Expenses Allowance For MP's
Expenses Allowance for Members of Parliament.
During the Budget speech of the Chancellor of the Exchequer he declared “It cannot be fair that those who pay tax are allowed to avoid it” So does this apply to the Members of Parliament and the expenses scandal which has been in the press over the last few weeks and what are the tax rules relating to the Members of Parliament?
In Section 292 of the Income Tax (Pensions and Earnings) Act 2003 is a section headed “Overnight expenses allowances of M.P’s.”
This section covers overnight expenses allowances of M.P’s and is as follows:-
No liability to income tax arises in respect of an overnight expense allowance paid to a member of the House of Commons in accordance with a resolution of that House.
“Overnight expense allowance” means an allowance expressed to be in respect of additional expenses necessarily incurred by the Member in staying overnight away from the Member’s only or main residence, for the purpose of performing parliamentary duties:-
In the London area as defined in such a resolution or
In the Member’s constituency. The exemption from tax is provided to any expense paid in accordance with a resolution of the House of Commons. The only recognisable qualifying condition comes in section 292(2), which requires that the allowance is “expressed to be” in respect of additional expenses necessarily incurred by the Member of Parliament in performing his/her parliamentary duties. The expense payments are exempt from tax if they are authorised by a “resolution of the House” and are expressed as payments of amounts necessarily incurred for the performance of parliamentary duties. The test is what the expenses are described as rather than what they are actually in respect of.But what does the Resolution of the House authorise? The introduction to the Green Book, which contains the guidance on expenses, but not the details of the resolution, states that ‘parliamentary allowances are designed to ensure that members are reimbursed for costs properly incurred in the performance of the MP’s duties.
The principles set out in the guidance underpin the allowance regime:”is this expense genuinely incurred by me in my role as Member of Parliament as opposed to my personal capacity”. Further guidance on applying this principle is as follows; “Is this purchase supporting me in carrying out my parliamentary duties?” Defining parliamentary duties is difficult but members may wish to consider, the generally accepted parliamentary functions, the legislative role, the oversight and accountability rule and the representative role including dealing with constituents problems.
The overnight costs allowance is available to reimburse members for the additional expenses necessarily incurred in staying overnight away from their main home for the purpose of performing their parliamentary duties. The allowance may be used to cover the following costs:-
Rent and mortgage interest.
Hotel expenses.
Utilities and telecommunication charges
Furnishings
Maintenance, service agreements, cleaning and insurance.
Subsistence. Had HMRC been responsible for the scrutiny of MP’s expense claims then very few of the more fragrant claims that have been made by MP’s and been revealed by the press e.g. Moat clearing and duck house for a pond would not have been successful.The rules for MP’s for claiming expenses are totally different to those rules for claiming expenses if you are an individual who holds an office or is an employee. Remember, this is the same House of Commons that insisted the Queen should pay income tax.
Article Courtesy of Stephen Brownlee @ SDB Accountancy Services
