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Rishi Sunak urges City workers to go back to the office
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What can we learn from Sunak’s tax ‘returns’?

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The figures disclosed in the prime minister’s tax statement tell us a little about his personal finances but without sight of the documents delivered to HMRC we can’t know the full story.

23rd Mar 2023
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Last November prime minister Rishi Sunak promised to publish his tax returns, and on 22 March 2023 some details from his last three UK tax returns were made public in a form of letter from his tax advisers (Evelyn Partners). The timing of this publication was interesting, as at the precise moment the Evelyn Partners letter appeared on gov.uk, a former prime minister was giving evidence to a Parliamentary select committee, the judgment of which may well decide his future parliamentary career.    

What we know 

Rishi Sunak has not published his full tax returns, as Jeremy Corbyn did, and more recently Nicola Sturgeon. He has authorised his advisers to publish the totals of his income, in three categories, and his capital gains for the past three complete tax years, plus the totals of the income tax and capital gains tax he paid for those years: 2019/20 to 2021/22.

We can see his gross earnings from Parliament, his total bank interest, and investment income broken down into interest, dividends and capital gains. 

The accompanying notes from Evelyn Partners say the investment income and capital gains arise entirely from a single US-based investment fund, which is held in a “blind management arrangement” on Sunak’s behalf. This means that Sunak has no control over that money; he cannot direct how it is invested or when gains are realised. He also can’t access those funds while he is a minister, but he remains liable to UK income tax and CGT on them.           

What’s missing? 

The prime minister received a salary of £156,163 in 2021/22, and he would have paid a considerable amount of employee’s class 1 NIC on those earnings, but that charge is not shown in the summary, and neither is the employer’s NIC.

The prime minister also receives a considerable number of benefits in kind, such as free accommodation in the centre of London, travel by chauffeur-driven car and private plane, and the use of a country residence. The value of these perks does not appear separately on the summary of his tax returns, but the notes from Evelyn Partners say the ministerial salary incudes an amount of expense for the use of Downing Street, which is taxable. 

MPs also belong to a generous final salary pension scheme through which they accrue up to one fiftieth of their final pensionable salary for every year they serve in Parliament. Some MPs also make personal pension contributions to the Parliamentary scheme. The pension contributions paid by Sunak, or on his behalf, are not disclosed. 

The Financial Times reports that Sunak owns four properties: a family home, an apartment in Kensington, a large manor house in Yorkshire with heated swimming pool, and an apartment in Santa Monica, California. However, no personal property income is reported in the income summary, so we must assume that none of those properties are let out. Owning four homes and not having to let any, even on a short-term basis, is a position few can aspire to.    

Tax calculations 

As Sunak’s income exceeds £125,140 in each of the three tax years he is not entitled to a personal allowance to set against his income, but he can deduct the annual exempt amount of around £12,000 from his capital gains. 

Being an additional-rate taxpayer Sunak has no savings allowance, so all of the bank interest he receives is taxable.      

I have calculated the income tax due based on the figures of income provided, but my computations produce a higher amount of tax due of £111 than the summary declares for 2019/20. The difference may be my mistake, but it could be due to missing information, such as gift-aid donations which have expanded the tax bands.

Average rates 

Some people have been shocked at the relatively low average rate of tax Sunak paid on his total income and gains for each of three years: 25.21%, 23.06% and 22.65% for 2019/20, 2020/21 and 2021/22 respectively. 

This is because a large proportion of the taxable sums are capital gains, which are taxed at 20% where the gain doesn’t arise from residential property or carried interest.

The average income tax rate may also be lower than someone who receives all his income as a salary as lower tax rates are charged on dividend income compared to earned income and interest.

What have we learned?

Sunak pays the right amount of tax for his mix of earnings, investments and gains. If voters feel that this average rate is too low then they need to put pressure on MPs to equalise the rates of tax charged on different sources of income and gains.

Replies (40)

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By Hugo Fair
23rd Mar 2023 17:49

A generally clear analysis of the (relatively) simple details actually published, but it'd have been better to exclude ALL slippages into journalistic hubris ... "Owning four homes and not having to let any, even on a short-term basis, is a position few can aspire to" adds nothing to our understanding.

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Replying to Hugo Fair:
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By buklah
24th Mar 2023 12:48

Agree completely, a relatively simple article with so much "journalistic" slippage. the actual blatant attempts to put ideas into peoples head show how poor teh write up is.

What is the point of "Owning four homes and not having to let any, even on a short-term basis, is a position few can aspire to." and "If voters feel that this average rate is too low then they need to put pressure on MPs to equalise the rates of tax charged on different sources of income and gains." in this article at all as tehse statements are totally pointless except to show a lot of bias.

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By Open all hours
23rd Mar 2023 19:48

Learnt very little and didn’t expect to. Main thing is multiple people who know him say he’s a good guy and genuinely involved in his constituency. That cuts him a lot of slack.
Rodders has now published his and the way work is taxed is well reflected in their overall comparative rates paid.
Thems the breaks.

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By Self-Employed and Happy
24th Mar 2023 09:57

To be perfectly honest I've thought from the start it is disgusting anyone to be considered for PM should be allowed to be "resident for tax purposes" elsewhere, I don't care if everything is now on a UK return, it's just the intent from the start.

Basically somebody who intends to pay nothing in the country he is an MP but hes happy setting policies that affect the poorest in our communities.

As someone who has always voted Conservative (I don't mind saying that on this article because come on it's purely political) I certainly won't be voting, MPs could not be further away from the people they purport to represent.

The last 25 years has seen a huge reduction in the amount of professionals becoming MPs, it shows.

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Replying to Self-Employed and Happy:
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By LGrainger
25th Mar 2023 08:51

agree

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Replying to Self-Employed and Happy:
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By LGrainger
25th Mar 2023 08:51

agree

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Replying to Self-Employed and Happy:
Morph
By kevinringer
25th Mar 2023 09:37

Self-Employed and Happy wrote:

To be perfectly honest I've thought from the start it is disgusting anyone to be considered for PM should be allowed to be "resident for tax purposes" elsewhere, I don't care if everything is now on a UK return, it's just the intent from the start.

Basically somebody who intends to pay nothing in the country he is an MP but hes happy setting policies that affect the poorest in our communities.

Quote from Rishi Sunak's declaration at https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

"You are domiciled in the UK and have always filed your tax returns on that basis.
As a resident of the UK you are therefore taxable in the UK on your worldwide
income and gains."

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Morph
By kevinringer
24th Mar 2023 10:14

I've often wondered if the wealthy are able to convert income into gains and take advantage of the lower CGT rate, and Rishi Sunak's Tax Return suggests this does happen. I have no problem with his wealth as it kind of suggests he's therefore more likely to have taken the job for genuine reasons (maybe I'm being too generous). I wonder how this contrasts with Boris' Tax Return.

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Replying to kevinringer:
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By Self-Employed and Happy
24th Mar 2023 10:32

OR

The job is taken so that he can slowly introduce measures (by gentle nudging) that benefit himself and others.

The abolition of the Lifetime Allowance is shocking in my view, it only benefits a tiny proportion of the population.

I maybe would have increased it by £500k, the problem is you are giving people already very wealthy more than you are giving the ordinary person.

We need a £15k personal allowance / NI threshold and.....(this one is controversial) to get Pensioners back to paying NI (but give them a bigger threshold)

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Replying to Self-Employed and Happy:
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By Ian McTernan CTA
24th Mar 2023 17:44

1.3m people isn't 'tiny' and are probably exactly the sort of people we need in this country.

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Replying to Self-Employed and Happy:
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By AndyC555
25th Mar 2023 10:47

"it only benefits a tiny proportion of the population."

the £1m LTA would mean any public sector employee looking forward to a pension of £44k p.a. or more would be affected by it.

I suspect that's the real reason why it was scrapped. £44k is a good pension but hardly puts people in the 'superrich' category.

It's another debate whether the valuation of public sector pensions is fair. It's done of 20x pension + lump sum.

An actuarially minded colleague puts the current valuation at around 28.9. Two years ago, when annuity rates were rock bottom, the valuation was around 50.

I can hardly begrudge how excellent public sector pensions are - I have a small one myself - but I do wish civil servants would acknowledge just how good their pensions are when talking about pay.

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By TBro4iuABEW6Qmh74nRteQz3
24th Mar 2023 10:36

Minor copy correction : "Owning four homes and not having to let any, even on a short-term basis, is a position few can aspire to." should read "Owning a home, even on a short-term basis, is a position few can aspire to."

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By LGrainger
24th Mar 2023 10:46

He has paid the correct amount of tax.
He has already , from a standing start, achieved by hard work, a great education.
He has been successful in his business career, and is a conviction politician - ie he is trying to do the right thing for his country - not for personal gain.
In short, the properly motivated , independent, able type of individual we want for the job!

Why can't those of lesser achievements ditch the envy , and see that?

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Replying to LGrainger:
accountant in london
By Accountant in London
24th Mar 2023 11:18

I agree, if he has done well and worked hard, why not celebrate that , then be sarcastic and petty about it? Its sad that this type of articles are written by Accounting Web - it just shows that there is no difference between the tabloids and Accounting Web.

"Sunak pays the right amount of tax for his mix of earnings, investments and gains. If voters feel that this average rate is too low then they need to put pressure on MPs to equalise the rates of tax charged on different sources of income and gains."

I don't understand why you would even say this? just because whinging voters want the PM to pay more tax, then why do the businesses have to suffer by paying more tax on Dividends? This is a very bad article which gives wrong idea to voters/people. There is no point in scoring points in threshing the PM and his achievements. In fact, you should encourage voters/people to strive to be like the PM - hardworking and wanting to have a better life for himself and his family and also try to do that for the country.... He is not perfect and so is everyone too

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Replying to Accountant in London:
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By justsotax
27th Mar 2023 12:01

no doubt born in a wheelie bin, inherited nothing, and had to make it in the world all alone......

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Replying to LGrainger:
Morph
By kevinringer
24th Mar 2023 11:28

LGrainger wrote:

He has been successful in his business career, and is a conviction politician - ie he is trying to do the right thing for his country - not for personal gain.
In short, the properly motivated , independent, able type of individual we want for the job!

I agree, and I'm not a Conservative voter.

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By listerramjet
24th Mar 2023 10:58

it tells us nothing about the personal family wealth, which is after all private business. Personally I don't think most people care. And it is hardly justification for pratting about with tax, making it more complex and corrupt. I am sure many ordinary people would care about that, and not in the same way politicians seem to.

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By GrayMan
24th Mar 2023 11:45

No one will ever know whether or not Sunak has paid the correct amount of tax, it doesn't even say whether it was all UK tax. I can recollect when we had sur-tax. When vat was introduced it was at 8%, 12.5% on luxury goods and there was earned income relief. The basic problem now is the same as it was then, it has always been far too easy to avoid paying tax in the UK on profits made here or incomes that should be taxed here. Contrary to popular belief, not all the best brains would flee abroad and good riddance to those that did. If they still made profits in the UK their profits should be taxed here.

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Replying to GrayMan:
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By BrianL
24th Mar 2023 12:51

Re your first sentence: did you read the Evelyn Partners letter including the notes?

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JD Portrait
By John Downes
24th Mar 2023 11:47

"Some people have been shocked at the relatively low average rate of tax Sunak paid on his total income and gains for each of three years: 25.21%, 23.06% and 22.65% for 2019/20, 2020/21 and 2021/22 respectively."

Maybe 'some people' should just get a life and stop being envious of the success of others. For the government to seize 20+% of all your income seems quite enough to me, they only waste it anyway.

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Replying to John Downes:
By ireallyshouldknowthisbut
24th Mar 2023 14:32

The point about CGT is that there is no particular reason *why* income structured as gain should be taxed much much less than "earned" income structured as income tax.

Indeed if you read any tax policy documents by the profession, think tanks and the like, they all say it's way too low.

And then, when you see the tax returns of the ultra wealthy, you quickly see why Osbourne bought it in. (If you recall, he did it out of the blue, with no independent research) The vast bulk of the income structured as a capital gains.

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Replying to ireallyshouldknowthisbut:
accountant in london
By Accountant in London
24th Mar 2023 14:52

"and investment income broken down into interest, dividends and capital gains. "

this sentence is wrong in the article, capital gains is NOT investment income. And I dont see why capital gains not be taxed at lower or different rate? Many countries I know have different/lower rates for capital gains. Infact almost all countries (not fully researched) have CGT on sale of main home, UK is one of the few countries that has a complete PPR relief. I know Portugal tax system and main homes gains are taxed on half the gains if the proceeds from the main home sale are not invested in an EEA country within 36 months of sale. In PM's case the capial gains are from the fund... buying and selling of the fund units. UK also has addtional rules on non-reporting funds whose gains are taxed at income tax rates (OIGs) - Offshore income gains. All this just tells us that the fund he has invested in is structured for tax efficiency..... there is nothing wrong in being tax efficient.

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Replying to ireallyshouldknowthisbut:
JD Portrait
By John Downes
24th Mar 2023 17:24

"if you read any tax policy documents by the profession, think tanks and the like, they all say it's way too low."
Well, that's me told then.

Me, I'm fed up with being told by 'experts' stuff that simply isn't true.
For example, Lockdowns are good.
Climate change is going to kill us all.
Net Zero will make us all rich.
Give up eating meat, eat insects instead.
These accounts present a true and fair view.

It's obviously nonsense. I'm long past the point where I believe the utterances of think-tanks and know-nothing 'professionals'. To me it's blindingly obvious that everybody, rich and poor, is over-taxed in this country. Increasing the tax burden is the route to penury. Handing money to people who will only waste it is utterly destructive.

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Replying to ireallyshouldknowthisbut:
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By AndyC555
25th Mar 2023 11:03

"there is no particular reason *why* income structured as gain should be taxed much much less than "earned" income structured as income tax."

No *particular* reason but plenty of reasons which have been acknowledged by economists for decades.

CGT is not adjusted for inflation, so any appreciation of assets is taxed at the nominal instead of the real value. This means investors must pay tax not only on the real return but also on the inflation.

Capital gains tax is merely part of a long line of taxation of the same pond of income. Wages are first taxed by payroll and personal income taxes, and then again when those investments pay off in the form capital gains.

Capital gains tax, is a tax on future consumption. Future personal consumption, in the form of savings, is taxed, while present consumption is not. By favouring present over future consumption, savings are discouraged, which decreases future available capital and may lower long term growth.

Capital gains may arise from risky investments, and a lower capital gains tax rate might encourage such risk taking.

Someone goes to work for a week. They pretty much know how much they will get for that week's work. they invest no money of their own to get that week's work - relying instead on the investment made by their employer to set up that business.

Someone invests money. They might lose it. Many do. Should we encourage such risk taking? How could we do that? Should we discourage such risk taking? Everyone *knows* that only people like Scrooge McDuck benefit - sat in his cave on his big pile of money wearing a top hat.

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Replying to AndyC555:
By ireallyshouldknowthisbut
27th Mar 2023 16:15

AndyC555 wrote:

"there is no particular reason *why* income structured as gain should be taxed much much less than "earned" income structured as income tax."

No *particular* reason but plenty of reasons which have been acknowledged by economists for decades.

CGT is not adjusted for inflation, so any appreciation of assets is taxed at the nominal instead of the real value. This means investors must pay tax not only on the real return but also on the inflation.

Capital gains tax is merely part of a long line of taxation of the same pond of income. Wages are first taxed by payroll and personal income taxes, and then again when those investments pay off in the form capital gains.

Capital gains tax, is a tax on future consumption. Future personal consumption, in the form of savings, is taxed, while present consumption is not. By favouring present over future consumption, savings are discouraged, which decreases future available capital and may lower long term growth.

Capital gains may arise from risky investments, and a lower capital gains tax rate might encourage such risk taking.

Someone goes to work for a week. They pretty much know how much they will get for that week's work. they invest no money of their own to get that week's work - relying instead on the investment made by their employer to set up that business.

Someone invests money. They might lose it. Many do. Should we encourage such risk taking? How could we do that? Should we discourage such risk taking? Everyone *knows* that only people like Scrooge McDuck benefit - sat in his cave on his big pile of money wearing a top hat.

Re I quite agree that indexation needs to be reintroduced for CGT if the rates of tax are aligned. Good news is that gone are all the tables, and it will be a simple computation your software will do. That is no reason to have such low rates, indeed the currant system is harsh on gains from investments made 20-30 years ago.

The point about CGT being very low, is that incomes are being deliberately structured as capital in order to pay less tax than if structured as income. I don't buy these are 'genuine' risks of capital, it's just packaging and deal structures.

Client currently winding up a one shot company which made a £2million capital gain over 3 years on essentially a consultancy income. Whistling quite merrily to the bank paying tax at sub 35% vs 55% if it was income. Yes its my job to flipping well structure it for his benefit, but the £400k of tax I save him by saying, er "don't just do it as a partnership, stick it through a company and wind it up, " would have paid for a dozen nurses for a year. He of course already have a £250k day job, and quite frankly doesn't care how much tax he pays. Its all just numbers and ego at that level.

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Replying to John Downes:
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By DavidWinter
24th Mar 2023 16:39

I don't understand when the rich are scrutinised that it's always blamed on envy. Hardly anyone living their ordinary lives are wishing to be billionaires, but they do want people who can afford more to pay more.

Rishi could probably finance a hospital wing and not even notice a difference in his lifestyle, while other people are freezing through the winter and can't afford to 'get a life'. They probably all work as hard as each other and we would lose nothing by reducing the gaping canyon between the super rich and the rest of us. We are also entitled to know if the people making rules for everyone even understand what our lives are like.

We know in our profession that once you attain a certain level of wealth - skill, intelligence and hard work are not critical requirements for increasing it further, you can farm all that out. No envy is required because success is quite often an illusion. Inheritance plays a part for many people who would have you believe they are self made and special - see Mr Trump and his small loan from his parents of $1m, Elon whose father owned half an emerald mine, or indeed Rishi who married a rich heiress and has not to my knowledge even been elected by the public he presides over.

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Replying to DavidWinter:
Morph
By kevinringer
25th Mar 2023 09:30

DavidWinter wrote:

... Rishi who married a rich heiress and has not to my knowledge even been elected by the public he presides over.

We don't elect PM's in the UK, in the same way we didn't elect Keir Starmer into his position as leader of the opposition. We elect individual MPs. Rishi, like all PMs before him, is a democratically elected MP just like Keir Starmer.

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Replying to kevinringer:
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By justsotax
27th Mar 2023 12:05

as i recall he hasn't stood as leader of the the conservatives in a general election....as an opposition leader, you don't charge over anything.....unless there has been a shift in the way parliament count votes....

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By JustAnotherUser
24th Mar 2023 13:11

here we take a look into the tax affairs of the 1% of the 1% of the 1%, a club only 18 people have been a member of since WW2... and people shall judge them as if they are a common man.

Sunak's legacy will live an die by how he works with the other 1%, I guarantee every tabloid has hit pieces sitting on the shelf to disgrace him if he steps out of turn.....

Nadhim Zahawi ‘agreed on penalty’ to settle tax bill worth millions
David Cameron's tax dodge bombshell after he was handed £200,000 GIFT from his mum
Boris Johnson caves in and pays up ‘outrageous’ US tax bill
Tony and Cherie Blair bought property via offshore firm and saved £300,000 in tax
John Major rushed out income tax news to help Queen
Tory MP Geoffrey Cox has undeclared stake in ‘tax avoidance’ scheme
etc etc etc

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By Software Seeker
24th Mar 2023 13:17

Love that the letter seems to have been signed off by a scribbling 5 year old.

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By Nebs
24th Mar 2023 15:00

I've never understood why it's just the PMs tax return that everyone wants to see. Imagine the extra tax that would be collected if everyone's tax return was open to public review.

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By Rob McCulloch
24th Mar 2023 15:25

Surely the reason that' lower tax rates are charged on dividend income compared to earned income and interest' is that dividend income is received after deduction of Corporation Tax. In the days of the imputation system with gross and net dividends, this would have been apparent. Simplification has not added to our understanding of the true rate of tax paid.

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Replying to Rob McCulloch:
By Ruddles
24th Mar 2023 15:48

Indeed. And in this case, although it is relatively insignificant, the US tax has led to some inaccurate reporting in some quarters - stating RS's UK tax bill in the context of his total income and gains (and therefore - admittedly, very slightly - understating the overall effective rate of tax). By ignoring the tax paid in the US which, all things being equal, would have been included in his UK tax bill had the income been UK-sourced.

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accountant in london
By Accountant in London
24th Mar 2023 16:00

Even without reading the letter on .gov website, i thought this article is really bad and now that I have reas through the letter, the PM is taxed on the fund income and gains regardless of it being paid to the PM. Plus the fund pays tax at source on this income and gains at the source country rates i.e lets say 28% but the PM only gets DTT relief of 10%/15% ... so there is an element of double taxation, this has not been taken into account when calculating the effective average rate. This article is terrible. I am so disappointed.

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By Ian McTernan CTA
24th Mar 2023 17:55

What have we learned?

That Rebecca can't help throwing in political comments into an article.

'If voters feel that this average rate is too low then they need to put pressure on MPs to equalise the rates of tax charged on different sources of income and gains.'

Coming from someone who really should know why those rates are different and have at least some clue about rates in other countries, I find it very disappointing.

Unless she's advocating for the rates to be equalised for everyone at one rate (say 25%?). Which would involve bringing back tax credits on dividends for a start- dividends come from taxed income for shareholder/owners.

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By Mr J Andrews
25th Mar 2023 12:49

The opener ''.......Without sight of the documents { PLURAL } delivered to HMRC , we can't know the full story.......'' needs explanation.
What documents were delivered to HMRC ?

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By 2TunTed
27th Mar 2023 12:12

Tax returns are a real gift for journalists but as a number of commentators have noted they don't reveal a great deal about his detailed finances and speculation about what they might be is just that, speculation. Just more stuff for the rumour mill of social media. Still good to have a foretaste of what might happen when private companies have to file PNL's at Companies House.

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By indomitable
27th Mar 2023 18:43

who cares? seems to me this is a very British disease, jealousy of wealth.

I personally couldn't care less what is in Rishi Sunak's or for that matter Kier Starmer's tax returns

They are both wealthy and what?

There is an argument that very wealthy people don't really understand the pressures of the 'common' man or woman but to obsess on the details of a person's tax return is unnecessary

I am sure Mr Sunak has paid the correct amount of tax and in my opinion the article has a very 'socialist' slant

I couldn't help notice the author mentioned 'jeremy corbin' and 'nicola sturgeon' as if they are examples of politicians that set a good example.

I understand wealthy people not wanting to show everyone how much they earn and how much tax they pay (unless they are involved in something illegal). It breeds jealousy and envy

I am more worried about the conservatives ability to manage this country which up to now has been a disaster for the last 10 years

-£400BN borrowed over lockdown
-Billions lost in fraud over the BBL scheme
-Billions thrown away on a track and trace service that never worked
-QE for years
-Public services that don't work

And they have the gall to increase taxes

How much the PM gets paid is a complete distraction

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By norstar
27th Mar 2023 18:55

I don't care what Rishi earns. A PM should be very well paid, let's be honest.

I do care about his negligence in dishing out money to all and sundry with little apparent "on the job learning" when facts emerged, whilst he left others completely bereft of support.

I do care that HMRC and the banks seem to be writing off vast sums, which were previously advanced with seemingly little to no checks made.

I do care that despite my having filed reports in certain cases, nothing has happened.

I do care that as a consequence of all this, that I'm now having to pay an extra wodge of CT, dividend tax etc to bail out the country's finances.

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By lorrine phylis
03rd Apr 2023 05:48

can't come to any conclusion very fast ,it is very important to listen his side of story.

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