MPs are using personal companies to accept payment for second jobs in a move which could reduce their tax bills, it was claimed today.
At least 10 MPs have conducted outside consultancy work through a personal company, according to an investigation carried out by The Times.
Such an arrangement could provide tax advantages because it avoids initially paying income tax of up to 45 per cent on the payment, with the company paying corporation tax at 19 per cent instead.
Additional tax, up to the full rate of income tax, is then paid if and when money is taken out of the company.
Using personal companies to accept payment for work is entirely legal but critics have called for politicians to be banned from doing it.
They argue that ‘MPs should not be avoiding paying the taxes they’ve decided that the rest of the population should pay’.
Parliament is in the process of updating its standards rules following the Westminster sleaze scandal and there are now calls to include a ban on the arrangement in the crackdown.
At least 10 MPs have conducted outside consultancy work through a personal company, according to an investigation carried out by The Times
The newspaper said Education Secretary Nadhim Zahawi had previously declared work for clients through a company he co-owned with his wife
Sir Alistair Graham, the ex-chairman of the Committee on Standards in Public Life, told The Times: ‘This should be stopped as soon as possible. MPs should not be avoiding paying the taxes they’ve decided that the rest of the population should pay.’
Labour MP Dame Margaret Hodge, the former head of parliament’s Public Accounts Committee, labelled the use of the arrangement ‘completely outrageous’.
She added: ‘We, as MPs, determine the tax everyone has to pay and for some in our midst to choose to use personal service companies in this way is particularly scandalous.’
MPs last week backed a plan tabled by Boris Johnson to ban paid consultancy work.
The changes would prevent MPs from accepting paid work as a parliamentary strategist, adviser or consultant, and from accepting payment or offers of employment to act as political consultants.
Parliament’s Committee on Standards is now taking forward Mr Johnson’s proposals and it intends to present a report with full recommendations to the Commons in early 2022.
The Times reported that Tory MP Mark Pritchard has used a company that he owns with his wife to take payments for outside work.
It also named the Tory MPs Jake Berry and Sir Bob Neill as others who have taken payments for consultancy work through companies owned by them or with their spouses.
The newspaper said Education Secretary Nadhim Zahawi had previously declared work for clients through a company he co-owned with his wife.
Sir Bob told MailOnline: ‘The suggestion this is done for any tax benefit from my point of view is absolute nonsense.
The report also named the Tory MPs Jake Berry and Sir Bob Neill as others who have taken payments for consultancy work through companies owned by them or with their spouses
‘The suggestion it is done with that in mind is nonsense. It is a very common procedure, particularly if anyone wants to keep their business finances separate from their personal finances.’
Mr Berry told The Times that he was in no way seeking to avoid or minimise tax liability, adding: ‘I have received no remuneration whatsoever from my wife’s company.’
A Department for Education spokeswoman said: ‘The Secretary of State for Education has followed all due process, which includes adhering to the Ministerial Code and declaring all interests in the Commons register and to the Cabinet Office.
‘In addition, all employment reported on was prior to him becoming a minister.’
Mr Pritchard has been contacted for comment.
Source: Daily Mail UK