Duke of Westminster’s family ‘will avoid paying billions in inheritance tax because his fortune was placed in series of trusts’
THE new party-loving Duke of Westminster will be able to avoid paying billions in inheritance tax following the death of his father because his vast fortune was years ago placed in a number of trusts.
Earl Hugh Grosvenor became the third richest man in Britain after dad Gerald, 54, the 6th Duke of Westminster, died earlier this week - inheriting a whopping £9.9billion fortune.
Under normal circumstances death duties are charged at 40 per cent on assets over £325,000.
But the 25-year-old Duke's pot of cash will be mostly safe from the taxman because the family's business empire is protected by trustees, meaning he'll pay only a fraction of the £3.6billion that would have been owed without tax avoidance measures.
Single Hugh, the 7th Duke of Westminster, now owns 300 acres of London, including parts of Belgravia and Mayfair, and a string of Downton-style country estates in Scotland, Oxford and Cheshire.
The Duke of Westminster’s family fortunes also include the Grosvenor Group property portfolio, which reported profits of £526 million last year, and Wheatsheaf Investment, which has stocks in food, water and energy businesses.
For years the 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 £3 a week wage through a deed of covenant to avoid paying tax twice.
The House of Lords ruled it was “every man’s right to order his affairs to reduce his tax bill by whatever legal means he found available”.
This philosophy later became part of tax law - leading to more and more complex avoidance mechanisms for the rich and powerful.
In 1979 a court ruled that the 4th Duke’s estate was exempt from inheritance tax because his death from cancer in 1967 happened sooner than it should have because he suffered a wound in the Second World War.
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A decade later and in 1986 Margaret Thatcher’s government abolished capital transfer tax on gifts as long as the donor lived for at least seven years.
The Financial Times estimated at the time that the 6th Duke would save £300 million (about £600 million now) in inheritance tax by transferring assets into trusts.
John Christensen, executive director of the Tax Justice Network pressure group, told : “The family has been at the forefront of the use of tax avoidance mechanisms, mainly to avoid inheritance tax. If you are rich enough you don’t face the tax bills the rest of us expect to pay. The public does not understand why the rich pay so little but for some reason the politicians refuse to take any action.”
Baby-faced Hugh Grosvenor, now 25, is Prince George’s godfather and once threw a £5million 21st birthday bash attended by Prince Harry and other A-listers such as Michael McIntyre and Rizzle Kicks.
Hugh is happy mixing with royals but never acts the toff with his other friends, pals told The Sun last night.
They have always said he is “immensely private”.
They claim his super-rich parents were determined he enjoyed a normal childhood, and sent him to a state primary school near their home at Eaton Hall, Cheshire, before he went on to attend private day school Ellesmere College in Shropshire and study at Newcastle University.
They wanted a “normal” childhood for Hugh — whose title is “Earl Grosvenor” — and his three sisters Lady Tamara, 36, Lady Edwina, 34 and Lady Viola, 23.
He has recently been working as an account manager at London eco-coffee firm Bio-bean.
But after the death this week of his father Gerald, 64, he is now Britain’s third-richest man — and the 68th wealthiest in the world.
The Grosvenor family have long-lasting links with the Royal Family and the Queen wrote to them privately after Gerald died at the Royal Preston Hospital on Tuesday.
He is believed to have suffered a heart attack at his grouse shooting estate, Abbeystead House in Lancs.
He was the Queen’s 14th cousin once removed and she asked him to mentor Prince William, whose godmother is his wife Natalia.
A spokesman for William and Kate said: “The Duke and Duchess of Cambridge were very sad to learn of The Duke of Westminster’s passing.
“Their thoughts are very much with his family.”
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