George Osborne is facing fresh pressure to say whether he will personally benefit when the top rate of income tax is cut from 50p to 45p next year.
Labour accused the chancellor of being "less than transparent" after his carefully worded response at the weekend when challenged as to whether he stands to benefit from the cut. Government sources indicated that he is among four cabinet ministers expected to release their tax details in the next few months: David Cameron, Nick Clegg and Vince Cable are expected to join Osborne in releasing details of their tax affairs after the local elections on 3 May.
Asked by the Daily Telegraph on Saturday whether he will benefit from the scrapping of the 50p top rate, the chancellor said: "On the last tax return I filled in [for 2010-11], I was not a 50p taxpayer ... And, no doubt, next time I fill in a return, I will be asked the question and will give you a straightforward answer then." Asked a further time whether his current income would attract the top 50p rate, he replied: "I will answer the question as and when I fill in my tax return."
Osborne did not pay the higher rate of income tax in 2010-11 because he earned no more than a ministerial and MP's salary of £134,565. The top rate applies to earnings over £150,000. From July 2011, during the financial year 2011-12 for which income has to be declared by 31 January 2013, Osborne had income on top of his salaries after he started renting his London house. On 21 July last year he put an entry in the Commons register of members' financial interests: "Residential property in London, from which rental income is received."
If the taxable rent income on the property, for which Osborne is personally liable, is above £15,435, he will be regarded as a 50p tax payer for two years (2011-12 and 2012-13) before the 45p rate is introduced in April 2013. He is likely to divide the tax liability with his wife, which means they could be liable for £30,000 in tax on rental income and still escape the 50p top rate.
The Labour MP for Birmingham Selly Oak, Steve McCabe, said: "George Osborne said he wasn't personally affected by his tax cut for millionaires, but he has been less than transparent about whether he paid the higher tax rate in 2011/12 or whether he is likely to pay that rate in 2012/13. The public needs to know whether the chancellor – who has spent billions scrapping the 50p tax rate – is one of the tiny number of people who stands to personally benefit from the change."
Osborne was first asked whether he would benefit from the cut in 50p rate by Evan Davis in an interview with the Today programme on 22 March, the day after the budget. "My salary is less than the £150,000 threshold … so I am not personally affected," he said.
Asked about other income, he said: "I am not a big winner from this budget. I am not actually [a 50p tax payer.]"
The focus on Osborne's personal tax affairs comes as Ed Balls, the shadow chancellor, seeks to increase the pressure on Osborne over another element in the budget – the so called "granny tax". The chancellor ran into trouble over his plans to freeze the personal allowance for pensions who historically enjoy a higher rate.
Balls, who is to hold a commons vote on 19 April to challenge the plan, wrote in yesterday's Sun: "Next year, the granny tax will leave nearly 4.5 million pensioners £83 worse off on average. And it will hit people just about to become pensioners harder still … It's not right and it's not fair."