Sir Keir Starmer published details of his taxable income and gains last week, following the disclosure by the Prime Minister, Rishi Sunak of his tax returns. Sir Keir's income and gains are straightforward and we ran them through our software to reconcile back to an exact breakdown of his tax bill.
Sir Keir has not published copies of his actual tax returns, just a summary, and notes. We have added our commentary as follows
| Commentary | 2021/22 £ |
2020/21 £ |
|
| Employment income: MP Leader of the Opposition |
MPs are taxable on their salaries and any taxable benefits deriving from their employment MPs receive large expense allowances in order to run their offices, these allowances have special tax treatment and are not taxable as income. Normally employee expenses are declared on form P11D and through claims under Self Assessment |
£76,961 £49,193 |
£76,912 £48,783 |
| Profit from Self Employment |
Profits are calculated as sales less Allowable Expenses and Capital Allowances. There are different ways to calculate your profits, using something oddly misnamed as 'Simplified Accounting' and fixed rate expenses. There are different rules for different types of trades, professions and vocations. See also Starting Self Employment |
£ 463 | 21,925 |
| Savings income | Savings Income such as bank interest is taxed at Income Tax rates. It can attract both a tax-free savings band and a tax-free Personal Savings Allowance (PSA). As a Higher rate taxpayer, Sir Keir is able to claim a £500 PSA to offset his savings income |
£14 | 13 |
| Total income & taxable income | £126,631 | £147,633 | |
| Tax @ 20% | Basic rate tax is payable on the first slice of your income. UK taxpayers are entitled to deduct a tax-free Personal Allowance from their taxable income when they work out their tax liability. The allowance is restricted by £1 for every £2 of income over £100,000. Sir Keir is unable to benefit from this allowance as his income exceeds the sum of £100,000 plus the personal allowance. |
on £37,700 = £7,540.00 | on
£37,500 = |
| Tax @ 40% | A higher rate tax is payable on income between the basic rate tax band and £150,000. | on £88,917 = £35,566.80 | on
£110,120 = |
| Income tax charged | £43,106.80 | £51,548.00 | |
| Capital Gains Proceeds (grossed up) |
Capital gains were disclosed as £85,466 by Sir Keir and we assume that this was a net gain after deducting the Annual Exempt Amount as otherwise, we are unable to reconcile back to the actual tax paid. | £97,766 | - |
| Less: Annual Exempt Amount | 12,300 | - | |
| Taxable gains | £85,466 | - | |
| Capital Gains tax payable | A gain on the disposal of a UK residential property is taxed at 28% for a higher rate taxpayer | £23,930.48 | - |
| Total tax payable | £67,037.28 | £51,548.00 | |
| Percentage of tax payable on total income and gains |
The percentage of tax paid on your income and gains depends on the precise mix of your income and capital gains. Capital gains are taxed at lower rates to income. The more gains you make the lower the percentage of tax you pay. |
29.87% | 34.92% |
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