Clever ways rich celebrities play the tax system – and how you can end up paying even higher rates than them | The Sun

THINK tax is a rigged game? You might be right.

In a new book, a rogue accountant breaks ranks to share his view of how the rich manage to make their tax burdens disappear.

He believes the system not only favours the wealthy, but was founded with that in mind.

Here, The Rebel Accountant shows the celebs who cleverly played the system – without breaking any rules – and argues we need a complete overhaul to make things fairer for everyone.

The last time you bought a car, how did you do it?

Did you just buy the car, or did you set up a string of companies based in tax havens in an elaborate ruse to avoid VAT?

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Your answer probably says something about whether you need a new accountant.

Specifically, an accountant like me.

Lewish Hamilton saved £3.3m

When Formula 1 driver Lewis Hamilton wanted his own plane, he set up an offshore company that bought a £16.5million jet, then leased it to "business users," which allowed his company to get the jet VAT-free, saving himself £3.3 million.

The trick is that he then became the sole customer of his jet-leasing company, effectively meaning it was his own private jet.

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Although that’s a detail he may prefer we gloss over, there was nothing illegal about this, he was just taking advantage of the law as it’s written.

Some people might call this tax planning, not so different from putting more money into your pension.

Too often, though, the law is written in a way that allows the rich and famous to use certain ‘arrangements’ to minimise their tax.

Tony Blair avoided stamp duty

Former Prime Minister Tony Blair was revealed in 2021 to have used a perfectly legal loophole to buy a £6.45million town house in London’s exclusive Marylebone.

If you’re lucky enough to have bought your own home, you probably paid “stamp duty land tax” at rates between 1 per cent and 15 per cent on the price you paid for your home.

But Blair avoided stamp duty on his Marylebone town house by not buying a £6.45million town house in Marylebone.

Instead, he bought a company registered in the British Virgin Islands that happened to own the £6.45million town house that he had his eye on.

There’s no stamp duty when you buy British Virgin Island companies, so this was a trick that saved Tony a few hundred thousand pounds.

Not that Blair is alone in using this ruse. There’s an estimated £100billion of UK property owned by foreign companies, many of which are based in tax havens.

And tax havens haven’t just been used for buying houses.

Jimmy Carr's tax haven

Comedian Jimmy Carr avoided income tax by using a trust in the tax haven Channel Island of Jersey.

Rather than be paid for his performances, the Jersey trust loaned him money instead.

The loans were designed to never be paid back by Jimmy, so he got the cash but not the taxable income. (He’s since apologised and paid the tax he avoided).

Not that you need a tax haven to avoid tax.

Chris Moyles' new job

Former Radio 1 DJ Chris Moyles wiped out the tax bill on his £630,000 salary by joining a tax avoidance scheme that involved him claiming to be a used car salesman.

The scheme involved him paying a £1million loan arrangement fee on a £5,000 loan, which created a £1million tax loss on his car salesman business.

The clever bit of his scheme was that the £1million fee was paid back to him via a string of other companies. So he ended up no poorer by paying the fee, even though the fee had created a tax loss.

Sometimes tax is weird like that.

Tax-saving investments

When the Government introduced a number of special tax breaks to encourage people to invest in films and music production and high-end TV, accountants quickly found ways to magnify the effects
of these tax breaks way beyond what the Government intended.

One of the schemes created by tax experts was sold to a host of celebrities including Olympic athlete Colin Jackson, TV presenter Gabby Logan and Take That’s Gary Barlow(as well as a surprisingly large number of orthodontists).

The scheme was designed to save £2.50 in tax for every £1 they invested by using borrowed money to create outsized investments that were then written off to create tax losses.

Along with two bandmates and his manager, Gary is said to have invested £66 million in this scheme.

But whilst the Government has tried to crack down on these sorts of tax avoidance schemes, one of the most unfair things about our tax system isn’t the loopholes that get exploited by the rich and famous.

I believe our tax system is specifically designed to allow the very rich to pay less tax.

Ronaldo's £16.5m fine

Some celebrities even have tax laws named after them.

When David Beckham was playing for Real Madrid, the Spanish introduced “Beckham’s Law”, that allowed wealthy non-Spaniards to pay lower tax rates than their cleaners.

Labour Party leader Sir Keir Starmer received tax breaks on his pension due an act of parliament called the Pensions Increase (Pension Scheme for Keir Starmer QC) regulations.

Amusingly, perhaps, it was the abolition of Beckham’s Law that caught Cristiano Ronaldo out, and led to Ronaldo paying an €18.8 million (£16.5m) fine for underpaying his taxes.

Shamefully, our tax system allows most seriously wealthy people to routinely pay tax at less than half the rate that you do.

How? Because most of what you earn is likely to be "income" – such as your salary. And income is very heavily taxed.

You might think you pay tax at a rate of 20 per cent, but you probably pay at least double that, once national insurance contributions (NIC) are included.

If you’re an employee, you don’t just pay an extra 12 per cent NIC on your salary, but your employer pays 13.8 per cent NIC too – and that’s money they could have paid you.

In fact, if your boss has £100 cash to pay you a bonus, you’ll be lucky to be left with £59 of it after income tax and NIC.

You’ll get even less if you’re paying back a student loan, or are having your universal credit or childcare benefits tapered away.

So you may really be paying more than 40 per cent tax.

But for the rich it’s a different story, because their wealth is tied up in businesses, meaning they pay a lower rate.

Amazon boss Jeff Bezos, a man so rich he can literally take his holidays in space, was revealed to pay a tax rate of 25 per cent.

Prime Minister Rishi Sunak recently announced that he paid tax at an average rate of 22 per cent.

Former Chancellor of the Exchequer Nadhim Zahawi paid tax of less than 15 per cent on the £27 million he extracted from an offshore company.

In all three cases their low tax rates aren’t because of some clever loophole, but were because their wealth came from "capital gains" rather than income.

In other words, they get their cash from selling investments they own, rather than drawing a salary.

And for inexplicable reasons (unless somehow the rich and powerful are influencing tax policy), since the days of Gordon Brown, capital gains are taxed at lower rates than income.

But that’s not the worst of it.

For all the outrage we may feel that the super-rich aren’t paying their fair share, you might at least get some satisfaction that you’re contributing something to the economy by paying your high rate of tax.

You’re helping to pay for all the schools and nurses and slightly quicker trains to Birmingham, right?

It turns out it’s not that straightforward.

'You're subsidising a tax break for your boss'

If you’re in regular employment, your salary is someone else’s expense – your boss has to pay your wages, and those wages reduce your boss’s income.

But a lower income for your boss means your boss pays less tax.

And if your boss is in a higher tax bracket than you (for instance if they earn more than £50,000 per year and you earn less than that) then the tax your boss saves on your salary will be more than the
tax you pay.

So you’re not paying for the schools and hospitals after all, you’re just subsidising a tax break for your richer boss.

If you actually want to contribute more to the Government’s coffers you’d be better off asking your boss for a pay cut.

Try Lorraine Kelly's trick

But if you would prefer a tax cut, you could always try what TV presenter Lorraine Kelly did.

She successfully argued that she wasn’t an employee of the Lorraine show, but rather was more akin to a self-employed actor playing a role – her role being a chattier, more positive version of herself,
and as such she should be subject to lower rates of tax, as self-employed people are.

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So if you think you play a chattier, more positive version of yourself at work, have a word with your boss.

TAXTOPIA: How I Discovered the Injustices, Scams and Guilty Secrets of the Tax Evasion Game by The Rebel Accountant is out now.

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