Sir Ken puts millions of shares in trust to save £100m in tax

Sir Ken puts millions of shares in trust to save £100m in tax

The former chairman of the supermarket chain, who retired this month, gifted millions of shares into family trusts in order to take advantage of the lower rate of capital gains tax (CGT) available until the end of this tax year on April 5.

Making the move now meant he was able to pay CGT at 10%. From the beginning of the next tax year - in measures that were introduced by the chancellor to clamp down on the tax perks enjoyed by private equity partners - the rate goes up to 18%.

The 76-year-old retailer told investors a fortnight ago that he would make changes to his shareholdings ahead of the capital gains tax change. Analysts at Cazenove calculated that Sir Ken could save £100m.

Under the tax saving arrangements Morrison gifted 86m shares into the Kenneth Morrison Discretionary Settlement. The trustees of the settlement are Sir Ken, his wife Lady Lynne Morrison and his family lawyer Paul Howell. He also gifted a tranche of shares into the Ken and Lynne Morrison Charitable Trust.

Howell has also become a trustee of other Morrison family trusts and as a result now has voting rights over nearly 4% of the company.

Other changes include Sir Ken and Arthur Wilson - another family legal adviser - retiring as trustees of trusts that own 95m shares worth some £270m. Their places are.....continued below

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The changes do not affect the total voting rights held by the Morrison family.

Sir Ken stepped down from the company that bears his family name earlier this month after half a century at the helm of the Bradford-based grocer.

The business, now valued at some £7.5bn, has been through a torrid time in recent years after it was almost overwhelmed by problems following its 2003 acquisition of the much larger Safeway. But Sir Ken was able to post record profits of £612m - up 66% on last year - and promised to buy back £1bn of shares.

The 76-year-old has spent 55 years in the grocery business, turning the family market stalls into the Britain's fourth biggest supermarket chain and himself into a billionaire. During his career the grocery business has changed from a time when families still had food ration books and supermarkets had not been invented, to a sophisticated business selling exotic foods flown in from around the world.

The grocery billionaire is one of many company directors who have cashed in shares or sold businesses early in order to avoid the 8% increase in tax.

A high-profile campaign was run by the CBI in an attempt to get the chancellor, Alistair Darling, to ditch the higher rate . CBI boss Martin Broughton said the tax change had "pulled the rug out" from under the government's decade-long effort to encourage an enterprise culture.

Many high-profile corporate executives have sold shares to cash in before the lower rate, designed to reward entrepeneurs, is axed.

They include non-executive Lonmin mining directors Sir John Craven and Roger Phillimore, who cashed in shares worth £2.7m to make a tax saving of more than £200,000. The bosses of the £3bn Towergate insurance group also announced plans to sell 25% of their business to turn it into cash before the tax hike.