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Unprecedented release of prime minister’s personal tax details reveals 2011 payments to help him avoid inheritance duties
Daniel Boffey Observer policy editor
The prime minister took the unprecedented decision to release his personal tax records on Saturday, as growing anger over revelations in the Panama Papers threatened to derail his premiership.
But the extraordinary move seems set to plunge David Cameron into further controversy, as it emerged that his mother transferred two separate payments of £100,000 to his accounts in 2011, allowing the family estate to avoid a potential £80,000 worth of inheritance tax.
Four years after first promising to open his financial affairs to public view, Downing Street published a document detailing Cameron’s income and tax payments from 2009-10 to 2014-15. The move came after an emotional Cameron admitted to the Conservative party’s spring forum that he alone was to blame for the furore caused by his failure to be frank about his profits from an offshore investment fund.
On Monday, Cameron will announce the establishment of a taskforce, led by HM Revenue & Customs and the National Crime Agency, to examine the legality of the financial affairs of companies mentioned in the Panama Papers, where documents relating to his father’s offshore fund were discovered by the Guardian and the International Consortium of Investigative Journalists.
The taskforce will draw on investigators, compliance specialists and analysts from HMRC, the National Crime Agency, the Serious Fraud Office and the Financial Conduct Authority. There will be new money provided of up to £10m.
But following the release of the prime minister’s tax records, Cameron now faces questions over whether his family took elaborate steps to minimise the amount of inheritance tax that would eventually be due on their estate.
The records show that the prime minister received a considerable boost to his savings in 2011. Following the death of his father in 2010, Cameron was left £300,000 tax free as an inheritance. However, his mother also transferred two payments of £100,000 to him in May and July 2011.
Inheritance tax is not payable on gifts that are paid at least seven years before the source of the possession dies, be it property or money.
A spokesman for the prime minister said that Cameron’s mother and father had “some years earlier” transferred the family home to their eldest son, Alexander Cameron, and the sums paid in 2011 were considered to be Cameron’s share.
Speaking in central London, Cameron admitted: “It has not been a great week. I know that I should have handled this better, I could have handled this better. I know there are lessons to learn and I will learn them. Don’t blame No 10 Downing Street or nameless advisers, blame me.”
The four-page document, compiled by the prime minister’s personal accountants, shows:
- Cameron paid £75,898 in income tax on a total income of £200,307 last year.
- Of that total, £3,052 represented interest earned on significant savings, estimated by experts to amount to £300,000, in an unnamed high street bank.
- A year earlier, in 2013/14 , Cameron earned £6,681 interest on savings, suggesting the amount of savings deposited in the account could be a lot higher.
- Cameron and his wife, Samantha, benefited from around £100,000 in rent from a property in Notting Hill, west London, each year.
- In 2010-11, the prime minister was essentially able to live for free in No 10, with £20,000 of his income deemed untaxed. The chartered accountant RNS reported that this was a “longstanding practice”. Cameron “voluntarily” cancelled it out for the following three years by declaring an equivalent amount taxable. He waived the deduction in 2014-15.
- The Camerons also received around £140,000 in 2010 from the sale of shares, including those held in Ian Cameron’s investment fund, Blairmore Holdings.
- Major outgoings in 2011/12 included the purchase of £140,000 worth of land adjoining the prime minister’s constituency home in Witney, Oxfordshire.
- £120,000 was spent refurbishing the No 11 flat where the Camerons live.
Last week, the prime minister was forced to admit that he had made a £19,000 profit from the Blairmore fund set up by his father after days of describing it as a private matter. Labour leader Jeremy Corbyn had claimed Cameron had “misled the public” and “lost the trust of the British people”.
Explaining his failure to be frank at the beginning of the week about his profits from the offshore fund, Cameron told his activists that emotion had clouded his thinking. He said: “I was obviously very angry about what people were saying about my Dad. I loved my Dad, I miss him every day. He was a wonderful father and I’m very proud of everything he did.
“But I mustn’t let that cloud the picture. The facts are these: I bought shares in a unit trust, shares that are like any other sorts of shares, and I paid taxes on them in exactly the same way. I sold those shares. In fact, I sold all the shares that I owned, on becoming prime minister.
“And later on I will be publishing the information that goes into my tax return, not just for this year but the years gone past, because I want to be completely open and transparent about these things.
“I will be the first prime minister, the first leader of a major party, to do that and I think it is the right thing to do.”
The financial secretary to the Treasury, David Gauke, said of the taskforce: “Everyone should pay their fair share of tax, just as the honest majority already does. No government has done more to make sure we crack down on tax evasion and aggressive avoidance, both here in the UK and internationally.
“But as the Panama Papers show, tax evasion is part of a wider set of international criminality activity, together with money laundering, illicit finance and evading sanctions.”
The leaders of the Scottish Labour and Conservative parties also published their tax returns before David Cameron on Saturday afternoon.
Kezia Dugdale revealed that she had an income of £57,465 in 2014-15 and was charged £11,250.40 tax, and challenged the other Scottish party leaders to do likewise. Later Ruth Davidson published her own 2014-15 tax return, showing earnings of £52,223 and tax of £10,513.
Dugdale’s return also revealed that the fee for her regular Daily Record column was donated in full to the charity MND Scotland, although she continued to pay tax on it.
Dugdale, who was the first to publish, said: “Politicians need to not only play by the rules, they need to be seen to be playing by the rules.
“So today I am publishing my tax return for last year. I have nothing to hide. And I challenge my fellow Scottish party leaders to do the same.”
On Sunday morning the SNP challenged the rest of Cameron’s cabinet to publish their tax returns, with the party’s Westminster leader, Angus Robertson, writing to the prime minister requesting he provided full disclosure of his government ministers and if they had benefited from offshore tax havens. The SNP leader, Nicola Sturgeon, has yet to publish her tax return.
• This article was amended on 11 April 2016. An earlier version implied that tax, after a tax free allowance of £325,000, would be due on gifts made at least seven years before the source of the possession dies. This is not the case.