Wednesday 14 May 2008 at 9.30am in Speaker’s House
Sir Stuart Bell MP
Nick Harvey MP
Mr David Maclean MP
In the absence of the Speaker, Nick Harvey MP was called to the chair.
The Committee met with Guy Westhead (Assistant Director, responsible for Benefits, Expenses and Earnings), Dave Goodwin (Public Departments (Technical), responsible for Members’ Tax Matters )and Peter Seedhouse (Policy Advisor, responsible for Benefits, Expenses and Earnings) of HMRC
Nick Harvey said the three areas the Committee most wanted to cover were the tax treatments of travel, capital equipment and housing.
There was a discussion about the tax treatment of Members’ travel arrangements, and in particular travel arrangements between the constituency and Westminster. Peter Seedhouse explained how the rules work for Members. Travel between London and a Member’s constituency is treated as travel between two permanent places of work and, where the House reimburses costs, is not taxable or subject to NICs. Detailed guidance for Members is provided in the HMRC booklet “MPs, Ministers and Tax”.
Peter Seedhouse said that the current arrangement about Members’ spouse travel was a long standing concession. Following the Wilkinson case, HMRC was having to review any existing concessions and decide whether to withdraw them. Alternatively, they could be put on to a statutory basis, but that would be a matter for Parliament.]
The mileage allowances paid to Members’ for undertaking their Parliamentary duties is linked to the statutory mileage allowances that employees can be paid tax and NICs free for work travel. The tax and NICs free amounts are linked to reimbursement of actual mileage at 40p a mile (25p over 10,000 miles). If a lump sum were to be paid in a particular period then an employee has to be able to show that it does not exceed the tax and NICs free amounts for the particular mileage. A fixed budget based on historic spending would not be exempt from tax.
Terry Bird pointed out the existing arrangements for constituency mileage were rather bureaucratic and contained some perverse incentives since constituency sizes varied significantly. There was a case for simplification. Dave Goodwin said that if the House did go ahead with paying a lump sum for travel, it would probably be taxable but the Member would be able to claim a deduction if he or she could demonstrate they had incurred allowable expenditure (or allowable miles where the travel was by car). The sort of records HMRC expected to be kept, and to be subject to occasional spot checks were a record of miles travelled on Parliamentary business, including a record of start, finish and the distance of each journey.