"Danny Alexander, new Treasury chief, avoided capital gains tax on house"
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Originally Posted by The Daily Telegraph
The new Chief Secretary to the Treasury, Danny Alexander, avoided paying capital gains tax when he sold his taxpayer-funded second home at a profit, The Daily Telegraph can disclose.
Mr Alexander, who was appointed on Saturday after the resignation of fellow Liberal Democrat David Laws, designated the property as his second home for the purpose of claiming parliamentary expenses but described it to HM Revenue and Customs as his main home.
Last night Mr Alexander admitted that he took advantage of a loophole to legally avoid paying CGT on the sale of the south London property for £300,000 in June 2007.
The disclosure that he failed to pay CGT comes at a particularly sensitive time because the Coalition is planning to increase the rate of the tax for owners of second homes and buy-to-let properties in an emergency budget next month.
When Mr Alexander sold his flat, the top rate of CGT was 40 per cent. It has since dropped to 18 per cent but the Lib Dems are now pushing for it to be increased to 40 or even 50 per cent.
The Daily Telegraph is running a campaign calling on the Government to protect the savings of small investors and ordinary second-home owners from any rise in CGT.
The fact that Mr Alexander has become the second Lib Dem to face questions about his finances within three days has focused attention on whether the party leadership has properly audited the financial activities of its senior figures.
(snip)
Mr Alexander took advantage of a tax loophole that allows people to continue to tell the tax authorities for three years that a property is their main home even if they have bought another house – in Mr Alexander’s case in Scotland – which has become their “principal residence”.
However, this did not stop him telling the authorities at the House of Commons that the London property was his second home.
The three-year loophole was introduced to give people time to sell their homes during housing market downturns. However, the Lib Dems have previously criticised its capacity to be abused.
Last year, they attempted to change the law to reduce the period to six months unless people were genuinely struggling to sell their home after moving to another property. This was not the case for Mr Alexander.
Senior accountants last night likened Mr Alexander’s arrangements to those of Hazel Blears, the former Labour minister. Miss Blears was forced to repay money to HM Revenue and Customs after selling a property designated as her second home for parliamentary purposes, without paying CGT.
There is no suggestion that Mr Alexander has broken any tax laws.
(snip)
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Oh dear...
tbh, despite being legal & within the rules, I think using this sort of loophole is worse than what David Laws did...(especially if it is similar to what Blears did).
Given the Lib Dem stance on CGT, & especially given Nick Clegg's criticism of MPs who avoided paying CGT, I think that Danny Alexander should pay it, even though what he did was legal.
Will he survive his new post?
I believe that it shows the motivation of the Telegraph quite clearly though, in my opinion... Yet another story they appear to have held back until the timing is just right to do the most damage to the Coalition... conveniently also at a time when the Telegraph is "running a campaign calling on the Government to protect the savings of small investors and ordinary second-home owners from any rise in CGT."
Take down one Lib Dem Chief Secretary to the Treasury... let him be replaced by another, & then try & take that next one down too... Just how many Lib Dem Chief Secretaries will the Treasury have before the Coalition falls & we have another General Election?
Regarding the part in the story where it says "The fact that Mr Alexander has become the second Lib Dem to face questions about his finances within three days has focused attention on whether the party leadership has properly audited the financial activities of its senior figures."
... Yes, they certainly have a point. Nick Clegg definitely should have made sure his MPs' expenses would hold up to scrutiny.
The mention of "the second Lib Dem to face questions about his finances within three days" does amuse me though, given that the reason it is "within three days" is purely due to the Telegraph itself...