1.Section 10 introduces a new income tax exemption for certain travel expenses paid or reimbursed to Members of the Scottish Parliament, Members of the National Assembly for Wales, and Members of the Legislative Assembly in Northern Ireland. This will broadly have the effect of maintaining the tax treatment that applies to similar expenses paid under a long-standing concessionary arrangement.
2.Subsection (1) inserts new section 293B into the Income Tax (Earnings and Pensions) Act 2003 (ITEPA).
3.New section 293B(1) provides for payments to which new section 293B applies to be exempt from income tax if they are expressed to be made in respect of relevant UK travel expenses.
4.New section 293B(2) defines the payments to which new section 293B applies.
5.New section 293B(3) defines ’relevant UK travel expenses’ as expenses necessarily incurred on the kinds of journeys made by the member listed in new section 293B(4) and journeys made by the member’s spouse or partner with whom they share caring responsibilities.
6.New section 293B(4) lists the qualifying journeys for the purposes of new section 293B(3)(a), including journeys within the member’s constituency or region which are not excluded journeys.
7.New section 293B(5) sets out the circumstances in which journeys within the member’s constituency or region are excluded journeys .
8.New section 293B(6) defines the terms ‘constituency or region’, ‘local office’, ‘the member’s local home’, ‘the member’s parliamentary home’, and ‘principal local office’, for the purposes of new section 293B.
9.New section 293B(7) defines the term ‘caring responsibilities’ for the purpose of new section 293B(3)(b).
10.New section 293B(8) provides an order-making power to amend the definition of ‘caring responsibilities’.
11.Subsection (2) provides that the amendments made to ITEPA by this section have effect in relation to payments made on or after 6 April 2013.
12.Members of the three devolved administrations (DAs) are reimbursed in accordance with the respective allowances schemes administered by the DAs. The current tax treatment of travel expenses paid to members of the DAs is subject to certain long standing concessions which need to be formalised or ended.
13.To recognise the requirement of elected members having to carry out their duties in both their constituencies and their respective Parliament or Assembly headquarters, the general rules which allow tax relief for expenses incurred on work-related travel have, under long standing concessions, been extended in the case of members of the DAs.
14.Following the creation of the Independent Parliamentary Standards Authority (IPSA) and the introduction of the new MPs’ Expenses Scheme, legislation was enacted in Finance (No.2) Act 2010 to formalise aspects of these concessions as they previously applied to MPs. Similar legislation was not introduced at the same time in relation to members of the DAs because, at that time, new allowances schemes were not in place for all of the DAs.
15.The concessionary treatment applying to travel expenses paid to members of the DAs will end from 6 April 2013 and instead these amendments to ITEPA will provide a statutory exemption for certain relevant UK travel expenses paid to members by the respective authority, as expenses necessarily incurred in the performance of their Parliamentary or Assembly functions. This will bring the tax treatment of these members’ expenses broadly into line with their Westminster counterparts.
16.From 6 April 2013, expenses incurred by members of the DAs on travel between their home and their sole or most frequently occupied office in their constituency or region will become taxable.
17.The new exemption will apply to relevant expenses paid or reimbursed on or after 6 April 2013.