You’ve possibly read in the newspapers of various celebrities and successful business who manage to avoid or at least substantially minimize their UK taxes while a large proportion of common people are paying nearly 50% of their income in tax. Well, there’s nothing to stop you using a few of these techniques to slash your UK taxes too, depending on your circumstances.
Here’s a few of the techniques that the Rich & famous use:
Take full advantage of your offshore status
People like Mohammad al Fayed make tremendous use of their non UK domiciled rank. If you’re an international national and were born overseas (typically your father will have been a non UK domiciliary at the date of your birth) you can avoid paying any tax on your overseas income and investment gains. The major condition to that is you must keep the income or perhaps proceeds outside the UK. As you can expect though you will find ways about this to enable some of the proceeds and income to be brought in to the UK without any taxes.
Take benefit from your spouses offshore status.
If you are lucky to have a husband or wife that is definitely either non UK citizen or non UK domiciled you can use their offshore status to your advantage. And this Philip Green did (the billionaire owner of BHS). His wife is a resident of Monaco and he ascertained that she extracted returns from her UK companies without any UK (and overseas) taxes. This saved him paying UK taxes of around 200Million which he could have otherwise had to pay if he’d taken the returns.
Using a tax efficient holding company.
Famous bands like U2 and also the Rolling stones utilize some of the best offshore tax companies in order to avoid paying tax on high of their income. U2 for example used to fall from the Irish tax regime which had a longstanding tax exemption for artists. When this loophole was tightened up, they changed their holding company to the Netherlands to take benefit from tax free royalties. There are lots of other countries which could also provide tax efficient holding companies just like Spain, Denmark and Cyprus.
Using tax efficient trading businesses.
Multinationals like Coca Cola make good use of a string of offshore companies so they could redistribute profits in the group to lessen the total ‘effective’ rate of corporation tax. (It is actually reducing this specific effective rate that is the main focus of countless in property tax lawyers lives! )
Actually transfer overseas Celebrities like James Frank, Michael Schumacher and Boris Becker have all transferred offshore to be sure they have only minimal UK tax obligations. They’ve based themselves in Switzerland and are local citizens. The wonder of Switzerland is the ‘fiscal deal’ that allows the tax liability to be fixed with an artificially reduced amount.
So there you have it: some ideas to get you thinking about how you can use the offshore tax planning techniques and contractor accountants of the rich and famous.