I’m A Celebrity, Get Me Out... of paying tax
Ant & Dec among stars with companies that can slash liabilities
SOME of Britain’s biggest stars are being threatened with a crackdown on their tax affairs which could see them paying millions more pounds to the Treasury.
A string of celebrities channel their earnings through limited companies with just one director and shareholder – themselves.
They include I’m a Celeb hosts Anthony McPartlin and Declan Donnelly, who pay their TV earnings into two identical firms which contain nearly £48million in cash and investments, according to the latest accounts.
The duo will have paid 19 per cent corporation tax on the profits but will not have to pay income tax – 45 per cent for top earners – unless they decide to pay it to themselves, delaying and possibly reducing a £12million tax bill.
This is legitimate tax planning and there is no suggestion they are breaking laws.
At the launch of the Tax After Coronavirus inquiry last month, MP Mel Stride, chairman of the Treasury select committee, talked about the issue “eroding” the tax base.
He said: “There has been a rapid expansion in the number of people operating on their own, through their own company, as opposed to, for example, the numbers that are operating through their own company and employing others.
“All that is fairly suggestive of this being done largely for reasons of tax benefits. And the Chancellor when he brought in the Self-Employed Income Support Scheme did make a nod in this direction. He kind of said, ‘Look I’m going to help out
BY NICK SOMMERLAD the self-employed but there will come a point where I will be looking to you for something’. I think that paraphrases the approach he took.”
When he announced support for self-employed people affected by the crisis, Rishi Sunak hinted at changes to the way the self-employed are taxed once the crisis is over.
He said: “I must be honest and point out that in devising this scheme in response to many calls for support, it is now much harder to justify the inconsistent contributions between people of different employment statuses.
“If we all want to benefit from state support, we must all pay in equally in future.”
Tax expert and ex-government adviser Rebecca Seeley Harris pointed out directors of “personal service companies” were excluded from the lockdown help self-employed people can claim.
She said: “So the money in the company has now been used to support these directors in the crisis and it hasn’t cost the Government a penny, unlike the scheme for the self-employed.”
Other celebrities accused of sheltering cash include singer Sam Smith, 28, who has £7.1million in cash in Sam Smith World Limited, and ex-Arsenal manager Arsene Wenger, 70, who has £6.8million in LAA Promotions Limited.
They would have already paid more than £1million in extra tax each if they were PAYE employees or had declared the income under the self-assessment scheme used by millions of ordinary self-employed people who do not get to choose how and when they pay their taxes.
The manager of one star, who did not want to be named, said: “He has made no money so far this year and I am not looking at booking shows until April.
“The limited company allows us to smooth out the bumps on the road. This is all totally transparent and within the rules.”
Footballer-turned-TV star Thierry Henry, 43, had £665,000 in cash in his company Cluemere Limited after paying out £4.2million in dividends, accounts show. And comedian Katherine Ryan, 37, received £10,000 in director’s salary from her company Kathbum Limited last year and a further £1.75million in dividends, leaving the company with £647,000 in cash.
Tax experts point out the celebs could wait for future tax cuts or move abroad to countries that would allow them to pay themselves the cash tax-free.
In the meantime, cash could be taken out as dividends, with lower tax rates, or they could pay the cash out in smaller sums over a number of years and repeatedly benefit from lower tax bands.
During the 2012 London Mayor race, Ken Livingstone faced criticism over his limited company to channel his media earnings.
His then-rival Boris Johnson described him as “someone who had deliberately set up a taxdodging manoeuvre”.
More than 170,000 people have set up personal service companies into which they pay their earnings.
Data compiled by Fame by Bureau van Dijk, a Moody’s Analytics company, found 1200 firms owned by a sole shareholder with at least £500,000 in cash which held in reserve a combined total of £1.65billion.
Much will be legitimately being held for investment or trading but some will be earnings that have not yet been taxed.
It is disgraceful to be attacked.. by someone who has deliberately set up a tax-dodging manoeuvre BOJO SWIPES AT LIVINGSTONE IN 2012