UK Prime Minister David Cameron took the unprecedented step of releasing a summary of his tax returns from the past six years today (Apr. 10), in response to his late father being named in the so-called Panama Papers for setting up an offshore fund.
The document, prepared by the prime minister’s personal accountants, show no evidence of illegal activity. It was also revealed that Cameron received an additional £200,000 ($283,000) cash gift from his mother in 2011.
That transfer has prompted further questions around the source of cash gifts worth £500,000 ($706,000) from Cameron’s parents, and whether they were linked to offshore holdings. Earlier, Cameron had admitted to profiting from a stake in his father’s offshore fund Blairmore Holdings, which he disposed of before taking office.
The British media, including BBC News, the Sunday Times and the Guardian, are reporting that Cameron’s mother, Mary, made the gift of £200,000 to Cameron in two payments in May and July 2011.
Cameron would not have to pay the £80,000 inheritance liable on the gift if Mary lives until 2018, seven years after the gift was made. Mary’s gift is on top of a £300,000 inheritance from Cameron’s father, Ian, who died in 2010.
Inheritance tax on gifts in the UK attracts up to a 40% tax rate. But the gift is tax-free if it’s less than £325,000, and passes the “seven-year rule,” where the giver lives for more than seven years after making the transfer. If the giver dies during the seven years, the gift attracts taxes on a sliding scale of rates.
According to the Sunday Times, Cameron received “preferential” interest rates at a British high street, or retail, bank because he had a large amount of savings. An estimate by the Guardian puts his savings at £120,000. Here’s a chart of the interest he earned:
The filing also shows that Cameron and his wife Samantha earned nearly £100,000 annually from renting out the London property they vacated after Cameron took office. He also took advantage of a tax reduction worth £20,000 set up specifically for the prime minister in 1947. He used the deduction for one year and then voluntarily cancelled it out by declaring the equivalent amount of taxable income in subsequent years. He waived the deduction last year.
The leader of the opposition Labour party, Jeremy Corbyn, told the BBC in response to the tax filing that inheritance tax rules should possibly be examined. He said Cameron needed to release more tax documents and that he should be questioned in parliament about his stake in Blairmore.
“I want to see the papers. We need to know what he has actually returned as a tax return. We need to know why he put this money overseas in the first place, and whether he made anything out of it or not before 2010 when he became prime minister,” Corbyn told the BBC. Corbyn himself has said he would publish his tax returns soon.
Cameron has said he didn’t know if the inheritance he received from his father originated from off-shore funds. “I obviously can’t point to every source of every bit of the money and dad’s not around for me to ask the questions now,” he told ITV.
Cameron today (Apr. 10) announced a government taskforce led by the tax authority to investigate tax evasion and money laundering by parties linked to the Panama Papers. He said £10 million in funding had been set aside for the taskforce.
Cameron is the first British prime minister to publish his tax records. The chancellor of the exchequer, George Osborne, is now believed to be preparing his own records for publication next week, according to the Sunday Times. Cameron’s move sets a precedent for future prime ministers to publish their private tax returns, the Times said.