Rishi Sunak paid £508k tax at 22% rate

Rishi Sunak paid £508k tax at 22% rate

Feb 15, 2024

 

The Prime Minister earned £2.2m in the 2022-23 tax year but paid a tax rate of just 22% due to the level of capital gains

In total, Rishi Sunak paid £508,308 in taxes, with the majority of tax paid on returns on investments with a capital gains tax (CGT) bill of £359,240 and £163,364 in income tax, equivalent to a favourable rate of 22.8%. Anyone earning over £150,000 from employment income currently pays income tax at 45%.

The PM’s tax summary was produced by Evelyn Partners did not include any information about national insurance contributions (NICs) on earnings.

His overall earnings increased in the last 12 months, resulting in a higher tax bill, up £75,000 from 2021-22 when he paid £432,493.

His total income was £2,229,086, up £300,000 on the previous year and he is the highest paid member of the House of Commons.

Sunak’s earnings were broken down between his salary of £140,000, savings interest of £3,985, and investment income of £289,000, earning £432,884 which is taxable via income tax.

The rest of his substantial earnings were made up of capital gains amounting to £1,796,202, liable for CGT of 20%. This is almost three times the amount made in capital gains in 2019-20.

The rate of CGT has been frozen at 20% since 2016 when it was reduced from 28%.

The earnings exclude $45,646 (£36,166) of dividend payments, taking his total pay up to £2,265,252.71. The dividends were of US source and were reported on his US federal tax return.

Rowan Morrow-McDade, tax senior manager at Alexander & Co posted on X (formerly Twitter): ‘If you were an employee and you made £75,000 you would have paid tax of £17,432.

‘This gives an effective tax rate of 23.2%, which is higher than Rishi’s, despite making just 3.3% of what Rishi made in that year.’

Richard Murphy, tax campaigner and accountant posted on X: ‘Sunak’s tax rate of less than 23% on income exceeding £2m was an insult to all working people.’

Murphy reworked Sunak’s tax return using recommendations from the Taxing Wealth Report 2024 stating: ‘He’d pay an additional £761,000 bringing his total to £1,269,000 at an overall rate of 57%.

‘That is what tax justice looks like.’

Earlier this month the Chancellor, Jeremy Hunt published his tax summary which showed he earnt less than a quarter of Sunak with £208,547 in total income and £208,058 in capital gains, totalling £416,605. Hunt paid £117,418 in UK tax, with £79,511 of this being paid in income tax and £39,152 in CGT.

Dan Neidle, founder of tax policy associates told Accountancy Daily: ‘I’m unconvinced there’s much merit in politicans publishing their tax returns, but if they say they’re publishing their tax returns, I wish they would actually publish their tax returns. Instead we get these silly one page summaries. Nicola Sturgeon published her actual tax return last year – why can’t the others do the same?’

Sir Kier Starmer is set to release his tax return soon.