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1 Feb 2010 : Column 111

39 (1) This paragraph applies if an order under section 61 or 62 of this Act provides that (despite the repeals in paragraph 38) any of the existing regulations are to have effect as if contained in a scheme under paragraph 3, 7 or 11.

(2) The order may provide for any provision of the existing regulations which-

(a) relates to one or more of the matters listed in paragraph 3(1), but

(b) could not be contained in a scheme under paragraph 3, to have effect as if contained in a scheme under that paragraph.

(3) If it does so a scheme under paragraph 3 may-

(a) revoke the provision;

(b) amend it so that it makes provision which may be contained in a scheme under that paragraph (but not otherwise amend it).

(4) The order may provide for any provision of the existing regulations which-

(a) relates to service as a member of the House of Commons, but

(b) could not be contained in a scheme under paragraph 7, to have effect as if contained in a scheme under that paragraph.

(5) If it does so a scheme under paragraph 7 may-

(a) revoke the provision;

(b) amend it so that it makes provision which may be contained in a scheme under that paragraph (but not otherwise amend it).

(6) The order may provide for any provision of the existing regulations which-

(a) relates to service to which paragraph 11 applies, but

(b) could not be contained in a scheme under that paragraph, to have effect as if contained in a scheme under that paragraph.

(7) If it does so a scheme under paragraph 11 may-

(a) revoke the provision;

(b) amend it so that it makes provision which may be contained in a scheme under that paragraph (but not otherwise amend it).

(8) "The existing regulations" means regulations under section 2 of the Parliamentary and other Pensions Act 1987.

Ministerial and other Pensions and Salaries Act 1991 (c. 5)

40 Omit section 6.

Pensions Act 2004 (c. 35)

41 In section 249A(3)(c) (schemes to which section 249A does not apply) for "section 2 of the Parliamentary and other Pensions Act 1987 (c. 45)" substitute "paragraph 3, 7 or 11 of Schedule [ Parliamentary and other pensions] to the Constitutional Reform and Governance Act 2010".

Parliamentary Standards Act 2009 (c. 13)

42 (1) In section 5(9) (MPs' allowances scheme does not affect pensions) for "the Parliamentary and other Pensions Act 1987 (c. 45)" substitute "Schedule [ Parliamentary and other pensions] to the Constitutional Reform and Governance Act 2010".

(2) In paragraph 18 of Schedule 1 (IPSA's administration and regulation functions), after sub-paragraph (2) insert-

"(3) The IPSA's functions under the following provisions are also regulation functions-

(a) sections 3, 4 and 6 of the European Parliament (Pay and Pensions) Act 1979 (but not any function relating to the administration of a scheme under section 3 or 4);

(b) paragraphs 1, 3, 4, 6, 7 and 10 of Schedule [ Parliamentary and other pensions] to the Constitutional Reform and Governance Act 2010 (but not any function relating to the administration of a scheme under paragraph 3 or 7).".'.-[ Mr. Straw.]


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Brought up, read the First and Second time, and added to the Bill.

New Clause 85


Tax status of MPs and members of the House of Lords

'(1) Subsection (2) applies if a person is for any part of a tax year-

(a) a member of the House of Commons, or

(b) a member of the House of Lords.

(2) The person is to be treated for the purposes of the taxes listed in subsection (3) as resident, ordinarily resident and domiciled in the United Kingdom for the whole of that tax year.

(3) The taxes are-

(a) income tax,

(b) capital gains tax, and

(c) inheritance tax.

(4) For the purposes of this section a person-

(a) becomes a member of the House of Commons when (having been elected to that House) the person makes and subscribes the oath required by the Parliamentary Oaths Act 1866 (c. 19) (or the corresponding affirmation), and

(b) ceases to be a member of that House when-

(i) the Parliament to which the person was elected is dissolved, or

(ii) the person's seat is otherwise vacated.

(5) For the purposes of this section and section [Tax status of members of the House of Lords: transitional provision] a person is a member of the House of Lords if the person is entitled to receive writs of summons to attend that House.

(6) In relation to a member of the House of Lords, in subsection (1) the reference to any part of a tax year excludes any part of the year during which-

(a) section 137(3) of the Constitutional Reform Act 2005 (c. 4) applies to the member, or

(b) the member is entitled to receive writs of summons to attend the House of Lords by virtue of being an archbishop or bishop.

(7) This section applies in relation to the tax year 2010-11 and subsequent tax years.

(8) But in applying this section to the tax year 2010-11-

(a) if the Parliament in which this Act is passed is dissolved in that tax year, ignore a person's membership of the House of Commons in that Parliament, and

(b) in any event, ignore a person's membership of the House of Lords at any time before the end of the period of 3 months beginning with the day on which section [Tax status of members of the House of Lords: transitional provision] comes into force.

(9) In this section, in relation to inheritance tax-

(a) "tax year" means a year beginning on 6 April and ending on the following 5 April, and

(b) "the tax year 2010-11" means the tax year beginning on 6 April 2010.

(10) In determining for the purposes of this section and section [Tax status of members of the House of Lords: transitional provision] whether a person is entitled to receive writs of summons to attend the House of Lords, ignore-

(a) section 2 of the Forfeiture Act 1870 (c. 23);

(b) sections 426A and 427 of the Insolvency Act 1986 (c. 45);

(c) any suspension resolution passed in relation to the person under section 31.'.- (Mr. Wills.)

Brought up, and read the First time.


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The Minister of State, Ministry of Justice (Mr. Michael Wills): I beg to move, That the clause be read a Second time.

The Temporary Chairman (Mr. Eric Illsley): With this it will be convenient to discuss the following:

Government new clause 86- Tax status of members of the House of Lords: transitional provision.

New clause 52- Disqualification from membership of the House of Commons and the House of Lords on grounds of residence and domicile for taxation purposes -

'(1) Subject to the provisions of this section, a person is disqualified from membership of the House of Commons and House of Lords if he does not comply with the conditions set out in subsection (2).

(2) The conditions referred to in subsection (1) are-

(a) that he was resident in the United Kingdom for the purposes of Part 14 of the Income Tax Act 2007 (c. 3) for the tax year during which he was elected or appointed and for each subsequent tax year; and

(b) in the case of a non-domiciled United Kingdom resident, that he has not made a claim to be taxed on the remittance basis in respect of the tax year in which he was first elected or appointed, nor in any of the previous 10 tax years, nor in any subsequent tax year during which he was a Member of Parliament.

(3) Members of Parliament must submit a declaration to the relevant authority indicating that they are in compliance with the conditions set out in subsection (2).

(4) A declaration under subsection (3) must be submitted to the relevant authority-

(a) within 30 days of the date of election or appointment;

(b) in the case of existing members of the House of Commons, within 30 days of the date on which this Act comes into force, and within 30 days of their election to any subsequent Parliament; or

(c) in the case of existing members of the House of Lords, within 30 days of the date on which this Act comes into force, and subsequently between 1 February and 5 April in each calendar year.

(5) Declarations must be made in accordance with arrangements made by the relevant authorities.

(6) Members of Parliament who do not submit a declaration in accordance with subsections (4) and (5) shall be liable to disqualification under this section.

(7) In sections 6 and 7 of the House of Commons Disqualification Act 1975 (c. 24), references to that Act shall be construed as including references to the Constitutional Reform and Governance Act 2010.

(8) In this section-

"appointed" means to have received a writ of summons to attend the House of Lords;

"Member of Parliament" means a member of the House of Commons or a member of the House of Lords;

"relevant authority" means-in the case of the House of Commons, the Speaker, and in the case of the House of Lords, the Lord Speaker.'.

New clause 53- Members of House of Commons and House of Lords to be treated as domiciled in United Kingdom (No. 2) -

'Any person who-

(a) is (or is elected to serve as) a member of the House of Commons, or

(b) when this section comes into force is a member of the House of Lords, or

(c) subsequently becomes a member of the House of Lords,


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is to be treated by Her Majesty's Revenue and Customs as being domiciled, resident and ordinarily resident in the United Kingdom, and will be liable to pay United Kingdom taxes accordingly in any relevant tax accounting year in which he holds membership of the House of Commons or the House of Lords.'.

New clause 54- Deemed resignation and suspension on grounds of tax status -

'(1) A member of the House of Lords is deemed to have resigned under section 32 if, after the commencement of this section, he makes a declaration to the effect that-

(a) he is not resident in the United Kingdom for the purposes of income tax, or

(b) in the previous 12 months he has made a claim to be taxed on the remittance basis as a non-domiciled resident.

(2) The date of a resignation under subsection (1) is the day the declaration is made.

(3) A resignation under this section comes into effect regardless of whether it would be a valid resignation under section 32.

(4) Every member of the House of Lords must make a declaration at least once every calendar year about his residence and domicile for tax purposes.

(5) A declaration under subsection (4) must state the member's belief about his residence for tax purposes and about whether he has made a claim to be taxed on the remittance basis as a non-domiciled resident.

(6) A copy of every declaration made under subsection (4) shall be deposited with the Clerk of the Parliaments.

(7) A member of the House of Lords who fails to make a declaration under subsections (4) and (5) by the last day of December of any year is suspended from the House of Lords from the following day as if a resolution of suspension had been passed under section 31, such suspension to last until such time as the member makes a declaration complying with subsection (5).

(8) A member of the House of Lords who dishonestly makes a false declaration under this section is guilty of an offence.

(9) Anyone found guilty of an offence under subsection (8)-

(a) shall be disqualified from membership of the House of Lords, and

(b) shall be liable to imprisonment of up to five years and to an unlimited fine.

(10) The offence created by subsection (8) shall be triable on indictment only.'.

New clause 55- Tax status of members of the House of Commons -

'(1) Every member of the House of Commons must at least once every calendar year make a declaration about his residence and domicile for tax purposes, which declaration must state the member's belief about his residence for income tax purposes and his belief about whether in the previous 12 months he has made a claim to be taxed on the remittance basis as a non-domiciled resident.

(2) A copy of every declaration made under subsection (1) shall be deposited with the Speaker.

(3) A member of the House of Commons who makes a declaration to the effect that he believes that he is not resident in the United Kingdom for income tax purposes or that in the previous 12 months he has made a claim to be taxed on the remittance basis as a non-domiciled resident shall be disqualified from membership of the House.

(4) A member who has failed to make a declaration complying with subsection (1) by the last day of December in any year shall be treated as suspended from the service of the House until he makes a declaration complying with subsection (1).

(5) A member of the House of Commons who dishonestly makes a false declaration under this section is guilty of an offence.


1 Feb 2010 : Column 115

(6) Anyone found guilty of an offence under subsection (5)-

(a) shall be disqualified from membership of the House of Commons, and

(b) shall be liable to imprisonment of up to five years and to an unlimited fine.

(7) The offence created by subsection (5) shall be triable on indictment only.'.

Government amendments 132 and 134.

Mr. Wills: 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 are 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.


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