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The Guardian - UK
The Guardian - UK
Politics
Henry Dyer and Michael Goodier

More than 40 MPs likely to benefit from scrapping of 45p tax rate

Liz Truss holds her first cabinet meeting after taking office at Downing Street
Cabinet ministers claim an additional £67,505 on top of their MPs’ salary, putting them all above the scrapped £150,000 threshold for the tax. Photograph: Getty Images

An estimated 41 MPs will benefit from the scrapping of the top rate of income tax – including every cabinet minister.

Owing to MPs’ standard pay increasing to £84,144 from April this year, 2022-23 would have been the first year that senior government ministers would have to pay the 45p rate of tax.

However, the chancellor, Kwasi Kwarteng, abolished the additional rate of tax as part of a mini-budget of tax cuts unveiled on Friday.

Cabinet ministers claim an additional £67,505 on top of their MPs’ salary, while the prime minister claims an extra £75,440. This would have put them all above the £150,000 threshold for the tax.

A Guardian analysis of the latest register of members’ financial interests found that 16 other MPs had outside earnings or employment in the past 12 months that would have pushed them over the £150,000 threshold.

Those include the former prime minister Theresa May, who would net an estimated £47,305.70 more if she earns the same in the next year as in the last 12 months.

The former attorney general Sir Geoffrey Cox would save about £53,963 as a result of the tax abolition if his earnings remain the same as last year – an amount larger than the average nurse or teacher earns before tax.

Much of Cox’s earnings came from work on an inquiry in the British Virgin Islands, a tax haven, although his earnings came through Withers LLP in London and were subject to HMRC.

The current attorney general, Michael Ellis, will benefit the most of all cabinet ministers from the tax cut, saving an estimated £1,429.70 from the removal of the 45p tax rate.

The Labour leader, Keir Starmer, could also benefit. The leader of the opposition is paid £63,098 by law, on top of the MP base salary. Starmer also made £18,902 in outside earnings in the last 12 months, which would take him over the £150,000 limit.

£18,450 of Starmer’s outside earnings came from a book advance, which he pledged to donate to charity. Without another book advance in the next year, Starmer would not go over the £150,000 limit.

Should their current rate of earnings continue, other Tory MPs that stand to gain from the tax cut include Fiona Bruce, Andrew Mitchell and Jeremy Hunt. Shadow frontbench MPs Jess Phillips and David Lammy were the highest-earning Labour MPs who could benefit if their earnings remain the same as last year.

When an MP had declared a repeated earning for the foreseeable future – for example, a sum for writing a weekly newspaper column or monthly consultancy work – the fee they received was multiplied up to calculate an annual total.

Some MPs will no longer be earning the same amount of money that they did in the last 12 months. For example, ​​Labour MP Dan Jarvis is no longer the mayor of South Yorkshire, for which he received an annual salary of £79,000 on top of his MP wages.

Newly appointed junior members of the government on lower ministerial salaries will no longer be able to top up their parliamentary earnings with second jobs taken up while on the backbenches.

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