Virgin Group founder Sir Richard Branson is 'tax exile for health reasons'
Entrepreneur says he moved main residence to private Caribbean island for health reasons
Sir Richard Branson makes great play of wrapping himself in patriotic trappings to promote his businesses, but Britain’s best-known entrepreneur on Sunday revealed he had been living as a tax exile for the last seven years after moving his main residence to a private Caribbean island.
Branson has swapped the union flag for the ensign of the British Virgin Islands, where income is not taxed. Having nominated Necker, an island he bought in the 1970s, as his tax base, he can only spend a maximum of between 46 and 183 days a year in the UK.
Defending his decision following a report in the Sunday Times, Branson said he planned to spend his remaining years on Necker for the sake of his health rather than to protect his bank balance.
“I have been very fortunate to accumulate so much wealth in my career, more than I need in my lifetime and would not live somewhere I don’t want to for tax reasons,” he wrote on his Virgin blog.
“I still work day and night, now focusing on not-for-profit ventures, but on Necker I can also look after my health. There is no better place to stay active and I can kitesurf, surf, play tennis, swim, do pilates and just play.”
His Virgin companies have frequently referenced their British origins in branding campaigns. When Margaret Thatcher criticised British Airways for dropping the union flag from its tailfins, Branson commissioned his planes to be decorated with flying ladies trailing the British flag.
In a publicity stunt to mark the Queen’s diamond jubilee, Virgin Atlantic petitioned New York’s mayor, Michael Bloomberg, to rename Union Square as Union Jack Square. Virgin Media capitalised on last year’s surge in national pride during the jubilee and London Olympics by incorporating the flag into its logo.
“Branson is damaging his personal brand,” said Alex Smith, a spokesman for UK Uncut, which campaigns for a greater tax contribution from corporations. “I don’t see any difference between him and a hedge fund manager. He is quite happy to take from this country but is not happy to give very much back. If he is so loaded he can afford to spend his time on charity work, why doesn’t he pay 50 per cent tax?”
Branson’s Caribbean home was destroyed by fire two years ago, but has now been rebuilt. He is renting out the island for $60,000 (HK$465,200) - a night.
“After almost 40 years of working in the UK, Richard, now in his 60s, chose to live on his island Necker in the British Virgin Islands [BVI], an island he bought in 1979,” his spokesman said. “He moved there more than seven years ago, but rather than retiring there, he spends 90 per cent of his time starting not-for-profit ventures and raising millions for charity through speeches and other charitable engagements. Since he gives 100 per cent of any monies he earns from these to charity, it makes no difference for tax purposes whether he is in the UK or the BVI.”
Branson earns $11m (HK$85m) a year, according to his spokesman, of which about $10m is from speeches, and donates much of his income to the Virgin Unite charity, which supports entrepreneurs around the world. His spokesman said the 63-year-old lives off money earned in the past and does not take a dividend from Virgin Group Holdings, which owns his stakes in the Virgin operating companies and is itself registered in the British Virgin Islands.
Land registry filings show Branson’s Oxfordshire home was bought last year for £1.35m (HK$16.7m), estimated to be below its market value, by his children Sam and Holly, although it is understood ownership was transferred to them four or five years ago.
As a non-resident, Branson must pay tax on UK income but not on any personal earnings outside of Britain. His companies continue to pay corporation tax.
The entrepreneur was named by Forbes as Britain’s sixth richest resident this year, and his fortune is estimated at £3.5bn. His investments range from Virgin Trains and Virgin Atlantic to the Virgin Active gyms.
Branson used Twitter to tell his followers: “The companies we’ve built have created tens of 1000s of jobs & paid 100s of millions in tax & will continue to do so.”