Tax planning under fire from the Press

David Hill INLT 45-099-PSB

David Hill INLT 45-099-PSB

I don’t easily get annoyed, but the nonsense that I have read in the newspapers last week regarding David Cameron’s offshore investments really did irritate me.

An offshore bond, or an offshore unit trust, is a perfectly normal investment vehicle where growth builds up offshore without deduction of tax.

And then when the investment is cashed in, UK tax is paid if the profit is above the annual exemption.

This is an established part of UK tax law and is in no way controversial.

Indeed, if David Cameron (pictured) had wanted to avoid tax, he would have been better buying shares in an ISA , as the profits on an ISA are always going to be completely tax-free.

And it is ridiculous to think that an ISA is tax evasion.

Just as I started to calm down, the Mail on Sunday headline took this journalistic nonsense to a new level. Apparently, David Cameron’s mother gave him a gift of £300,000 and he didn’t pay tax on it.

That is probably because there is no law that remotely suggests that tax should be paid on a gift to an individual, unless the donor dies within seven years of making the gift.

Imagine the situation if we had to pay tax every time our parents gave us something!

We do have a moral duty to pay taxes that are due and if it transpires that complex, artificial arrangements were set up by an politician, then they should be rightly criticised.

But making use of approved allowances by investing in ISAs, pensions and trust funds are perfectly normal parts of financial planning and probably always will be.

David Hill is a Chartered Financial Planner and Independent Financial Adviser at Hills Financial Planning, 15 Agnew Street, Larne. He can be contacted on 028 28276814 or by email: david@hillsfinancialplanning.co.uk