The Ukip leader has admitted he made a mistake by setting up a trust fund in an offshore tax haven.

Nigel Farage, who has previously spoken out against tax evaders in a speech to the European parliament, admitted he paid an adviser to set up the Farage Family Educational Trust 1654 on the Isle of Man, the Daily Mirror said.

The newspaper said Farage insisted he had not personally benefited from the account, and that he claimed he had ended up out of pocket.

The MEP told the Mirror: "My financial advisers recommended I did it, to have a trust really for inheritance purposes and I took the advice and I set it up. It was a mistake. I was a completely unsuitable person for it. I am not blaming them, it was my fault. It's a vehicle that you chuck things in through your life that you don't need and you build up a trust fund for your children or grandchildren.

"It was called an educational trust and could have been used for grandchildren's schools fees, things like that. It was a mistake for three reasons. Firstly, I'm not rich enough to need one and I am never going to be. Secondly, frankly, the world has changed. Things that we thought were absolutely fair practice 10 years, 20 years ago, 30 years ago aren't any more. Thirdly, it was a mistake because it cost me money. I sent a cheque off to set it up."

The newspaper said Farage transferred his shareholding in a company, Farage Limited, to the Farage Family Educational Trust, based in Douglas, the capital of the Isle of Man. This meant the trust owned 33% of Farage Limited, later rising to 50%, the Mirror said.

Farage denied receiving dividends from the company.

Companies House documents reveal the offshore trust remained a shareholder of Farage Limited until 2011, the Mirror said.

The Ukip leader insisted he shut it down in 2007 or 2008, saying: "I sent a cheque off to set it up, out of my own taxed income, and basically just through administration fees that money disappeared."