How the super rich dodge tax
Nevertheless, HM Revenue & Customs (HMRC) figures indicate that the government loses some £45 billion a year in tax unpaid by high net worth individuals. Here, we look at some of the tricks they use and whether there is anything we can learn from them.
Stamp duty avoidance
Ultra wealthy individuals have often avoided paying stamp duty on residential properties in the UK by buying them through an offshore company.
Recent analysis of apartment owners in the super-luxe One Hyde Park development in London, for example, shows that 50 out of the 56 properties sold so far for a total of £1.1 billion are owned by offshore companies.
These include Water Prop Holdings, thought to be a front for the Ukrainian oligarch Rinat Akhmetov, and a Cayman Islands-based company called Park One, whose real owner is His Excellency Sheik Hamad bin Jassim bin Jaber al-Thani of Qatar.
However, such deals now look to be a thing of the past, with Chancellor George Osborne cracking down on "corporate envelope" purchases as well as increasing the stamp duty on UK properties sold for more than £2 million from 5% to 7%.
He said in his Budget speech: "If you buy a property in Britain that is used for residential purposes, then we will expect stamp duty to be paid.
"I am increasing the stamp duty land tax charge applied to residential properties over £2m brought into a corporate envelope. The charge will be 15%. And it will take effect today."
Swiss bank accounts
In the past, one of the most popular ways for the super rich to avoid tax was to squirrel their cash away in a Swiss bank account.
This worked well for them because Switzerland, like Monaco, the Cayman Islands and Jersey, is a global "tax haven" where the wealthy can legally avoid almost all forms of tax.
However, the Government has since acquired the Swiss bank account details of up to 6,600 wealthy Britons suspected of evading tax.
Thanks in part to this crackdown, HMRC's elite High Net Worth team, which deals with the personal tax affairs of about 5,000 of the UK's wealthiest individual customers (most of whom have assets worth £20 million or more), has has this year collected about £162 million in tax, compared to just £25 million two years ago.
Offshore bonds are insurance wrappers that allow you to defer tax on your investment. In other words, there's no income tax to pay until you cash in all or part of it.
And unlike the tax dodges described above, offshore bonds can be used by ordinary investors, as well as the super rich.
Remember, though, that if you do cash them in, you will end up paying tax at up to 45% (depending on your income tax band).
You can avoid this by passing them on to a spouse or child who pays a lower rate of tax, or by holding on to them until you retire and move into a lower-rate tax bracket.
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