TaxPersonal TaxMinisters will not face hefty tax bills

Ministers will not face hefty tax bills

The Treasury has denied government ministers will face thousands in tax as a result of living in 'grace and favour' homes, contradicting statements made by paymaster general Dawn Primarolo.

Speculation grew at the weekend that Tony Blair, Gordon Brown, Robin Cook and others could find their residences taxed for hundreds of thousands as benefits in kind after a statement from Primarolo.

In parliamentary written answer she told Liberal Democrat MP Normon Baker: ‘Where refurbishment to the accommodation consists of repairs, decoration or furniture, tax is charged on the benefits.’

But following reports in the press a Treasury spokesman said ministers would not be facing tax against their residences.’Those stories are completely wrong. The rules are the same as they’ve always been. Nothing has changed.’

Tax experts also threw doubt on whether ministers could be charged.

Chas Roy-Chowdhury, head of taxation at the ACCA, said ministers were exempt under rules relating to property needed ‘for the better performance of employees duties and security’.

A liability might arise in relation to expenses connected with living accommodation, but that would only amount to 10%, not the 40% published elsewhere.

‘This shows that the whole tax system is so complex that even government experts cannot give a clear, precise and correct answer.’

Primarolo made her written statement on 16 July and follows speculation that Robin Cook might face a charge because he was permitted to keep the foreign secretary’s residence despite becoming leader of the House of Commons in a reshuffle after June’s general election.

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