By Harry Glass, This Is Money

Olympic gold medalist and Tour de France winner Bradley Wiggins has withdrawn from a controversial tax-avoidance scheme, he said today.

The 32-year-old cyclist was criticised last week after it was revealed he was using a scheme named Twofold First Services, reportedly owned by a company based in the Cayman Islands.

He told The Guardian: ‘I had a small investment in Twofold, following guidance from my professional advisers.

‘I had, however, claimed no tax relief of any amount in regard to this investment. Given the concerns raised about it, I have now instructed my advisers to withdraw me from the scheme with immediate effect.’

A host of celebrities, including comedian Jimmy Carr and several members of Take That, have been singled out for using tax avoidance schemes this year.

In June Carr admitted to a ‘terrible error of judgement’ in using an offshore tax dodge to pay as little as 1 per cent tax on his multi-million pound income.

In the end the comedian explained to his 2.3million Twitter followers that he would no longer use the Jersey-based K2 tax scheme and vowed to ‘conduct my financial affairs much more responsibly’ following widespread anger after his tax dodging was revealed.

‘I met with a financial advisor and he said to me “Do you want to pay less tax? It’s totally legal.” I said “Yes.”’, Carr tweeted.

It’s estimated that around 1,100 of Britain’s wealthy – including celebrities, musicians, sports stars and other high earners – use that particular scheme, K2, to shelter £168million a year from UK income tax and National Insurance Contributions (NICs).

The way that and similar schemes work is remarkably simple. Members redirect their earnings into a Jersey-based trust. The trust then grants interest-free or low-interest loans to members, on which little or no tax is payable. The borrowers then quietly ‘forget’ to repay these loans, which the trust later writes off against the earnings it holds.

It was thought Carr’s tax loophole would be saving him as much as £1.66million a year, which is nearly half of all the earnings he pours into K2.
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