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Report identifies UK as world's first “onshore” tax haven

The UK’s 54 billionaires are paying personal taxes on only a fraction of their wealth, according to a report by accountants Grant Thornton. It identified the UK as the world’s first “onshore tax haven”.

The report was commissioned by The Sunday Times to calculate the scale of legal tax avoidance by the country’s wealthiest people. This was after HM Revenue & Customs (HMRC) blocked requests to disclose their aggregate payments under the freedom of information laws.

According to Grant Thornton, the UK billionaires paid income tax totalling just £14.7m on their £126 billion combined fortunes, and only a handful paid any capital gains tax.

At least 32 of the individual billionaires or family groupings are calculated not to have paid any personal taxes on their fortunes, although they are liable for Vat and council tax.

The only figures to have been released by HMRC reveal that the 5,000 Britons earning more than £1m paid direct taxes at an average rate of 34% last year. By comparison, those earning between £500,000 and £1m paid 35.5%, and those earning between £200,000 and £500,000 paid 34.3%.

Mike Warburton, senior tax partner at Grant Thornton, said: “Some of the world’s wealthiest people are now using London as their base. One of the reasons is that for many of them the UK is effectively a tax haven.

The accountants analysed the published accounts and other records publicly available on the 54 billionaires, which was sufficient to estimate their likely personal tax liability. The analysis concluded that, in total, the 54 billionaires paid an estimated tax bill totalling £74.5m. James Dyson, the inventor worth £1,050m, contributed the bulk of the income tax paid by the billionaires — £9m of the £14.7m paid by all 54. Of the 22 billionaires who paid tax, it was mostly on share dividends paid by their companies.

The analysis also revealed widespread use of offshore tax havens. At least 42 of the 54 billionaires make use of havens such as the Channel Islands, Switzerland and the Caribbean.

The most common loophole used by billionaires is to take advantage of the British system of offering “non-domicile” status to foreigners, or those with foreign-born parents, living in this country. Under the scheme, foreigners can legitimately claim they are “domiciled” abroad even though they may carry British passports and may have lived in Britain for decades. So-called “non-doms” place their assets offshore and pay tax only on money brought into Britain.

Other billionaires with British roots benefit from another loophole in the tax laws — by becoming non-residents. This allows them to move abroad, typically to a tax haven, but return to this country for a maximum of 90 nights a year.

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