MercoPress. South Atlantic News Agency

UK minister quits for allegedly avoiding to pay capital gains tax

Expenses scandal victim, Kitty Ussher Exchequer Secretary

A British minister has quit the Government after allegations that she avoided paying up to £17,000 in capital gains tax by “flipping” her second home. Kitty Ussher said she had not done anything wrong, but was quitting as Exchequer Secretary to avoid causing “embarrassment” to Gordon Brown.

The Daily Telegraph has published details of letters between Ms Ussher and her accountant, suggesting she re-designated a property in her Burnley constituency as her main home for one month before selling it in 2007, avoiding CGT at 40% on the profits.

According to a letter from her accountant, Ms Ussher had previously named her home in south London to HM Customs and Excise as her main residence. She identified the Burnley house as her second home for Parliamentary expenses claims.

In the letter, the accountant stated: ”I am enclosing a declaration to vary your previous main residence election for a period of one month to (the Burnley home) and then back to (the London home).

”The effect of varying the election is that (the Burnley home) will receive the final three years' main residence exemption and the gain will be completely exempt from capital gains tax provided (the Burnley home) is sold before April 2007.“

The property was sold in March 2007 for £62,000, making Ms Ussher and her husband a profit of more than £40,000, reported the Telegraph. Because it was now classed as her main home, she was not liable for CGT, saving the couple a sum estimated at between £9,750 and £16,800.

The procedure is legal, but has already caused problems for several other MPs, including former Communities Secretary Hazel Blears, who repaid £13,000 to HMRC. Mr Brown described Ms Blears's avoidance of CGT as ”totally unacceptable“.

Ms Ussher had already caused embarrassment when it was revealed that within months of her election in 2005 she asked the Commons authorities to fund extensive refurbishment of her Victorian family home in south London, including the removal of a ”bad taste“ Artex ceiling. In a note to civil servants, she asked ”pay as much as you can“.

In her resignation letter, Ms Ussher said she was leaving the Government ”with the greatest regret“ but would remain as MP for Burnley until the coming election, when she will stand down from Parliament ”completely for family reasons”.