MP Jared O’Mara has been arrested on suspicion of fraud.
Police arrested the Sheffield Hallam MP, along with office manager Gareth Arnold.
Officers raided the MP’s constituency office, removing documents and computers for investigation the same day.
The men were both released pending further investigation.
Arnold said: “There is an ongoing investigation pertaining to allegedly fraudulent claims from the office of Jared O’Mara. Nobody has been charged.”
O’Mara has submitted paperwork for his resignation as an MP, dated for when Parliament returns in September.
He won his seat in the 2017 election as a Labour MP, beating former deputy prime minister Nick Clegg.
He was suspended by Labour in October 2017, after a string of online comments came to light and he was accused of sexism and homophobia.
He apologised: “I was in a bad place back then and after being called many of those abusive slurs myself, I repeated them.”
He was reinstated in July 2018 but left the party nine days later.
In April, O’Mara stepped back from parliamentary duties for a period on the advice of his doctor.
