MPs given exemption from tax avoidance

The Government introduced legislation on ‘disguised remuneration’ in the Finance Bill last week to target the practice of using third party vehicles such as offshore trusts to allow employees to avoid or defer the payment of income tax or national insurance contributions.
However, it has emerged that MPs will not be subject to the full force of the new rules.

The Finance Bill, which was published in full last week, includes a specific exemption for members of the House of Commons from rules which will apply an income tax charge to employee payments made through third parties.

The addition is the last of the exemptions listed in the Bill, and is not referenced in the explanatory notes published alongside it.

MPs salaries and expenses are paid through the Independent Parliamentary Standards Authority (IPSA), not directly by Parliament, so would have fallen under the new third party rules without the exemption. It was made since IPSA already applies tax to the payments through PAYE.