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Flag-waving former PM Margaret Thatcher may have avoided millions in inheritance tax by keeping a chunk of her fortune offshore.

A copy of Tory Baroness Thatcher’s will shows she left a £4.7million estate to be shared among family members.

But the £12million Central London mansion where the Iron Lady spent the last years of her life is owned by an anonymous trust registered in the British Virgin Islands – a ­notorious tax haven.

Through this arrangement she could have avoided up to £5million in inheritance tax – the 40% that would have been due if it was owned by a UK individual.

In the will, made in 1997, Thatcher intended to leave £1million to husband Sir Denis, but he died in 2003 – 10 years before her. Instead, her estate is split between her family, with a third each going to her twins Mark and Carol, and the remaining third shared by her grandchildren when they reach 25.

Expert Richard Murphy, of Tax Research, said: “It has always been strange that Margaret Thatcher, that most British of prime ministers, enjoyed the benefits of a property registered in the British Virgin Islands.

"It is possible that Denis Thatcher set up the trust or other offshore arrangements in order to save tax.”

Ex-Tory leader Thatcher died in April aged 87 following a stroke and had her ­ceremonial funeral funded by the taxpayer.

Papers linked to her will state “the gross value of the estate in the United Kingdom amounts to £4,768,795”. But it does not appear to include the Belgravia mansion, valued at £12.4million by Zoopla.

The house was bought in 1991 by Bakeland Property Limited, an anonymous offshore trust in Jersey, on a 64-year lease. It was sub-leased to a firm of the same name based in the British Virgin Islands.

It is not known who the beneficiaries of Bakeland are. If Thatcher had owned shares in it when she died, inheritance tax would have been due on their value.

Lawyer Andrew Kidd, of Clintons, said: “The shares in the BVI company would be included in Baroness Thatcher’s estate, and subject to UK inheritance tax, in so far as they were in her ownership.”

Thatcher’s financial advisors refused in 2002 to explain why she did not appear to own her own house, and stated: “No one’s going to tell you about that.”