Friday, July 30, 2010

MPs get special treatment for home to work commuting

They're at it again. Sadly it takes tax geeks to spot it and I'm indebted to Mike Truman, editor of Taxation, for spotting this little fiddle.

Regular readers will recall that my comments on the tax questions arising from the MPs' expenses scandal last year. It is VERY disappointing to learn that even under the new regime someone has seen fit to secure discriminatory and special treatment for MPs.

The explanatory notes to clause 7 of Schedule 4 of the most recent Finance Bill explained that:
"amendments to ITEPA will provide a statutory exemption for certain travel expenses paid or reimbursed to MPs by IPSA as expenses necessarily incurred in the performance of MPs’ Parliamentary functions."
That seemed reasonable to me. It created new s293A ITEPA 2003 which also looks reasonable in itself. (I especially liked the explicit exclusion in the legislation of alcoholic drinks from a tax free allowance for evening meals eaten in, what passes for an office canteen at the Palace of Westminster, if the House sits after 7.30pm).

Mike however dug a little further. s293A grants tax relief for expenses paid in accordance with s5 of the Parliamentary Standards Act 2009. This in turn refers to the MPs' allowances scheme prepared by IPSA. And Mike identified that, read carefully (see bold extracts below), this gives MPs a tax-free allowance for the costs of travel upto 20 miles to and from their home, if they live outside the constituency.
7.2 MPs may claim Travel and Subsistence Expenses for journeys which are necessary for the performance of their parliamentary functions, and fall into one of the following categories:
(a) For MPs who are eligible for Accommodation Expenses, journeys between any point in the constituency (or a home or office within 20 miles of their constituency) and Westminster or a London Area home;
(b) ......
No other employee would get such an allowance - and if they did it would be taxable as it's evidently for 'home to work' travel.

A cursory glance at the rest of the guidance provided by IPSA suggests that the new scheme is MUCH tighter than before. The expense reimbursement terms I looked at seem much more in line with the over arching principles of the scheme and similar to those that would apply in the commercial sector. So why is there any element of special treatment? It can hardly be a mistake. It must be deliberate.

It's a disgrace. Again.

Who sought the allowance? Who agreed it? Does anyone in HMRC know about it? Did they accept that special treatment for MPs was appropriate? I think we should be told. Don't you?

Afterthought: A more generous view of all this would be that the special relief for MPs is a hint as to a new relief that will shortly become available for all employees for home to work travel. Especially those who do some of their work at home.


  1. Yes, a more "generous" view would be as you say. Somehow I can't see that happening, old cynic me.

  2. Mark, you say "this gives MPs a tax-free allowance for the costs of travel upto 20 miles to and from their home, if they live outside the constituency".

    Surely the effect is that MPs can claim "necessary" travel costs between consituency (or thereabouts) and Westminster (or thereabouts) - much more than 20 miles in most cases! However, while "wholly" and "exclusively" conditions appear to be missing, are we not generally dealing here with travel between one place of work and another?

  3. Thanks Guys.
    John, that may be what was intended ad it was my first reading of the rules. As I say, Mike noted the reality which seems to be borne out by the bold text in the extracts above.