No Mr Redwood, you cannot avoid tax on a tax exempt savings account
We are thrilled to see TJN's work quoted in this context, especially our work on the tax gap and the country-by-country reporting standard for multinational companies.
However, we would like to set John Redwood MP (Conservative member for Wokingham) right on the following question:
If a constituent of the hon. Gentleman’s had a deposit in a savings product that was paying interest, on which they were paying tax, and they switched that into a tax-free national savings product, would that be tax avoidance or sensible investment?
No Mr Redwood. Tax-free national savings products such as Individual Savings Accounts (ISAs) are exempt from tax. By definition you cannot avoid tax on income that is exempt from tax. Tax avoidance involves taking deliberate steps to not pay tax which would otherwise be due.
So the answer to your question, Mr Redwood, is that if the constituent switched to a tax-free national savings product, her sensible investment would be exempt from tax.