Constitutional Reform and Governance Bill

Welcome to the Chair, Mr. Illsley. The Government have made it clear on several occasions that they support the principle that parliamentarians should pay taxes in the United Kingdom. All parties now seem to agree, and the proposed changes from the official Opposition, the Liberal Democrats and some of my hon. Friends suggest different ways of addressing this very issue. The Government's group of proposed changes would deem Members of this House and Members of the other place resident, ordinarily resident and domiciled in the UK for the purposes of income tax, capital gains tax and inheritance tax. As a result, they would be liable to pay those taxes on their worldwide income, capital gains and assets in exactly the same way as the vast majority of taxpayers. Moreover, they would be unable to access the remittance basis of taxation. In lay terms, they would not be able to avoid tax as a non-dom while a Member of this Parliament. The vast majority of parliamentarians do pay full UK taxes, but there has been widespread popular concern about the exceptions to that rule. The net result of these proposed changes would mean that MPs and peers were liable to pay the same taxes as the vast majority of UK taxpayers, regardless of their actual common law status in the UK. The new clauses will come into force from Royal Assent, so they might apply to the next Parliament. New clause 85 provides that all MPs will be deemed resident, ordinarily resident and domiciled from taking up their seat in this House upon taking the oath. Therefore, only those who were full UK taxpayers may sit and vote in this House. In the other place, all those appointed after the Bill receives Royal Assent would be aware that if they accepted a life peerage and a seat in the other place, they would be deemed resident, ordinarily resident and domiciled for tax purposes. It is not possible to change a person's resident, ordinarily resident and domiciled tax status part way through a tax year, so in both instances MPs and peers would be deemed to be resident, ordinarily resident and domiciled for the whole of any tax year in which they were Members. That means that they would be deemed as such from the start of the tax year in which they took up their seat and to the end of the tax year in which they stood down. We acknowledge that the situation is different for incumbent Members of the House of Lords, who will be unable to resign from the House until the provisions in part 3 of the Bill come into force. As such, new clause 86 provides for a transitional period of three months during which incumbent peers can give notice in writing to the Clerk of the Parliaments that they are not willing to be subject to the deeming provision, and from that point their membership of the other place would cease. Peers who remain Members of the House at the end of the three-month transitional period would automatically be deemed resident, ordinarily resident and domiciled for tax purposes.