Different tax positions of Duke of Westminster’s estate and Rupert Grint – why the law matters

Because of trusts set up in the 1950s, no death duties arose on the death of the Duke of Westminster earlier this week, saving the estate an estimated £3bn. According to an expert quoted in The Daily Telegraph, the trustees are not beneficial owners, which is why the estate does not have to pay inheritance tax. “The trustees are legal owners but not 'beneficial owners',” Hugi Clarke of estate planning firm Foresight told the paper. 

“As legal owners, the trustees can do anything an ordinary owner can do, in terms of selling and trading the assets within the trust. But they do not have 'beneficial access' or absolute rights as individuals to the assets.” The assets are therefore not inside their individual estates for inheritance tax purposes.

Meanwhile, Rupert Grint, who played the part of Ron Weasley in the Harry Potter films, failed in his attempt to save paying around £1 million in taxes after he was advised by his accountants to change the dates of his accounting year.

However, a tax tribunal judge rejected Grint's appeal against an HM Revenue and Customs’ (HMRC) block on him using a change in accounting dates to avoid the 50 per cent tax rate introduced in 2010-11. His accountants had tried to move eight months of income into the 2009-2010 tax year, when the top rate of tax was 40 per cent. 

Dismissing Mr Grint's appeal, the judge ruled the actor had failed to meet the conditions on which the law would recognise a valid change in accounting dates. The judge stressed it was not part of HMRC's case that Mr Grint was involved in tax avoidance as the tax had already been paid.

Tax Barrister - myBarrister