Billionaire Earl to Use $300 Million Real Estate Windfall to Pay Tax Bill

Charles Cadogan, the 8th Earl Cadogan, will use most of the proceeds of his family’s real estate business from the past decade to settle a U.K. tax charge, filings show.

Family trusts will use dividend income from Cadogan Group totaling 218 million pounds ($300 million) to fund next year’s inheritance tax bill, according to the London-based firm’s 2020 results, which were published this month. Cadogan Group has already paid out about 240 million pounds since the Earl and his family faced the once-a-decade tax in 2012, according to data compiled by Bloomberg.

Billionaire Earl to Use $300 Million Real Estate Windfall to Pay Tax Bill

The 84-year-old Earl is the U.K.’s 14th-richest person with a net worth of $6.5 billion, according to the Bloomberg Billionaires Index.

“The trusts, which are the ultimate owners of the business, are subject to a recurring ten-yearly inheritance tax charge based on capital value,” Cadogan Group Chief Executive Officer Hugh Seaborn said in a statement. “A significant portion of the dividend over several years has been used to provide for this tax.”

The details give a rare insight into the trust structures that often protect the fortunes of the world’s ultra-rich, allowing them to maintain control of assets across generations and curb tax liabilities when beneficiaries die. U.K. trusts typically pay inheritance tax once a decade at a lower rate than the nation’s standard 40%.

Charles Cadogan, who is life president of his family’s real estate investment and management business, has been the head of one of Britain’s biggest inherited fortunes since 1997. For more than three centuries, Cadogan and his family have owned land in the central London area of Kensington and Chelsea, home to some of the city’s most famous retail districts and expensive properties.

Cadogan Group cut its dividend last year to 17.4 million pounds following the outbreak of the pandemic -- a drop of more than 50% from the previous 12-month period -- after previously boosting payouts in recent years ahead of the next tax charge. Cadogan Group had net assets of 3.4 billion pounds at year-end.

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