Lord Paul considers quitting Lords over tax exile rules

[Hopeless Romantic]

One of Gordon Brown’s key financial backers is considering leaving the House of Lords following the introduction of new laws banning peers from being tax exiles.

Lord Paul, who is non-domiciled for tax purposes, has asked his accountants to calculate how much it would cost him to remain a member of the House of Lords.

The Labour peer is worth an estimated £500 million and therefore his tax bill could run into tens of millions of pounds. Friends of the 78-year old peer expect him to leave the House of Lords in the summer.

Speaking to The Daily Telegraph, Lord Paul said: “I will examine what it means and make the best decision for my situation. I am non-domiciled. I will follow the law.”

He said he had not yet decided whether to leave the House of Lords.

Losing the peer from the Lords would be a blow for Mr Brown. Lord Paul is one of Labour’s major donors – having reportedly given more than £400,000 to the party and £45,000 to Mr Brown’s leadership campaign in 2007. He also bankrolled Mr Brown’s office in opposition.

The peer is expected to give a sizeable donation to Labour for the forthcoming general election campaign.

The Government has introduced laws which ban peers who are non-domiciled or non-resident for tax purposes from sitting in the House of Lords.

People who are non-domiciled usually have parents born abroad and they do not have to pay tax on money held outside Britain. They may also avoid inheritance tax.

The new law was seen as an attempt by Labour to force Lord Ashcroft, the Conservative’s deputy chairman, to disclose his tax status. Lord Ashcroft, one of the Conservatives’ biggest donors, has previously been a tax exile. However, he has not disclosed his current tax status.

The Tory peer has said he will not have a problem abiding by the new laws and is expected to remain a member of the House of Lords.

Therefore, the new Labour laws could backfire if Lord Paul is the main victim of the legislation. Several other Labour peers are also thought to be non-domiciled.

Lord Paul was born in India and has built one of the world’s biggest steel companies, Caparo. He was elevated to the Lords in 1996 by Sir John Major.

The peer is currently being investigated over his alleged abuse of expenses. It emerged last year that he had nominated a flat in a hotel he owns in Oxfordshire as his “main home” despite apparently living in London where he owns property worth more than £10 million.

http://www.telegraph.co.uk/news/newstopics/politics/7205976/Lord-Paul-considers-quitting-Lords-over-tax-exile-rules.html