There has been much said about the revelations of the Paradise Papers recently. The media seem to be carrying out a witch hunt because people have dared to use completely legal schemes to avoid paying tax.
As a financial adviser I regularly advise clients on ways to save tax. Income, capital gains, inheritance and corporation tax.
I was listening to Jeremy Vine on Monday 6th November. One of the callers was upset that ‘the rich’ were using these legal schemes to save tax, however he made a very interesting comment – he and other ‘ordinary people’ were not earning anything on their savings. He asked why were these schemes not available to them?
In other words he was not against such schemes just the fact that he didn’t know how to access them.
The truth is that there is a difference between him and the likes of Lewis Hamilton etc, the latter realise the value of getting advice. Financial advice is available to all but many people do not appreciate the value of it. If I said to that caller pay me a fee of £1,000 he’d bulk, without understanding that I could probably save him £10,000 in tax.
Some of the schemes are only available to the super rich because of the complexity and associated charges but many schemes are available to those with considerably less money. A pension scheme will give an immediate 20% tax benefit, yet too few ordinary workers use this to maximum benefit.
* A recent survey showed that consumers would not pay a fee of £500 for financial advice – there lies the issue!
Financial advisers spend years and lots of money learning their profession as well as continually maintaining and updating their knowledge.
This knowledge and experience can provide the general public as well as the super-rich with excellent advice helping all achieve their goals, be that seeing their money grow, having sufficient income in retirement or paying less tax. But to obtain this advice an individual needs to appreciate the value of paying for such advice.
Those that pay, reap the benefits. Those that don’t are the ones that whinge about it being unfair.