Boris Johnson and Rishi Sunak will escape soaring energy bills causing misery for millions this spring due to a ‘cap’ on contributions to their Grace and Favor homes.
The Prime Minister and Chancellor are only liable for a ‘benefit in kind’ to cover heating and utilities at the official Downing Street residences where they live rent-free.
And the value of the benefit is limited to a maximum of 10% of their ministerial salary – meaning they only pay a few thousand pounds a year on property bills.
The windfall may come as six million households are feared to struggle to heat their homes, with energy prices set to soar more than 50% in April.
That will put pressure on Mr Johnson and Mr Sunak to find a way to ease the pain for families as runaway inflation in the wake of the pandemic triggers a cost of living crisis.
The Prime Minister’s spokesman said today that ‘discussions are still ongoing’ with Mr Sunak and Business Secretary Kwasi Kwarteng on how to reduce the burden on household finances.
Boris Johnson (left) and Chancellor Rishi Sunak (right) are only liable for a ‘benefit in kind’ to cover heating and utilities at the official Downing Street residences where they live rent-free
A report by the Resolution Foundation today predicted that more than a quarter of families will fall into fuel poverty when the government’s price cap is lifted
Under government rules, the prime minister and chancellor are liable to tax on expenses “related to the use” of their official apartments, such as heating and lighting.
Under government rules, the Prime Minister and Chancellor are liable to tax for expenses “in connection with the use” of their official apartments, such as heating and lighting.
The value of the benefit is capped at 10% of their ministerial salaries – so not counting their MP salary.
According to the latest Treasury accounts, Mr Johnson had a benefit of £7,500 for flat No 11 in 2020-21, while Mr Sunak’s in No 10 was £6,800.
The actual cost to them will depend on their total taxable income, but is likely to be between £3,000 and £3,300.
Above all, this will not change despite the exorbitant bills for the rest of the country.
Treasury accounts state: ‘The Chancellor and Prime Minister have the use of their official residences in Downing Street.
“Expenditure relating to its use, such as heating and lighting, is taxable under the Income and Pensions Tax Act 2003. The benefit in kind is capped at 10% of gross salary .”
Politicians also pay council tax on properties.
Mr Johnson lives in the four-bedroom flat above No 11 with his wife Carrie and their children. There is a £30,000-a-year taxpayers’ allowance for maintenance and improvements, but Mr Johnson has been heavily criticized for initially trying to charge donors for a much more expensive refurbishment.
Mr. Sunak lives in the apartment above number 10 with his wife and two daughters. Prime Ministers since Tony Blair have tended to choose Residence No11 because it is larger.
Mr Johnson earns just over £75,000 as Prime Minister, on top of his £82,000 salary as an MP. Mr Sunak receives £67,500 as Chancellor plus his MP salary.
A government spokeswoman said: ‘As has always been the case, the Prime Minister and Chancellor enjoy residential accommodation in Downing Street.
“As agreed with HM Revenue and Customs in successive administrations, ministers then pay a tax charge for this benefit in kind which is based on their ministerial salary.
“It is not possible to disaggregate the energy costs of 10-12 Downing Street as it is a combined building.”
Asked about the measures taken and whether a reduction in VAT on invoices was envisaged, the Prime Minister’s official spokesman said: “Discussions are still ongoing”.
No announcement is expected this week, but the spokesperson said: “The Prime Minister continues to speak to the Chancellor, the Business Secretary and these two Ministers are having further discussions on the appropriate response to reducing these challenges. of the cost of living that we see.
“Obviously we have things like the energy price cap that continues to protect 15 million households from high global gas prices, alongside additional support targeted at the most vulnerable.”
A report by the Resolution Foundation today predicted that more than a quarter of families will be pushed into fuel poverty when the government’s price cap is lifted.
Energy regulator Ofgem is revising its current cap, which will be revised in February after a record six months of soaring wholesale prices.
The report also found that levels of fuel poverty are likely to be highest in the North East and West Midlands, at 33% and 32% respectively, alongside pensioner households, those in social housing and from those in poorly insulated houses.
The think tank’s senior economist, Jonny Marshall, said: ‘Rising petrol prices are driving up energy bills and will see the number of families suffering from ‘fuel stress’ triple to more six million homes this summer.”
Mr Johnson lives in the flat above 11 Downing Street with his wife Carrie and their children (pictured together at Checkers last month)