Starmer Family Trust Possibly Reduced Inheritance Tax, But Outcome Aligned With Direct Ownership
London – A trust established by Labour Leader Keir Starmer relating to a field gifted to his parents may have reduced potential inheritance tax (IHT) liabilities, though Starmer maintains no tax benefit was sought or realized.Analysis suggests the trust structure could have mitigated IHT if the field’s value had increased significantly before his parents’ deaths, but the final tax outcome was consistent with Starmer having owned the field directly and allowed his parents its use.
The field was purchased by Starmer in the late 1990s for £20,000 and transferred to a lifetime trust for the benefit of his parents. Had the field been held directly by his father, the estate would likely have faced an IHT liability upon his death, especially as the residence nil rate band did not exist in 1996.
Starmer’s team told the Sunday Times the decision to allow his parents use of the field “had nothing to do with any tax considerations. He simply wanted to help his parents keep donkeys.” However, critics note this statement addresses the use of the field, not the establishment of the trust itself.
The analysis concludes that even if tax planning was a factor in creating the trust, it doesn’t constitute typical “tax avoidance” because the resulting tax outcome mirrored that of direct ownership. The author distinguishes this from more aggressive trust schemes designed to eliminate tax liabilities, which frequently enough fail or are considered tax evasion.
“There is no single legal definition of ’tax avoidance’, and others may disagree,” the analysis states, referencing a prior article on the complexities of defining the term.
The author, a member of the labour Party and advisor to policymakers across multiple parties, including the SNP Scottish Government’s tax advisory group, acknowledges potential differing interpretations. Thay credit reporting by Gabriel Pogrund and the Sunday Times and expertise from a trust taxation specialist.
