The Staggers 21 June 2013 Farage admits offshore tax fund was a mistake: "I'm not rich enough" A bad day for UKIP as Farage's tax avoidance is exposed and the party loses its deposit in the Aberdeen Donside by-election. Sign UpGet the New Statesman's Morning Call email. Sign-up Has Nigel Farage's seemingly inexorable rise finally come to an end? It feels that way this morning. The UKIP leader is on the defensive after the Daily Mirror revealed that he opened an offshore trust fund on the Isle of Man "for inheritance purposes", while in last night's Scottish by-election in Aberdeen Donside his party finished a disappointing fifth and lost its deposit after winning only 4.8 per cent of the vote. Farage wisely responded to the tax story by immediately admitting that it was "a mistake", although his declaration that he's "not rich enough to need one" is unlikely elicit much sympathy from voters. He said: "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 story is all the more damaging for Farage because he also stands accused of hypocrisy. In a speech last month in the European Parliament, he told MEPs that they had a "common enemy – rich people, successful companies evading tax". Farage, of course, is guilty of legal tax avoidance, not illegal tax evasion, but it's the shared motive that counts. As for the by-election, while UKIP's share of 4.8 per cent might be considered impressive given that it had no previous presence in the seat, its prediction that it would keep its deposit (by polling at least 5 per cent) means it must be regarded as a failure. Lord Monckton, the party's Scottish leader, declared before the result: "We have made a breakthrough. It's clear now we'll keep our deposit". Alex Salmond (interviewed in this week's NS) said: "They have never saved a single deposit in Scotland, which once again demonstrates a clear divergence between Scottish and Westminster politics." Here's the result in full Mark McDonald (SNP): 9,814 - 42% (-13.4%) Willie Young (Labour): 7,789 - 33.3% (+5.5%) Christine Jardine (Lib Dem)1,940 - 8.3% (+2.3%) Ross Thomson (Conservative): 1,791 - 7.7% (-0.4%) Otto Inglis (UKIP): 1,128 - 4.8% (+4.8) Rhonda Reekie (Scottish Greens): 410 - 1.8% (+1.8%) Dave MacDonald (Scottish National Front): 249 - 1.1% (+0.3%) Tom Morrow (Scottish Christian Party "Proclaiming Christ's Lordship"): 222 - 0.9% (+0.9%) James Trolland (Scottish Democratic Alliance): 35 - 0.1% (+0.1%) Update: Labour has just issued its response to the tax story. John Spellar MP said: "I know Nigel Farage wants to appeal to disaffected Tories, but copying some of the Tories' biggest donors by using offshore trusts to avoid tax is taking things too far. It's typical of UKIP - they talk about how much they love this country, but they don't even bank here – it’s just hypocritical." › Morning Call: pick of the papers UKIP leader Nigel Farage addresses the media in London on May 3, 2013. Photograph: Getty Images. George Eaton is senior online editor of the New Statesman. Subscribe For daily analysis & more political coverage from Westminster and beyond subscribe for just £1 per month!