Tax avoidance – don’t get caught out

What is tax avoidance?

Some people try to bend the rules of the tax system to pay less tax than they should.

With our support, spotting tax avoidance is straightforward. You may think it is difficult to spot, or that you need to be an expert. We can show you how to protect yourself from tax avoidance schemes.

Check your pay

Understanding how you’re being paid is the best way to make sure you don’t get caught up in tax avoidance. This applies to people in PAYE as well as Self Assessment.

Checking your payslips and contractual arrangements will help you confirm you are paying the right amount of Income Tax and National Insurance contributions. Doing this will mean you avoid getting an unexpected tax bill later.

Things to look out for include:

• receiving more money in your bank account than what is shown on your payslip
• receiving untaxed payments like loans or capital advances

The money you receive in your bank account should match the net pay on your payslip. To understand more about what your payslip should look like, read our payslip guide.

You can also use this risk checker to spot whether any of your contracts could involve tax avoidance.

Steer clear of avoidance schemes

Check HMRC  list of tax avoidance schemes that we’ve named. If you are involved in any of the tax avoidance schemes shown on the list, you should get in touch with us as soon as possible.

Please keep in mind, this is not a complete list of all tax avoidance schemes currently being marketed.

If a tax avoidance scheme is not shown in the list, this does not mean that the scheme works or is in any way approved by HMRC.

Umbrella companies – understand how they work

If you’re a contractor, you may be employed through an ‘umbrella company’. If you’re not sure, it’s best to check as some umbrella companies try to break the tax rules.

You may be at risk. But if you understand how umbrella companies work, you can take steps to avoid these risks.

Post Courtesy – HMRC website. Post edited to make it smaller.