almost every day
• In life or death, you’ll have to pay
• I tax thee freely as you strive for right
• I tax thee purely sometimes out of spite
• I tax thee with a passion so there’s no use
• Of non-dom statuses or off-shore trusts
• Your global wealth it is a must
• Crocodile tears but with my last breath
• I shall tax thee better after death.

Thank you Elizabeth Barrett Browning for poetical inspiration on this subject.

Saddo that I am, I sat down yesterday to list all the ways in which we’re taxed in the UK and within minutes almost filled a sheet of A4 paper. When you look at just how much is put away either directly or indirectly into the gaping Government maw, it’s enough to give you the heebie-jeebies! Don’t try this exercise at home without first downing a large glass of Southern Comfort, the list is scary.

Before putting pen to paper, I asked myself if it would be easier to just list all the duties, levies or taxes either alphabetically or in size/priority order but in the end I felt it would make more sense to lump them under a few broad categories as follows:

Work – From the moment you set foot in a workplace until retirement, the tax clock swings merrily back and forth, tick-tocking away in the background like an invisible money metronome. Income tax, national insurance contributions, online selling taxes, corporation tax, taxes on property/room rental, etc. Whether you own or run your own business, have a side hustle or simply work for someone, there’s no escaping taxes. I’ve been working almost continually since I left college – that’s 44 years of paying employment related taxes.

Spending – Not content with picking your wage pocket, what’s left to spend is then subject to a whole host of other insidious unseen levies or duties such as VAT which is applied like thickly spread butter to almost every product or service you acquire, be it essentials or sin taxes such as duty payable on booze, fags or gambling.  

Vehicles – Having squirrelled away a few pennies, the first thing most young people do after getting a job is to buy a car. What you don’t realise as you screech away from the forecourt leaving a trail of rubber on the tarmac, is that at the same time you’ve also signed up to a lifetime subscription to HMRC. Vehicle excise duty (road tax), fuel duty and insurance premium tax continue to erode your earnings until you can’t read the small print or realise that wasn’t the brake pedal. (Bang!) I passed my driving test at the age of 23, that’s 40 years of paying vehicle related taxes.

Property – After a car, comes a house although these days the chances of getting onto the property ladder before you’re 50 are pretty slim. When you buy or sell property, the Chancellor does a little rain dance. Whoop! Whoop! Another one bites the dust. Yeah baby! Rubbing their hands with glee at the thought of all that filthy lucre - stamp duty, council tax, capital gains tax (second homes) green energy levies (added to bills) flowing into the coffers. Honestly, young people are probably better off never leaving home and just living at their parent’s expense. Eventually, Britain will become like other countries where you have three or four generations living in their own familial commune to cut down on property or social care expenses. I stepped onto the housing ladder at the age of 20, buying a small flat jointly with my ex-husband so I’ve been paying property related taxes for over 42 years.

Savings/Pensions – So you’ve come to the end of your working life. In addition to shelling out a chunk of your hard-earned dosh in the previous four broad tax categories, you’ve somehow had a little left over to put away either into a pension or savings account for that retirement rainy day. Wake up and smell the coffee as your nice little nest egg is being eyed up by the tax magpie perched in the branches above. Yep, nothing’s sacred to these scavengers! There are taxes to be paid on share dividends, savings accounts (if interest is over £1,000 or not in an ISA) and every time you draw down on your pension pot, 20% is handed over to the Revenue. As I’ve said before, there’s little incentive to save for your old age – may as well have the best life you can whilst you’re young then live off the state.

Death – And the above last statement is vitally important if you want to limit the very, very, very last tax bill you and your loved ones may need to pay once you finally kick the bucket. When you die you transition from being an earthly taxpayer to being a heavenly one. Nothing is certain in life but death and taxes. Especially the Inheritance Taxes. 

It really takes the biscuit and smacks of double taxation thinking that you've paid taxes all your life out of your earnings or as a consumer then you have to pay AGAIN when you die.   You may be a 20% taxpayer in life but when you die, magically you move into a higher tax bracket (40%) if the grand total of all your worldly wealth exceeds a certain threshold.

The trick here is to ensure it doesn’t but even that is about to become harder if current revenue raising rumours are to be believed. How to limit your IHT bill? Here’s a few suggestions: Ensure you spend, spend, spend before dying. Buy nice clothes, splash out on expensive useless anti-ageing treatments, eat at the finest restaurants. Go to theatre, concerts, festivals. Don’t worry about dynamic ticket pricing as it’s doing you a favour by mitigating your IHT.

Employ gardeners, cleaners, chauffeurs, to help with daily chores. Pay them cash in hand. Give generously to charities – money or assets. Charities will take that old stamp or coin collection that’s been gathering dust for years off your hands. Financially help your children while you can. If you have grandchildren, pay for their university fees, driving lessons or house deposit. Take family holidays together in your old age with you footing the bill. There’s no tax law against that is there?

Your golden years are effectively a last chance saloon – make memories not money! Memories can’t be taxed. Your kids, grand kids, relatives will thank you for all those fun times had together and you can finally give a two fingered salute to the Tax Man with your dying breath safe in the knowledge your worldly wealth is less than the IHT threshold.