MPs' EXPENSES: 100 MPs cash in on tax dodge that Speaker Martin failed to end

news

MPs' EXPENSES: 100 MPs cash in on tax dodge that Speaker Martin failed to end

By Ian Drury
Last updated at 1:41 AM on 14th May 2009

The loophole allowed Hazel Blears to dodge a tax bill of up to £18,000

More than 100 MPs are profiting from a tax loophole that the Commons Speaker has refused to close.

The House of Commons Commission, chaired by Michael Martin, has failed to introduce laws that would stop MPs dodging capital gains tax.

John Mann, a Labour backbencher, won a Parliamentary vote ending the ability of MPs to switch the location of their second home to benefit from capital gains tax exemption.

But the resolution has been omitted from the new Green Book - the bible of MPs' pay and perks.

It allowed Communities Secretary Hazel Blears to defend dodging a tax bill of up to £18,000 when selling a London flat by insisting she had broken no rules.

Miss Blears had designated the Kennington flat as her 'second home' which, under Commons rules, allowed her to claim up to £24,000 a year in mortgage interest and running costs.

But she told the Inland Revenue it was her 'main home' for tax purposes --enabling her to avoid capital gains tax of about 40 per cent on the £45,000 profit she made when the property was sold five years ago.

She has now agreed to pay the taxman more than £13,000 following public outrage.

Mr Mann last night blamed the Commons Commission for not introducing the resolution, which was passed last July.

He said more than 100 MPs had designated their 'main home' for tax purposes as their 'second home' for expenses - allowing them to profiteer from both.

The vote is binding on the Commons and can only be scrapped if MPs specifically vote to continue the 'abuse'.

Mr Mann said it was 'a disgrace' that the changes had not been introduced.

He said ignoring the resolution effectively allowed MPs to have 'preferential treatment' over their tax affairs.

Last night, the backbencher laid the blame for the failure squarely at Mr Martin's door.

'This is the House of Commons Commission's fault,' he said.

'They took the decision not to implement these changes, even though they are the will of Parliament. They have no power to stop it.'

The Commission is a panel of six MPs who oversee the running of the Commons.

Mr Mann said it should be 'abolished' and replaced with a panel of individuals from outside Westminster politics, for instance civil servants, businessmen and union leaders.

Earlier this year, the Speaker suggested he had been confused about the implications of Mr Mann's resolution.

He told the MP in the Commons: 'I am not saying that we did not fully understand the amendment, but if he can come to the Clerk of the House and give us an explanation of his interpretation of it, that will help the Commission.'