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| CURRENT SECTION :: Money News | |
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MPs are exploiting loopholes in expenses rules that let them drastically cut their capital gains tax bills, a newspaper investigation concluded yesterday. Having potentially poured in a total allowance of £24,000 for both homes, over 100 MPs were said to have saved millions in CGT by saying their ‘second home’ was their main household. Unlike second homes, traditionally in London where property prices are higher, the main household for an MP, traditionally in their constituency, is not liable for capital gains tax. Under Commons rules, MPs are free to choose which of their two properties they regard as their second home and on which they will claim the tax-free allowance to maintain them. As everyone’s main home is exempt from CGT, MPs can tell the taxman without question that their second home, eligible for the full £24,000, is really their main household. This means MPs can avoid the hefty cost of paying a CGT bill for a London property and pay the 18% take on any value increase on their lower value constituency home instead. “You’re talking about over 100 MPs doing this,” Frank Field, MP for Cities of London and Westminster told the Mail on Sunday, which carried out the investigation. “They would argue it’s all totally within the rules but this system is unique to MPs. The fact that the ACA is tax-free is a total fiddle. It is little short of corruption.” Presented with the Sunday paper’s findings, including that 415 MPs claimed the allowance, HMRC said: “The Commons rules only apply to them. It’s nothing to do with us.” Jun 30, 2008 Email this article Printer friendly page Previous Page
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