RISHI Sunak saved over £300,000 because of a cut to capital gains he voted for in 2016, according to a new analysis of his tax affairs.
No 10 released a summary of the Prime Minister’s earnings on Wednesday afternoon, showing that over the last three years he has earned around £5m and paid just over £1m in tax.
Most of his income comes from a US-based investment fund.
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In 2016, David Cameron's government cut the top rate for capital gains tax from 28 per cent to 20%
Mr Sunak, who had just been elected MP for Richmond, argued in the Commons in favour of the cut, saying it would support businesses.
However, the cut ultimately mean he paid £308,167 less than if the regime had remained the same.
Dan Neidle, the lawyer whose work on Nadhim Zahawi’s tax affairs resulted in the former Conservative Party chairman’s resignation, said Mr Sunak’s effective rate of tax was around 22%, far lower than if the majority of those earnings had been made via employment.
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Speaking to Sky News, Mr Neidle said the Prime Minister paying an effective rate of 22% is “not because he has done anything clever or because he is avoiding tax, it is because in this country we tax employment income at up to 47% but capital gains on investments at only 20%.
“That is why his effective rate is so low.“Whether that is a fair result, whether the law should be like that, is a very good question.
“And, weirdly, Mr Sunak, who benefits from that low rate, is also the man who has the power to change it.”
The Prime Minister refused to say if he thought capital gains tax should be higher during a visit to North Wales.
He told broadcasters: “I said I would publish my tax returns. I was pleased to be able to do that yesterday in the interest of transparency.”
The Prime Minister’s official spokesman said the returns showed Mr Sunak paid a “considerable amount” in capital gains tax.
“It is not unusual for savers to choose to put their investments in funds which focus on delivering long-term growth rather than short-term income generation,” the spokesman said.
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Labour leader Sir Keir Starmer has vowed to follow Mr Sunak’s example by publishing his tax return.
“Now the Prime Minister has published his, I will publish mine,” he said after giving a speech in Stoke-on-Trent on Thursday.
“I hope to be able to do that later on today, so that’s very straightforward.”
He also avoided a whether the capital gains tax rate should be reviewed.
Former business secretary Jacob Rees-Mogg argued that Mr Sunak’s healthy earnings show him to be “the sort of person we want running our country”.
He told TalkTV: “I think it is really good news that you have somebody of the ability and wealth-creating enterprise of Rishi Sunak as our Prime Minister
“I think the fact he has £5 million of income is good news and should give us confidence in the calibre of people going into British politics.”
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