Which of the Cabinet have just handed themselves a tax break?

During his response to the Budget today, Ed Miliband challenged members of the cabinet who will benefit from the lowering of the top rate of income tax from 50p to 45p to raise their hands.

No-one did. So I did a bit of sleuthing, using the register of MPs’ financial interests and the register of ministers’ interests to see which ministers are likely candidates.

The full blog post, with table of calculations, can be found on the Telegraph website here, while the text of the resulting newspaper article is online here or after the fold.

Budget 2012: David Cameron is only Cabinet member known to pay top rate of tax

David Cameron is the only member of the Cabinet who is known to pay the top rate of tax, according to a Telegraph survey

By Christopher Hope and Cal Flyn

The Daily Telegraph, 22 Mar 2012

Last night, it emerged that George Osborne could also be a top rate taxpayer, despite the Chancellor suggesting in a breakfast time radio interview on Thursday that he was not.

This is because he has rented out his London home since last July, around the time he moved his family into a flat in 10 Downing St. He needs an extra £15,000 in income on top of his ministerial salary to pay the 50 per cent rate.

Every member of the Cabinet was asked by The Daily Telegraph on Thursday whether they paid the top rate of tax and therefore would benefit from the cut from 50p to 45p from April next year, unveiled in this week’s Budget.

Apart from the Prime Minister, no other Cabinet minister admitted to earning enough to be caught by the top rate, which applies to annual incomes over £150,000 a year.

This is despite several of Mr Cameron’s colleagues likely to receive unspecified levels of income from blind trusts, private firms and other property assets.

Downing Street declined to comment on whether Mr Cameron paid the 50 per cent rate, saying: “I am not going to go into the Prime Minister’s tax affairs.”

However it is understood that the Prime Minister is caught by the 50p rate because of rent he receives on his London home, on top of his annual salary of £142,500. His total income, including the rent, is not thought to be far above £150,000 a year.

Cabinet ministers are paid £134,565 a year, which means that it would need a just over £15,000 of additional income to push them into the high rate tax bracket.

A further 21 Cabinet ministers were asked whether they received more than £150,000 a year in total income. Eight Cabinet ministers said they were not paying the top rate, four refused to say, and another nine declined to respond.

Some of the Cabinet ministers who refused to respond keep their investments shielded from scrutiny in ‘blind’ trusts. They include Justice Secretary Ken Clarke, Northern Ireland Secretary Owen Paterson and International Development secretary Andrew Mitchell.

Sources close to Defence secretary Philip Hammond insisted that he was not a top rate taxpayer. However in 2010 it emerged he had moved shares in his family property firm Castlemead, into the name of his wife, who pays tax at a lower rate.

Mr Hammond said he transferred part of his stake to his wife because he was expecting to enter Government and knew that Whitehall rules barred him from holding shares. It could have saved him more than £26,000 a year.

The remaining 60 per cent of his holdings were put into a trust. Mr Hammond said at the time that the tax benefit from receiving income in share dividends rather than salary was ‘marginal’.

Culture Secretary Jeremy Hunt owns a stake of almost 50 per cent in education listings website Hotcourses, and received dividends from the company of over £2milion in 2010.

He also owns a property in Surrey, a share in an office in Hammersmith, West London, and a half-share of a holiday home in Italy. A spokesman for Culture secretary Jeremy Hunt declined to comment on his tax affairs for family reasons.

The speculation about whether any Cabinet ministers were top rate taxpayers was triggered by George Osborne, the Chancellor, who insisted in a breakfast-time interview on the BBC that he did not pay the top rate of tax.

Asked if he was “a 50p tax payer”, Mr Osborne replied: “I’m not actually, no”, adding: “My salary is less than the 50p rate but I’m not thinking about that, I’m trying to think about what’s right for the country.”

Mr Osborne’s entry in the registry of members’ interests shows that he has rented out a home he owns with his wife Frances in central London since last July, around the same time that he moved into a flat above 10 Downing Street.

He also owns a 15 per cent stake, worth an estimated £4million, in Osborne and Little, an upmarket family wallpaper business. Any income he received from the home or the conmpany would have to be less than £15,000 to avoid breaching the £150,000 threshold.

Last night, an aide insisted that Mr Osborne’s comments on the Radio 4 Today programme related to his tax status in 2010/11 and not for 2011/12, because the tax year had not yet finished.

He said: “In the most recent tax year George was a higher rate tax payer because of his salary and part of the rental income from one property that has a mortgage on it. He makes no use of tax avoidance schemes.”

Labour called on the rest of the Cabinet to disclose further details of their tax affairs. Angela Eagle, the shadow leader of the House, told MPs: “We were all astonished to learn from the Chancellor this morning that he was not a top rate taxpayer.

“The hunt is now on for the name of his accountant who will surely find himself in spectacular demand. But given that the Chancellor has answered the question, surely the rest of the Cabinet should now do so.”

Sir George Young, the Leader of the House, replied: “Why should this outbreak of openness be confined to members on this side of the House?”

Advertisements
Tagged , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Advertisements
%d bloggers like this: