Basic taxation

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2. Keep it legal

The hallmark of good tax planning is that it will pass the HM Revenue & Customs' scrutiny with flying colours, even where complicated family trust arrangements and considerable wealth are involved.

It is important to keep in mind the way HM Revenue & Customs distinguishes between the various attempts to minimise tax liability.

In particular you need to understand the terms "mitigation", "avoidance" and "evasion". Although these tend to be used indiscriminately, their meanings are very different.

• Mitigation:

  If your tax saving has been encouraged by the government - for example you hold your investments in an individual savings account (ISA) or a pension plan - that is mitigation. Make the most of the investment opportunities on which the government smiles.

• Avoidance:

  Accountants might argue the point but broadly speaking avoidance, while not illegal, involves saving tax by using certain loopholes in the law. Some of these are tolerated but others exist only because HM Revenue & Customs hasn't got around to closing them or because to do so would create an impossibly complex set of rules. Proceed with caution.

• Evasion:

  If you deliberately omit something from your tax return or give a false description, that's evasion. You have not just been dishonest - you have acted criminally and could be fined or imprisoned.

1. Your tax breaks courtesy of the government 2. Keep it legal 3. Income tax - first principles 4. Income tax - keeping it in the family 5. Capital gains tax (CGT) 6. How to avoid CGT on your share portfolio 7. Inheritance tax (IHT) planning 8. The most popular tax efficient investments 9. The tax treatment of collective funds 10. Tax efficient but may be very risky 11. Self assessment - who needs it? 12. Self assessment - key dates 13. Do you need an adviser? 14. Conclusion