CAMERON TAX BILL DODGE ON MOTHER’S £200K GIFT
New row over historic decision to publish the PM’s tax return ...after it is revealed family may avoid £70k in death duties
DAVID CAMERON faced a fresh row over his personal wealth last night when it emerged he stands to avoid a £70,000 tax bill following his father’s death.
His mother Mary gave him an extra £200,000 months after stockbroker Ian
Cameron died in September 2010, having left his son £300,000 in his will. It meant the money was paid to the Prime Minister free of Inheritance Tax (IHT).
If his father had left him £500,000 in a lump sum, £70,000 of it would have had to be paid to the Inland Revenue.
All bequests over £325,000 are subject to a 40 per cent tax levy.
A source close to the Prime Minister vehemently denied any wrongdoing, saying: ‘This is the kind of sensible, perfectly legal and proper tax planning that millions of ordinary people do.’
The source said Mr Cameron had no idea his mother planned to give him and his two sisters extra money after their father’s death.
Last night Mrs Cameron was reported to have waded into the row and defended her son over his tax affairs. The 81-year-old said: ‘Nothing wrong has been done. They’re all chasing after I don’t know what. I think it is absolutely disgusting.’
After receiving £300,000 in his father’s will in December 2010, the PM’s mother gave him two additional sums of £100,000 – tax-free – in May and July 2011.
He used £137,500 to buy the field adjoining his house in Oxfordshire.
Mrs Cameron is said to have given the extra amount to the Prime Minister – with similar amounts to his sisters – to ‘even out’ the division of their father’s wealth among his four children.
Mr Cameron’s elder brother Alexander was given ownership of the main family home in Oxfordshire in 2006, worth £2.5 million. This appears to have been designed to take advantage of the ‘seven-year rule’ which can reduce – or wipe out – IHT.
‘When she looked at things after her husband’s death, the Prime Minister’s mother felt it was important to even out the way the money was shared between all four children,’ said the source.
The source said the Prime Minister had no idea his mother intended to give him the money, nor had he been involved in any family discussions about the matter before his father’s death.
Asked if the Prime Minister believed he or his family had done anything wrong, the source said: ‘The Prime Minister believes everyone should obey the tax law at all times and he has done.’
But the disclosure will increase pressure on Mr Cameron after it was revealed he had a £30,000 stake in his stockbroker father’s Blairmore offshore fund.
Labour is certain to step up claims of hypocrisy against Mr Cameron, who four years ago described a Jersey-based tax avoidance scheme used by comic Jimmy Carr as ‘morally wrong’.
Amid fears in No10 that the row over the PM’s tax affairs could affect the result of the EU referendum in June, Mr Cameron yesterday became the first British Prime Minister to publish his tax returns. It shows he earned £200,307 last year. However, the £200,000 gift from Mary Cameron was not part of the tax documents released. The information was disclosed separately by officials in an attempt to come clean about all of the Prime Minister’s finances.
Yesterday’s documents show a total of £46,899 came from his share of letting out his and wife Samantha’s home in West London, which they vacated to move into No10. It indicates the couple’s combined rental income from the property was £93,798 – equal to £1,800 a week. Officials were quick to point out that for the last four years, Mr Cameron has waived a £20,000-a-year ‘Prime Minister’s Allowance’ paid to all PMs on top of their salary.
‘He decided it was inappropriate to receive this money from taxpayers,’ said one official. However, it will do little to avoid further questions about the way IHT was avoided when Mr Cameron received a total of £500,000 within ten months of his father’s death – in three tranches.
When Mr Cameron Senior’s will was published six years ago, eyebrows were raised at the £300,000 left to the PM – a relatively modest sum bearing in mind his father’s estimated £10million wealth. Furthermore, when Ian Cameron made his will in 2009, the IHT threshold was £312,000, suggesting his £300,000 bequest to his second son was designed to fall just below the limit.
Mr Cameron’s sisters, Tania and Clare, were jointly left in the will a £1million London house by way of a trust, having already been gifted a stake in the property in advance of Cameron Senior’s death.
Tax experts say this appears to have been another legal way to curb Inheritance Tax liability.
In 2006, four years before Ian Cameron died, his substantial Oxfordshire home – where the Prime Minister grew up – was transferred outright to Alexander, a wealthy QC. Because it was handed over more than three years before Ian died, the full 40 per cent inheritance tax on the £2.5million home would not be payable: the rate ‘tapers’ to nothing if the parent survives for more than seven years after making a gift.
The same seven-year rule also means that if Mary Cameron lives until 2018, seven years after she gave the Prime Minister £200,000, no tax will be payable on it.
It is believed that none of the payments made to the Prime Minister or his two sisters, including their bequests from their father, and the subsequent ‘top ups’ from their mother, incurred IHT.
It is also understood all three have benefited to the tune of £500,000. That still leaves them way behind Alexander Cameron. But Mary Cameron, who moved into a lodge in the grounds of the family home, will be able to use her own will to further ‘even out’ the proceeds.
And, as a result of the family’s shrewd use of tax laws, there is likely to be more to share out.
Commenting on Jimmy Carr’s tax avoiding scheme, the PM said: ‘There is nothing wrong with people planning their tax affairs to plan their pension and retirement. But some of these schemes are morally wrong.’
THIS is a tense moment for the Prime Minister. He may not be out of danger yet. Coming clean is not as easy as it sounds, which is why most people make a mess of it. There are very few examples of major figures being willingly candid about their private affairs.
Of course the best thing to do is to reveal everything, immediately and cheerfully. But it is hard for a proud man to do so. These are matters most people like to keep to themselves.
Those suddenly caught in the searchlights never realised how their actions would look on a newspaper front page. Mr Cameron’s tax disclosures last night revealed no illegality or wrongdoing. But they managed to provoke more questions by not openly stating that he had received a large money gift nor explaining the means used to shelter it from tax.
It is a common estate management method used by some of our readers but somehow it sits uneasily with a Prime Minister. Trust is all.
For senior politicians who have long been loaded with praise and guarded from trouble by a phalanx of aides and supporters, it is quite hard to cope with prosecutorial questions implying that they are guilty of wrongdoing.
So it is no great surprise that David Cameron has not handled the Panama Papers affair well. The question is whether he can now recover, or whether it will continue to drag him down.
His greatest danger is that he and his affairs will become the central issue of politics, and the EU contest will turn into a referendum on his personal future.
There is no doubt that the campaign has left the Government divided, exposed and tense, and highly vulnerable to wobbles such as this.
So Mr Cameron’s performance from now on is not just about saving himself but about saving the Government and quite possibly British membership of the EU, a cause he values highly.
It would be absurd if such a major question were decided because of a row about offshore funds.
His publication of his tax returns is a wise step. It will now become standard practice for all senior politicians, as it is in the US. As it happens, we live in a country with unusually clean politics, but it is good to be able to see the proof. His wry acceptance that he could have done better was the right tone to adopt.
Even so, sharks still circle. Parliament is back in session tomorrow and, while Jeremy Corbyn could sink any cause he takes up, the Prime Minister faces danger there from all sides, especially his own ranks. He had better be sure he really has told us everything.
There is no substitute for total clarity from now on. Any further revelation at this stage could be perilous.