Huge profits from sale of homes renovated with taxpayers’ money
Hazel Blears
The full extent to which MPs used second home allowances to play the property market was laid bare last night as one former Labour minister was revealed to have made almost £200,000 on a flat renovated with public money.
Barry Gardiner, the former environment minister, cashed in on his second home, having claimed thousands of pounds in expenses to renovate the Westminster property, located just a few miles from his main Brent North constituency house.
Mr Gardiner’s gain exposed how politicians have exploited the £24,222 MPs annual second home allowance, beefed up with generous expense accounts, to buy additional properties, refurbish them with kitchens and bathrooms, and acquire furniture — all paid for by the taxpayer.
Ben Bradshaw, the Junior Health Minister, also used his second home allowance to pay for the entire mortgage on a London home which he owned jointly with his partner. A spokesman said: “Although the mortgage is in their joint names, since the civil partnership, Mr Bradshaw has paid the full bill. Before 2006 Mr Bradshaw only claimed for half the mortgage interest for his property, although the rules would have allowed him to claim for the full amount.”
It also emerged that Greg Barker, the shadow climate change minister, made £320,000 after buying a property with the assistance of public money and selling it after 27 months.
Barbara Follett, the Tourism Minister, submitted claims for personal protection after she had been mugged by a stalker, according to The Daily Telegraph.
Some MPs have exploited a tax loophole to dodge capital gains tax, which is levied at 18 per cent on any profit made on the sale of a second home.
Geoff Hoon, the Transport Secretary, has built a property portfolio worth £1.7 million, having claimed expenses on at least two homes. Hazel Blears, the Communities Secretary, claimed taxpayers’ money to pay the mortgage on three homes in a single year. Under the current rules, all 646 MPs are entitled to claim up to £24,222 each year towards a second home.
That sum is earmarked to meet mortgage repayments or rent, but is also designed to be used to cover stamp duty, legal fees and removal costs. While the allowance is funded entirely by the taxpayer, any profit arising from the sale of a second home is pocketed by the MP. The real boon for MPs has been the extraordinary flexibility within the tax system and the parliamentary allowance structure.
Under the rules, an MP can switch his primary residence and second home around. The switch has two consequences: first, it allows the MP to claim the allowance and expenses to renovate the other property but, critically, the main residence does not attract capital gains tax when sold.
Ms Blears used the parliamentary allowances and expenses system to bankroll a shopping spree in which she claimed thousands of pounds to buy two beds and two televisions for her second homes during a 12-month period. Non-MPs would have to pay tax on such expenses, which are generally regarded by the taxman as a benefit in kind and taxed as additional income. MPs are exempt.
While Parliamentary rules state that politicians are not allowed to be seen as extravagant, they are allowed to spend up to £10,000 on a new kitchen, £6,335 on a new bathroom, up to £750 on a new television and £1,000 for each new bed. They can also claim for electrical goods and furniture, detailed in the Additional Costs Claims Guide, which has become known as the John Lewis list. MPs can also claim for the food they eat when away from their primary home — up to £400 a month.
Until April 2004 Ms Blears’s designated second home was a modest semi-detached house bought in 1997 in her Salford constituency. Ms Blears, a leading Blairite Cabinet minister, was then claiming £300 a month in mortgage payments.
In March 2004, she claimed £850 for a television and a video recorder from Selfridges and £651 for a mattress from Marks & Spencer. The following month, and the year after being made Home Office Minister, she changed her second home to a flat in Kennington, South London, which she had bought three years earlier for £155,000.
Ms Blears claimed £850 a month to cover the mortgage for the flat and in August 2004 sold the property to the Labour peer Baroness Henig at a £45,000 profit. During September and October she claimed for staying in hotels in London, including two nights at the Zetter hotel in Clerkenwell at £211 a night.
In November 2004 Ms Blears and her husband paid £300,000 for a flat in Clerkenwell. She began claiming more than £1,000 a month to cover mortgage payments and the maximum £400 a month for groceries.
While Mr Hoon was Defence Secretary and Leader of the House, he lived in a grace-and-favour apartment in Whitehall and used his constituency home in Derbyshire as his second home. Mr Hoon was able to claim the second home allowance and expenses to pay for thousands of pounds worth of renovations and refurbishments. During 2004 and 2006 Mr Hoon recarpeted his home, which he had owned since 1986.
Before living in Admiralty Arch in Whitehall, Mr Hoon had another flat in London, which he subsequently rented and then sold. That property was bought for £150,000 in 1991 and disposed of for £475,000.
After stepping down in 2006 from being Leader of the House, Mr Hoon moved out of Admiralty Arch and bought a new second home in a Georgian square close to the House of Commons. He claimed the £900-a-month repayment on his interest-only mortgage as part of his second home allowance.
During 2007 and 2008, Mr Hoon claimed the maximum £23,083 allowance. In a statement, a spokesman for Mr Hoon said last night: “I lived at Admiralty House from 2002 until 2006 on advice from Special Branch on security grounds, as Defence Secretary. The alternative of providing comprehensive security at my personal property would have entailed significant extra costs to the taxpayer.”
No comments:
Post a Comment