What is the difference between tax avoidance and tax evasion?
Tax avoidance means using legal ways to reduce the amount tax individuals or companies have to pay. Sometimes this is justified – ISAs are a form of tax avoidance to help people save. But a lot of the time, the system is abused.
Tax evasion is when individuals or companies deliberately do not pay the taxes that they owe and it is illegal.
What are you doing to tackle tax avoidance and evasion?
We are putting £917 million into tackling tax dodging, including:
- Closing tax loopholes. For example we have closed Labour’s tax loophole for private jets.
- Extra taxes to stop tax avoidance. For example we’ve created a Mansion Tax for tax dodgers that’s impossible avoid.
- Agreements with tax havens to declare information about people hiding money offshore
- Prosecuting more people who break the law, using 200 new criminal investigators
- Working with other counties to update the international tax system, which has been largely unchanged for 100 years and lets multinational companies avoid tax
How much extra money will the government get from cracking down on tax dodging?
By 2015, we will be getting an extra £9 billion each year thanks to our efforts.
What success have you had so far?
Here are just a few of our achievements:
- 33 tax loopholes closed
- 1,000 new tax investigators
- £9 billion being clawed back through deals with Switzerland, Liechtenstein and the Channel Islands
- £500 million clawed back from the 5,600 wealthiest individuals
- 262 banks signed up to the Code of Practice on Tax, stopping them from promoting tax avoidance
- An extra £1.4 billion by using better data to detect fraud
- Prosecuted 10 times more people for tax evasion than in 2010