These 10 Tax Saving Hacks by the Rich and Famous Display Their Skill to Navigate the System
Learn how to save taxes from the rich and famous
The tax system is often perceived as a complex labyrinth, but it might not be as complicated as it appears. Although common people find it hard to navigate, a new book by an audacious accountant reveals how the rich have mastered the art of reducing their tax burdens. The tax system, it seems, is not only tilted in favor of the wealthy, but it was seemingly designed with their interests in mind. In this article, we'll delve into the world of 10 celebrities who have skillfully navigated the tax system.
1. Lewis Hamilton Saved £3.3m
Formula 1 star Lewis Hamilton showed his financial acumen by pocketing £3.3 million in savings while acquiring his private jet. The strategic move involved establishing an offshore company for the purchase of a £16.5 million aircraft. By leasing it to "business users," he managed to circumvent Value Added Tax (VAT), securing substantial tax relief. Interestingly, Hamilton soon became the sole customer of his jet-leasing firm, effectively transforming it into his private aviation vehicle.
2. Tony Blair Avoided Stamp Duty
In a strategic move in 2021, former UK Prime Minister Tony Blair managed to acquire a luxurious $7.8 million townhouse in the prestigious Marylebone neighborhood of London while avoiding the standard "stamp duty land tax." This tax can amount to anywhere from 1 to 15 percent of the property's value upon purchase. Blair chose to purchase a company registered in the British Virgin Islands that held ownership of the Marylebone townhouse. Because there is no stamp duty for acquiring British Virgin Island companies, Blair was able to save several hundred thousand pounds through this legitimate move.
3. Jimmy Carr's Tax Haven
Comedian Jimmy Carr found himself in a tax controversy when he employed a financial strategy in the tax haven of Jersey to sidestep income tax. In this arrangement, he received funds through a Jersey trust in the form of loans instead of conventional performance payments, thus ensuring that he did not generate taxable income. These loans were intentionally designed never to be repaid by Carr, and he publicly acknowledged his error after public scrutiny, before promptly settling the taxes he had evaded.
4. Chris Moyles' New Job
Former Radio 1 DJ Chris Moyles ingeniously managed to sidestep taxes on his $768,864 salary by engaging in a peculiar tax avoidance scheme. This intricate plan saw him assume the role of a used car salesman, triggering a $1.2 million loan arrangement fee on a seemingly modest $6,100 loan. This led to a significant $1.2 million tax loss on his car salesman venture. But the brilliance of it was the fact that the $1.2 million fee eventually circled back to him through a complex web of interlinked companies, ultimately leaving his finances unscathed, despite the apparent tax loss.
5. Ronaldo's $20 Million Fine
Some celebrities are so intertwined with tax issues that laws are named after them. For instance, David Beckham's time at Real Madrid led to the creation of "Beckham's Law," which permitted wealthy non-Spaniards to pay lower tax rates than their domestic help. Another example is the Pensions Increase (Pension Scheme for Keir Starmer QC) regulations, which benefited Labour Party leader Sir Keir Starmer. Interestingly, the abolition of Beckham's Law caught Cristiano Ronaldo off guard, leading to a $20 million fine for underpaying his taxes.
6. Lorraine Kelly's Trick
Lorraine Kelly, the renowned TV presenter, ingeniously lowered her tax liability by successfully asserting that her role on the show was that of a self-employed actor rather than an employee. This strategic classification allowed her to benefit from reduced tax rates, which are typically reserved for self-employed individuals.
7. Warren Buffett: The Advocate of Higher Taxes
Warren Buffett, the iconic billionaire investor, is well-known for his vocal support of higher taxes on the wealthy. Despite his advocacy, Buffett's own tax practices have raised eyebrows, since he has strategically organized his investments and income to reduce tax burdens, often relying on the preferential tax treatment of capital gains. This paradox underscores the intricate nature of the tax system, which frequently results in income from investments being taxed at lower rates than ordinary earned income.
8. Jeff Bezos: Amazon's Founder and Former CEO
Jeff Bezos, known as Amazon's Founder and Former CEO with a lavish sky-high lifestyle, has often been under scrutiny due to the e-commerce giant's tax practices. Critics have accused Amazon of utilizing tax avoidance strategies, such as shifting profits to tax-friendly nations and evading corporate income tax within the United States. These practices have raised concerns about their impact on public funding, as they allow Bezos to accumulate staggering wealth while potentially shifting the burden of supporting vital public services onto others.
9. Elon Musk: CEO of Tesla and SpaceX
Elon Musk, the CEO of both Tesla and SpaceX, who also owns a controlling stake in social media platform X, formerly Twitter, stands as another influential billionaire in our lineup. Under his leadership, Tesla has substantially profited from tax incentives, which were specifically designed to encourage the widespread adoption of electric vehicles. Nevertheless, skeptics argue that these incentives tend to favor the affluent, who have the means to purchase electric cars, prompting calls for reform to ensure a fairer distribution of these credits within the society.
10. Oprah Winfrey
Media mogul Oprah Winfrey, known for her talk shows and unique approach to business, strategically relocated to California to capitalize on the state's attractive tax incentives for film production. While financial benefits played a significant role in her decision, it's crucial to emphasize that this move adhered to legal regulations. Her choice aligns with the broader trend of individuals and businesses leveraging tax-friendly locations to enhance their financial standing.