Taxman denied billions after duke’s death
The family of one of Britain’s wealthiest landowners will avoid billions of pounds in inheritance tax after he died this week.
Gerald Grosvenor, the 6th Duke of Westminster, collapsed on Wednesday while walking on his Abbeystead shooting estate in Lancashire as he prepared for the start of the grouse season. He was flown to a hospital, where he died. He was 64.
Police said there were no suspicious circumstances.
The aristocrat, who had been a major general in Britain’s Territorial Army, was a heavy smoker. He was treated for lung cancer four years ago, leaving him in poor health.
He was estimated to be worth £9.35 billion (NZ$16.78b), but his family’s fortune is protected from the taxman after being placed in a series of trusts.
British death duties are normally charged at 40 per cent on an individual’s assets over £325,000. However, the duke’s estate is likely to pay only a fraction of the £3.6b (NZ$6.46b) it would have owed without the tax avoidance measures.
The trustees who control the family’s property and business empire will now be headed by Hugh Richard Louis Grosvenor, who will become the 7th Duke of Westminster at the age of 25.
Although the new duke has two elder sisters, he inherited the title and control of the estate, which includes thousands of hectares of land in Scotland and Spain, through the rule of primogeniture, which puts male children ahead of female siblings irrespective of age.
He will be aware of the pitfalls confronting him. His father suffered a nervous breakdown and depression in 1998, blaming the pressures of business and public appearances.
The duke once said: ‘‘Given the choice, I would rather not have been born wealthy, but I never think of giving it up. I can’t sell. It doesn’t belong to me.’’
The Grosvenor family has been at the forefront of the use of legal loopholes to avoid inheritance tax.
The 2nd duke won a legal battle against the taxman in 1936 after paying his gardener’s wage of £3 a week through a deed of covenant. The House of Lords ruled that it was ‘‘every man’s right to order his affairs to reduce his tax bill by whatever legal means he found available’’. This became enshrined within British tax law, leading to the development of complex avoidance mechanisms for the wealthy.
In 1979 a court ruled that the 4th duke’s entire estate was exempt from inheritance tax because his death from cancer in 1967 had been hastened as the result of a wound he suffered during World War II.
The Financial Times estimated in 1986 that the 6th duke would save £300m – about £600m (NZ$1.07b) now – in inheritance tax by transferring assets into trusts.
John Christensen, executive director of the Tax Justice Network pressure group, said: ‘‘If you are rich enough, you are able to create schemes which mean you don’t face the tax bills the rest of us expect to pay. The public does not understand why the very rich pay so little but for some reason the politicians refuse to take any action.’’