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Keir Starmer speaking at the 2020 Labour Party leadership election hustings in Bristol
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What Keir Starmer’s tax summary tells us

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Following Rishi Sunak’s transparency over his tax affairs, Keir Starmer has released a summary of his own income and gains for 2020/21 and 2021/22 including the tax he paid for those years.

27th Mar 2023
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The statement says it was prepared by ‘your chartered accountants’ but the leader of the opposition’s advisers are either more modest that Sunak’s or they don’t want the publicity, as they are not named.   

What we know

Starmer has released details of his taxable income for two years from April 2020, which coincides with his appointment as the leader of the Labour Party, and hence leader of the opposition. Sunak’s tax summary covers three years from April 2019.

The Labour leader takes a lower salary as an MP than Sunak: £76,961 compared to £81,908 for 2021/22. Not all MPs take the full salary they are entitled to.

The annual salary for an MP was increased to £81,932 from 1 April 2020, and was frozen at the level for 2021/22.  

Starmer also received £49,193 (in 2021/22) for his job as leader of the opposition.

What is missing?

As in Sunak’s tax summary the taxes paid as shown on Starmer’s summary only include income tax and capital gains tax, national insurance contributions (NIC) paid by the individual and the employer are ignored.

Likewise pension contributions paid by or on behalf of the MP are not declared.  

Computation

Unlike Sunak, Starmer has no dividend income, and his total taxable income does not take him into the additional rate band – above £150,000. This means Starmer is entitled to the reduced rate of personal savings allowance (PSA) of £500, which was not available to Sunak.

The small amounts of bank interest of £13 and £14 are covered by the PSA, so are not taxable in either year.

Like Sunak, Starmer cannot make use of a personal allowance as it is completely tapered away in both years where his total income exceeds £125,000.

Starmer has some self-employed income of £21,925 in 2020/12 and £453 in 2021/22 which his advisers say relates to book royalties. The lower figure puzzles me, as trading income of less than £1,000 would be covered by the sundry trading allowance. Either the declared figure is after deduction of that allowance, or his advisers forgot to claim it, costing Starmer £181.20 in extra tax.        

Gains

Starmer realised a significant capital gain in 2021/22 from the sale of a house he purchased for his sister and her family. This gain of £85,466 is taxed at 28%, rather than at 20% which is what Sunak pays on his considerable non-property gains.

Starmer would be entitled to the annual exemption of £12,300 to set against his capital gains, but the summary shows CGT paid of £23, 930, ie exactly 28% pf the gain. Dan Neidle questioned this point and received the assurance that the capital gain is shown after deduction of the annual exemption.

Average rates

Starmer pays an average rate of tax on his income of 34%, and 28% on his gains. If the capital gain had been shown before the deduction of the exemption, the CGT paid would amount to 24.48%, giving a total average tax rate for 2021/22 of 29.87%   

What have we learned?

The sanitised summary of Keir Starmer’s tax affairs doesn’t tell us very much, which was probably the aim of the authors.

What I find shocking is the relatively small salary MPs take. Starmer must have been earning significantly more in his role as director of public prosecutions, which he retired from in 2013.

Replies (9)

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By Justin Bryant
27th Mar 2023 14:31

I seem to recall Corbyn was relatively wealthy and don't forget they get a decent pension.

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By Hugo Fair
27th Mar 2023 14:55

"What can we learn from Sunak’s tax ‘returns’?" vs. "What Keir Starmer’s tax summary tells us"
So why the quotation marks for Sunak but not for Starmer - especially as "the taxes paid as shown on Starmer’s summary only include income tax and capital gains tax" (as per in Sunak’s tax summary).

And "This gain (from a property sale) of £85,466 is taxed at 28%, rather than at 20% which is what Sunak pays on his considerable non-property gains" is gratuitous - in that the same would apply to any two people in those circumstances of property/non-property gains!

The main 'revelation' is saved for the end ... "The sanitised summary of Keir Starmer’s tax affairs doesn’t tell us very much, which was probably the aim of the authors."
This is surely what you would expect of anyone put in this invidious position (publishing your tax returns for general consumption)?

Thanks (3)
the sea otter
By memyself-eye
27th Mar 2023 19:44

Seems to me like the political classes are falling over each other to 'publish' their tax affairs - presumably to show how much holier than thou they are (tax wise).
I shan't follow their example lest my probation officer finds out how much I earn (or don't)
Might do so next year though.....

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By Not Anonymous
27th Mar 2023 20:18

"The small amounts of bank interest of £13 and £14 are covered by the PSA, so are not taxable in either year."

Are you sure about that?

In my software they would be taxed at 0%.

And if the other income was less could be a factor in tapering of the Personal Allowance. With knock on effect to the total tax liability.

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accountant in london
By Accountant in London
29th Mar 2023 10:39

'What I find shocking is the relatively small salary MPs take', - No need for this sentence. Again giving wrong ideas to the people and politicising the article.

One very interesting point to note, other than the sentence above the author has not made similar remarks made in Rishi Sunak's tax return article, this definitely tells us which party the author supports.

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By indomitable
29th Mar 2023 11:03

An unhealthy obsession with what our politicians earn

Let's concentrate on how well these people can run our country

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By vstrad
29th Mar 2023 12:31

There might be support for higher pay for MPs if there were considerably fewer than 650 of them.

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By Ian McTernan CTA
29th Mar 2023 15:27

Did we learn how many other houses he might own and under what structures?

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By Moo
30th Mar 2023 11:02

Presumably being a sensible sort of chap Kier Starmer will have put savings from when he was better paid into ISAs. As we accountants generally only see the money going on a client's tax return it is easy for us to underestimate their finances.

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