Details of the Schedule
2.Paragraph 1(2) substitutes a new section 292 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), exempting from tax certain payments made by IPSA to MPs in respect of their accommodation expenses. The new section 292 reflects the position that, with effect from 7 May 2010, expenses paid to MPs are no longer paid under a resolution of the House of Commons but instead under the scheme administered by IPSA made under the Parliamentary Standards Act 2009 (PSA).
3.Subsection (1) of the new section 292 provides for payments made by IPSA under section 5(1) of PSA to be exempt from income tax if they are expressed to be made in respect of accommodation expenses, or if they are related to or in consequence of a payment of accommodation expenses. The latter condition ensures that payments made by IPSA which are related to accommodation expenses, such as the additional payments made to MPs who claim accommodation expenses for a rental property and who have caring responsibilities, are within the scope of the exemption.
4.New subsection (2) defines “accommodation expenses” for the purpose of new subsection (1).
5.New subsections (3) and (4) provide that particular payments made under IPSA’s scheme in relation to overnight accommodation are not within the scope of the income tax exemption for accommodation expenses.
6.New subsection (3) provides that expenses reimbursed by IPSA for the cost of an overnight stay in a hotel, which has been incurred only because the MP was required to attend a late night sitting of the House of Commons, does not fall within the meaning of “accommodation expenses” for the purpose of new subsection (1) unless the House has sat beyond 1 a.m. Where the cost of an overnight stay in a hotel is reimbursed by IPSA because the MP was required to attend a sitting of the House beyond 1 a.m. and IPSA have agreed that it would not be reasonable for the MP to return to any residence, the exemption provided by subsection (1) will apply.
7.New subsection (4) provides that loans advanced to MPs for a deposit on a rental property do not fall within the meaning of “accommodation expenses” for the purposes of new subsection (1).
8.Paragraph 1(3) amends section 360 of ITEPA to take account of the new section 292.
9.Paragraph 1(4) provides for the new section 292 of ITEPA to have retrospective effect so that the tax exemption it provides applies in relation to payments made to MPs by IPSA on or after 7 May 2010, being the start of the current Parliament.
10.Paragraph 1(5) provides for any expenses that remain payable on or after 7 May 2010 under the arrangements in place prior to that date to be subject to ITEPA as if it had not been amended by this Schedule.
11.Paragraph 1(6) provides that the amendment to section 360 of ITEPA applies only in relation to expenses incurred by MPs on or after 7 May 2010.
12.Paragraph 2(1) inserts new section 293A into ITEPA.
13.New section 293A(1) provides for payments made by IPSA under section 5(1) of the PSA in respect of relevant UK travel and relevant subsistence expenses to be exempt from income tax. “Relevant UK travel expenses” and “relevant subsistence payments” are defined in subsections (2) and (3) of new section 293A(1). Subsection (4) provides further definitions for the purposes of subsection (2). These definitions rely on IPSA's scheme under section 5 of the PSA and subsection (4) of section 293A expressly provides that if IPSA changes the definitions for the purposes of its scheme, they will also change for the purposes of subsection (2) of new section 293A.
14.Paragraph 2(2) provides that new section 293A has effect in relation to payments made by IPSA on or after 7 May 2010.
15.Paragraph 2(3) provides for any expenses that remain payable on or after 7 May 2010 under the arrangements in place prior to that date to be subject to ITEPA as if it had not been amended by this Schedule.
16.Paragraph 3 amends section 294 of ITEPA in respect of European travel expenses incurred by MPs and members of the devolved administrations.
17.Paragraph 3(2) substitutes a new subsection (1) of section 294 which consolidates the previous provisions and reflects the fact that European travel expenses incurred by MPs are no longer paid or reimbursed in accordance with a resolution of the House of Commons but instead are paid by IPSA under section 5(1) of the PSA.
18.Paragraph 3(3) amends subsection (3)(b)(iii) of section 294 to extend the definition of “relevant European location” for the purposes of the tax exemption in that section to include countries which are members of the Council of Europe. This reflects the expenses payments that IPSA will make to MPs, but the extended tax exemption will also apply to members of the devolved administrations if equivalent expenses payments are made to them under their respective expenses schemes.
19.Paragraph 3(4) provides that the amendments to section 294 of ITEPA have effect in relation to expenses payments made to MPs and members of the devolved administrations on or after 7 May 2010.
20.Paragraph 3(5) provides for any expenses that remain payable to MPs on or after 7 May 2010 under the arrangements in place prior to that date to be subject to ITEPA as if it had not been amended by this Schedule.