Sir Keir Starmer follows Rishi Sunak in publishing tax return summary
Sir Keir Starmer’s tax return shows he earned around £85,000 in capital gains last year, compared with nearly £1.6 million made by Prime Minister Rishi Sunak.
The Labour leader said the earnings were linked to the sale of a house he helped his sister buy, whereas the prime minister’s largely came from a US-based investment fund.
Sir Keir released a summary of his tax return on Thursday covering the period he has been Labour leader, in response to Mr Sunak publishing his own on Wednesday afternoon.
The statement shows the Labour leader made capital gains of £85,466 in the financial year 2021/22, on which he paid £23,930 capital gains tax.
That was on top of £126,154 income for being an MP and Leader of the Opposition.
Mr Sunak's long-awaited tax documents, covering the past four years, show he paid more than £1 million in UK tax over the previous three financial years.
The former California resident separately paid $6,892 from $45,948 of dividends that were taxed separately in the US in 2021.
Mr Sunak made nearly £2 million through income and capital gains in 2021/22.
His total investment income in 2021/22 was more than double his MP’s salary of £81,908.
Understanding tax rates
Income tax rates
Income tax rates
The basic rate of tax is set at 20% and applies to earnings between £12,571 to £50,270. The first £12,570 you earn is tax-free. Every pound you earn above £50,270 then falls under the next tax bracket. The higher tax rate is set at 40%, and applies to every pound earned between £50,271 and £150,000. The additional tax rate, which applies to the highest earners, applies to any income over £150,000. The term 'marginal tax rate' is commonly used to describe other automatic wage deductions, like student loan repayments and National Insurance, to capture the amount docked from a worker's pay.
Dividend tax rates
Dividend tax rates
Dividend taxes apply to the sums paid to investors for owning shares in a company.
There is a £2,000 tax-free allowance tax rate, and then dividends are taxed based on which income tax band you fall under. Earners taxed at the basic rate have dividends taxed at 8.75%, higher rate income taxpayers pay 33.75%, and additional rate taxpayers pay 39.35%.
Government-backed savings schemes such as pensions and ISAs provide separate tax-free allowances for dividends and interest payments.
Capital Gains Tax
Capital Gains Tax
The capital gains tax (CGT) is the tax on the profit generated when you sell something that has increased in value - although some assets can be sold tax-free.
Gifts between spouses, for example, are generally tax-exempt, until they later sell the asset.
Presently, you only have to pay CGT on overall gains above your annual CGT tax free allowance of £12,300, but this will be cut to £6,000 in the new tax year, which begins April 5, 2023, then will be cut again to £3000 from 2024/2025.
If you’re a higher or additional rate taxpayer you’ll pay: 28% on your gains from residential property, and 20% on your gains from other chargeable assets.
Basic rate income taxpayers pay 10% CGT on any gains that still fall within that tax threshold, after personal allowance and any income tax reliefs. That rises to 18% on residential property sales.
Any remaining gains that fall outside the basic income taxpayer threshold attract the higher rates above.
The Conservative leader initially promised to publish his tax documents during the leadership race last summer and upon their release during a busy day in Westminster - critics questioned the timing of the release.
The release came amid a highly-anticipated grilling of his predecessor Boris Johnson by MPs over whether he misled the House of Commons with his denials about partygate.
It was also on the same day as the Commons voted on Mr Sunak’s new deal on post-Brexit trading arrangements for Northern Ireland.
Labour deputy leader Angela Rayner tweeted: “Wonder why he’s chosen today?”
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Starmer has been the leader of the Labour party since 2020, just five years after beginning his parliamentary career in 2015 as an MP for Holborn and St Pancras.
He previously worked in law, having qualified as a lawyer in 1987 before working as a barrister.
The 60-year-old became the director of public prosecution between 2008 and 2013. In 2014, he received a knighthood for his services to criminal justice.
His legal career saw him work with the National Union of Mineworkers and serve as a legal advisor to the Northern Ireland Policing Board to help ensure the Good Friday Agreement's recommendations were upheld in Northern Ireland after the Troubles.
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