Will Boris suffer a bedroom tax?

As Boris Johnson prepares to become prime minister, Chris Etherington, partner at RSM, examines his potential tax bill from income to property taxes on multiple residences, personal earnings to tax reliefs, not to mention the future prospect of the public duty cost allowance (PDCA)                           

As Mayor of London and an MP, Boris Johnson is no stranger to having his personal finances in the spotlight. He has openly published details relating to his tax affairs in the past, with his personal tax liability regularly exceeding £200,000 a year over the last decade. As PM he will come under even closer scrutiny and might have to focus a bit more on getting his financial affairs in order after coming in for criticism last year when failing to report some of his income within the parliamentary time limits. 

In the tax year to 5 April 2019, based on the Register of Member’s Financial Interests and ignoring his MP’s salary, Boris earned income of approximately £570,000. That in itself could give rise to an income tax liability of up to £242,000. That income included a monthly payment of £22,916 for his Daily Telegraph column and fees for speaking engagements of around £335,000. As PM, he likely will not have the same time on his hands to ‘knock out an article’, so perhaps the biggest shock will be the substantial reduction in his income with the associated tax liability falling as well.

It is not all doom and gloom though. Boris can enjoy the benefit of his new digs at Downing Street and Chequers largely tax-free. HMRC accept that ministers occupying official residences does not give rise to a benefit-in-kind. Boris will however be expected to pay his own council tax for his Downing Street residence and other costs such as lighting, heating and redecoration will be taxable.

What about the new £1.3m home he has reportedly acquired with his partner Carrie Symonds? Given he will not usually be living there as his main home, will he have to pay tax in the future when he sells it? A special relief from capital gains tax (CGT) exists when someone sells their main residence, but it can be restricted if you have not lived there the entire time you have owned it. Providing HMRC accept Boris has to live at Downing Street as a result of his job, a special relief should still ensure he does not suffer CGT on a future sale of his new house despite not living there to start with. 

The same might not be true for Carrie if she does decide to move into Downing Street with him as they are not married. She could still benefit from a slightly different relief from CGT on her share of the property but would need to live in the new house at some point before and after her period of residence at Downing Street in order to benefit from this.

If Boris’s stay at No. 10 ends up being shorter than he hoped, he can at least console himself with the prospect of the Public Duty Cost Allowance (PDCA) when he leaves. The PDCA is paid to help former PMs with their costs for public duties ‘arising from their special position in public life’, currently capped at £115,000 per annum. It is not a well-publicised benefit and does not appear to be specifically dealt with in tax legislation but likely falls under the same tax exemptions other MPs benefit from in relation to their expenses.

So, what about the alleged bed purchase? Well, looking at the tax returns previously published by David Cameron, it appears Boris could also be entitled to a fixed Prime Ministerial expense deduction of £20k each year to cover expenses related to the job. Unfortunately, the bed is unlikely to be seen as wholly, exclusively and necessarily related to the role of PM as everyone needs to sleep. The expense account may therefore ease the blow, but any bed purchases should ultimately come out of Boris’s own pocket and would therefore be taxable.

About the author

Chris Etherington is a partner at RSM

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