MPs expenses saga continues - tax free

The MP expenses scandal reared its ugly head once more last week, but what will be the tax consequences of this ongoing saga? Mark Lee reports.

Last week Labour MPs Jim Devine, David Chayton, Elliot Morley and Tory peer Lord Hanningfield faced criminal charges of theft by false accounting over their expenses claims.

The scandals rumble on this week, with Labour launching an internal investigation after Devine claimed he was told that he could move money between expense accounts.

Sir Thomas Legg’s report on MPs’ expenses proved that abuse of the system was widespread with more than half of all MPs required to make repayments.

A shameful footnote to the whole affair is that the Additional Costs Allowance is tax-free - as determined by the 1983 Finance Act (which, like all tax law, was passed by parliament which, on this occasion, understood precisely what it was doing).

There are many tax related questions raised by this scandal, but the three most crucial ones are outlined below.