What is tax avoidance and tax evasion?

There is a big difference between tax avoidance and tax evasion.

Tax avoidance means using the tax breaks within the tax system to your advantage. A simple example would be using your cash Isa allowance to not pay income tax on your deposit savings.

In contrast tax evasion is illegal. This is where an individual or company purposely tries to not pay tax that is due. For example not declaring income that should be subject to income tax.

Tax avoidance in most cases is perfectly legitimate and will form part of any tax planning strategy.

There are some aspects of tax planning advice that are not regulated by the Financial Services Authority. If you would like more information please contact us.