How is a Prime Minister taxed? In the interests of transparency, Prime Minister Rishi Sunak has published details of his taxable income and chargeable gains for the last three years. We compare his income and gains to our tax guides, to see which ones will help him shave a quid or two off his tax adviser's fees for next year!
Rishi has not published copies of his actual tax returns, just a summary, and notes. We have added our commentary
| Commentary | 2019/20 | 2020/21 | 2021/22 | |
| Taxable UK income/gains |
Rishi is UK resident for tax purposes. As Prime Minister, he most probably meets the Automatic Residence tests of the Statutory Residence Tax (SRT). His parents, who are Punjabi Indian by origin arrived in the UK from East Africa in the 1960s. Both parents have most likely acquired a UK domicile of choice by virtue of their British Citizenship. Rishi records his position as UK-domiciled. He might potentially be able claim Non-Domiciled status if he chooses to move abroad in the future. |
£ | £ | £ |
|
Employment income MP's salary Ministerial Salary |
MPs are taxable on their salaries and any taxable benefits deriving from their employment MPs receive large expense allowances in order to run their offices, these allowances have special tax treatment and are not taxable as income. Normally employee expenses are declared on form P11D and through claims under Self Assessment Rishi's Accommodation Benefit In Kind is included in his ministerial salary |
79,444 19,180 |
81,908 71,256 |
81,908 74,255 |
|
Savings income Bank interest |
Savings Income such as bank interest is taxed at Income Tax rates. It can attract both a tax-free savings band and a tax-free Personal Savings Allowance (PSA). |
2,479 |
472 |
293 |
|
Investment income Interest Dividend |
Interest - see above Dividend income is taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate). Before 6 April 2022, these rates were: 7.5%, 32.5%, and 38.1%. |
41,703 195,637 |
7,371 174,363 |
690 172,415 |
| Total income | 338,443 | 338,370 | 329,561 | |
| UK Income Tax | UK taxpayers are entited to deduct a tax-free Personal Allowance from their taxable income when they work out their tax liability. The allowance restricted by £1 for every £2 of income over £100,000. Rishi is unable to benefit from this allowance. | 123,107 | 124,473 | 120,604 |
| Less: Foreign taxes withheld/paid |
UK resident individuals are usually taxable in the UK on their worldwide income and gains as it arises. There are exceptions to this rule:
Where a UK resident's income has suffered Foreign tax, whether withheld or paid, there are rules to prevent double taxation. Some or all of your foreign taxes paid may be adjusted to prevent this. |
(29,356) | (16,638) | (19,397) |
| Capital Gains |
There are different ways for individuals to Report Capital Gains depending on whether you are UK resident, non-resident or temporarily non-resident, and whether you are in or out of Self Assessment. Capital gains may be reported via the:
Disposals of UK residential property fall within the separate UK property disposal service. In Rishi's case, we know that his investment income and gains derives from a single US-based investment fund. Private equity funds are often structured as partnerships: this is to allow for flexibility. In the US there are also corporate structures which are taxed transparently, in a similar way to partnerships. The effect is that partners or members of the structure are taxed personally on the income and gains of the structure. Some income is taxed as if it is capital gains. This is a special tax treatment which is quite unique. Fund income can fall under the 'carried interest' rules. The effect is that income is reported as capital gains. A 'Carried Interest' is the share of profits receivable by general partner of an investment fund by virtue of their ownership of an interest in the fund’s assets. As Rishi's investment fund is based in the US, the terms of the UK/US double tax treaty will dicate which taxing authority has the power to tax the income or gains arising from the fund. |
679,946 | 1,439,211 | 1,642,431 |
| Capital Gains Tax (CGT) paid |
CGT is payable at different rates, depending upon the nature of the asset you have disposed of. Individuals may deduct an Annual Exempt Amount each year from their gains. A higher-rate taxpayer is taxed at 20% on most gains and at 28% for gains made on the disposal of UK residential property, or an interest in a property-rich entity. If a carried interest is claimed to be taxed as capital gains, this attracts the higher CGT rate of 28%. This is low compared to the upper income tax rate of 45%. There are also numerous CGT reliefs available to offset, depending on the nature of your gain. These have to be claimed under Self Assessment. |
133,589 | 285,382 | 325,826 |
| Total UK Tax paid | Tax is payable under Self Assessment | 227,350 | 393,217 | 432,493 |
| Taxable US income (in dollars) | This income is reported in the US, under an entirely different system to the UK | $ | $ | $ |
| Dividends | 175,053 | 123,317 | 45,918 | |
| US Tax | Rishi has claimed some double tax relief in respect of this tax (see Foreign taxes withheld/paid, above). | 26,258 | 18,498 | 6,892 |
| Percentage of tax payable on total income and gains |
The percentage of tax paid on your income and gains depends on the precise mix of your income and capital gains. Capital gains are taxed at lower rates to income. The more gains you make the lower the percentage of tax you pay. It's difficult in Rishi's case to work out what allowances he has been able to claim for CGT purposes, and so this % is just an estimate. |
22% | 21.9% |
Useful guides for Rishi
Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?
SRT: Statutory Residence Test
What is the statutory residency test? Why is it important and how does it work?
Accommodation benefits
When is accommodation a taxable benefit? What are the exemptions? How is the benefit calculated? Can accommodation be claimed as part of business travel?
Savings income: rates and allowances
How do you tax interest? What is the Savings tax allowance?
Dividend income
How do you tax a distribution or dividend received from a company? What are the rules for non-residents? What are the company law requirements for a valid dividend?
Offshore Income Tax Toolkit
This toolkit provides an outline of the tax issues for UK resident individuals with offshore income and investments.
Foreign income and residency pages: FAQs
What foreign income is taxable in the UK? How, and what foreign tax credit relief is available? How does this interact with the Statutory Residence Test and tax treaties? The best place to start is here!
CGT: Reporting when & how?
How do you report your capital gains? What return do you use? There are different ways for individuals to report capital gains depending on whether you are resident or non-resident, and whether you are in or out of Self Assessment.
Tax on Carried Interests
How are fund managers taxed? When does income get taxed as Capital gains?
Tax treaties: Where do you live?
Where do you live for the purposes of a double tax treaty? How can you resolve disputes and uncertainties over your tax residency?
An index to CGT reliefs
There are numerous Capital Gains Tax (CGT) reliefs in the UK: when do they apply and what are the conditions for relief?
External links
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