Monday, 26 March 2012

Avoiding taxes in UK legally

avoiding taxes uk
If you are hard working british citizen earning about 40000£ per year you pay in income tax 10437£ per year. Four month a year you work only for paying income tax and national insurance. Just imagine you can leave this money with you legally. What you prefer a new car, refurbish your house, paying your mortgage or get rid of your debt. You deserve that ,you work hard for that.

If you work as an employee on a permanent basis and employer pay salary on your account after making tax deductions, you probably won’t be able to avoid anything. Let’s calculate.

Earnings SummaryYearlyMonthlyWeekly
Gross Pay£40,000.00£3,333.33£769.23
Tax Free Allowances£8,105.00£675.42£155.87
Total Taxable£31,895.00£2,657.92£613.37
Tax Due £6,379.00£531.58£122.67
Basic Rate - 20%£6,379.00£531.58£122.67
National Insurance£3,888.96£324.08£74.79
Total Deductions£10,267.96£855.66£197.46
Net Earnings£29,732.04£2,477.67£571.77
Employers NI£4,486.66£373.89£86.28

Changing your employment status to contract with the same earning can makes wonder. First self employed pay a little bit less, and more important you will have an amazing opportunity to claim for tax returns. You can claim for every purchase you made can be considered for your business.

My friend Bob repairs and cleans houses, he claim for every possible item. He uses car for moving his equipment and construction materials, so he added car, instruments and many other items totally reached 20 000£, so he earned £34,567.65 from the same 40 000£ gross income just paying £5,432.35 in taxes. I was a computer programmer in the past working on contract. I like gadgets, phones and computers, one year i bought these devices for 5000£ and claimed for tax return for all of them. I claim for IPad, IPhone and IPlayer, because I needed to test how sites work on them, I also successfully claimed for desktop, laptop, router, and even TV with playstation and XBox because i needed to test sites on consoles too. Sometimes I was working at home with remote connection to our company server at extra hours using my table and a chest at home - I claim for them too.

Claiming for tax return give some cuts but it is still not a zero tax. To pay zero income tax you should be considered as non UK resident. That doesn’t mean you cannot be be physically at the uk for the whole year. Determining where residency is complex depending on how much days spent in the UK on the tax year. If you are a news correspondent or software developer or have any other profession which allow you work remotely from the office most of the time you can move to any of the countries with no income tax, or with low income tax. If you are outside of UK and considered non resident you are under a law of hosting country. You will considered as not resident if:

  • your absence and employment from the UK covers a complete tax year (that is 6 April to 5 April)
  • you spend less than 183 days in the UK during the tax year
  • your visits to the UK do not average 91 days or more a tax year over a maximum of four years


All you need is to do is to go to one of that countries: Andorra, Bahamas, Brunei, Kuwait,
Maldives, Monaco, Nauru, Oman, Qatar, United Arab Emirates, Vanuatu. Open bank account there. Then return back to UK find a job without presence in the office, give your employer your offshore bank account details and move there.

I did that starting working for one british IT company remotely as software developer. I can communicate with skype, having conferences, vpn access to their office network. I travel sometimes to UK and other countries but I pay 0 income tax and no national insurance at all because I am not the resident and this is absolutly legal.

This offshore bank account is great, they give 9% rate per year. Finally I gathered money to invets rather than paying rates on loans and taxes. 
If you mind about staying in UK you can solve this out by creating an offshore company. Here is my next blog about saving money in offshore.


  1. Hmm it's a good topic to discuss on. What about when it will come against any huge cash loan has taken by any uk residential person. Is it applicable for that? If the answer is yes then what is the way out? Please some one gives advice on it. Thanks in advance.

  2. It depends what type of loan you are going to get. You can get mortgage being non UK resident. Even foreigner without UK citizenship can get mortgage in UK . Rate probably could be slightly higher. But if you manage to provide for bank strong income proof you can get the same rates. Usually they need the proof of income from two sources. As a first proof you can get payment invoices with official letter from employer company. As a second proof an account reference from offshore bank. It would be more difficult to get car or customer loan, it depends on bank policy and personal luck.

  3. Concerning to cash loan you can get it before moving out of UK and become non resident. If you pay it properly after becoming non-UK resident it will be fine.

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