Boris Johnson, Brian Paddick and Jenny Jones release their income and tax paid – where's yours, Ken?

Boris's income and tax for the last four years

Within twelve hours of promising to do so, on Newsnight last night, all the main candidates in the mayoral election have released their records of income and tax paid – except one.

Over the last four years, Boris Johnson’s accountant states that he has earned £1,716,992 and paid £684,719 of this in income tax and National Insurance – a total tax take, even including allowances and reliefs, of 40 per cent, clearly showing that he has paid all the income tax he should have, and indeed perhaps then some. Not one penny of his earnings, says the accountant, was channelled through a company to pay 20% corporation tax instead of 40% income tax, as Ken Livingstone has done. The full table is shown above.

In the three years 2008-11, Brian Paddick states that he has earned a total of £326,242 in taxable income and paid £100,693 in tax – a total tax take of 31 per cent (the difference with Boris may be that Paddick may not have included National Insurance in his figures). Paddick’s figures are below; his 2012 figures are promised shortly.

Jenny Jones’s people say her sole earnings have been her salary as a member of the London Assembly and the former Metropolitan Police Authority – a total of £63,421 last year – plus a few very small “£50 and £75 type” fees for media appearances and the like. She has been taxed under PAYE for her salary and paid full income tax on the other income, they say.

There’s just the one holdout. In a letter to all the other candidates this morning, Patrick Heneghan, Ken’s campaign manager, says he won’t be publishing any data at all for Ken until all the other candidates publish the full income of their wives, husbands and partners as well!

“Publication of Ken’s return alone will not address many of the questions that have been raised,” says Heneghan. “The question of Ken’s income and his wife’s income and their tax has been central to the coverage of this issue…we believe that household income publication is necessary for full disclosure… the same principles need to be applied to all the candidates if this process is to be seen as open and fair.”

Let me put it like this, Patrick. From the figures we have seen this morning Johnson, Paddick and Jones have clearly paid their dues on what they earn. They have not, unlike your boss, used personal companies solely controlled by themselves and their partner to avoid at least £50,000 in tax. They have not split their income with their partner 50-50 to save tax, even if it was earned entirely by them. (Ken admitted again that he’d paid his wife from his company in the Newsnight debate yesterday.)

The other candidates have not admitted “income-spreading,” where a large amount of money earned in one year is held as a cash pile in the company and released in much smaller chunks over several years to avoid higher-rate tax. This admission alone – on the record and on tape by Ken – gives the lie to any claim he may now make that he has not been avoiding tax.

The other candidates’ partners are employed by other people and have built careers for themselves on their own merits. For the last twelve years, Ken’s wife’s sole employer has been… Ken. For eight of those years, by the way, she was on the public payroll at Ken’s City Hall – as, for a shorter period, was the mother of one of his other children. Nice work if you can get it!

Fear of the public knowing the full scale of Ken’s tax avoidance and his income from such exotic sources as Venezuela and Iran is, of course, the real reason why we will probably never get a full and honest look at his accounts.

It’s worth remembering that ten days ago now, challenged about his tax avoidance on BBC London, Ken said: “No journalist has contacted my accountant to ask anything about my tax arrangements. I’d be quite happy for them to do so.” As I mentioned in my previous post, I have spent the last ten days being repeatedly stonewalled. It is, of course, so much harder to practice full disclosure when you’ve got something to hide.

What I expect will eventually happen is what I predicted before: a bowdlerised and less than frank version of Ken’s finances will eventually trickle out. As I said earlier today, I do know rather more than I’ve published so far about Ken’s income, so with any luck I’ll spot it.

Boris’s team is now preparing to put a “countdown clock” on its website, ticking down the minutes until Ken keeps his promise. This is starting to feel like it could be the moment when the election was sealed against Ken.

UPDATE 13.30: It appears to be happening as I said: Ken has been forced into a U-turn and is trickling some figures to the Standard. I haveto go out but will cast my eye over them when I get back.

Brian Paddick income and tax figures:

2010/2011

Police pension: £63,397

Other earnings: £13,355

Total income received: £76,804

Total on which tax is due: £70,329

Total tax due (and paid): £14,534

 

2009/2010

Police pension: £63,397

Other earnings: £10,437

Total income received: £73,843

Total on which tax is due: £67,443

Total tax due (and paid): £18,292

 

2008/2009

Police pension: £63,397

Other earnings: £130,102

Total income received: £193,499

Total on which tax is due: £188,470

Total tax due (and paid): £67,867

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Ken Livingstone: has his tax loophole been closed?

Will Ken be writing a cheque to the Revenue?

Buried on page 79 of the Budget document today (page 78 of the PDF) is a fascinating paragraph, 2.207. Next year, it says, “the Government will introduce a package of measures to tackle [tax] avoidance through the use of personal service companies. This will include… requiring officeholders/ controlling persons who are integral to the running of an organisation to have PAYE [income tax] and National Insurance contributions deducted at source by the organisation by which they are engaged.” My italics.

What this could mean, in other words, is that the tax avoidance method which Ken Livingstone and others have used is going to be closed. Ken, famously, has his six-figure income from the likes of LBC, Iran’s Press TV and after-dinner speaking paid not to him directly but to a personal service company, Silveta, of which he and his wife are the sole directors and shareholders. This allows him to pay corporation tax at the small company rate of 20% rather than income tax at up to 50%. He has to pay income tax when he takes money out of the company, but at a reduced rate, and escapes NI altogether. He can also save huge amounts by splitting his income with his wife, as joint shareholder, even though it was earned entirely by him. He has also admitted using the company to spread income earned in one year over several years to avoid higher-rate tax, not something that us PAYE wage slaves can do.

From next year, if I read this correctly, it looks like LBC, the Iranians and the rest could have to take income tax and NI off before they pay Ken’s company, thus completely obviating its purpose. The accountant and tax avoidance campaigner Richard Murphy, to whom I pointed this paragraph out today, describes it as a “potentially enormous change” with huge implications for small business which will see a “massive shift” away from personal companies to self-employment.

There is still some ambiguity in this paragraph – which appears to be the only statement the Government has made on this subject today, though a consultation exercise is promised. The key vagueness lies in the phrase “integral to the running of an organisation.” This might simply mean those, like the head of the Student Loans Company, who channel through a company their income from what is effectively an employment relationship with a single organisation and not those, like Ken, who have a range of clients. But the word “organisation” could mean the service company itself.

With its usual Olympic-class hypocrisy, the Ken campaign has today been lashing Boris Johnson as a “campaigner for the 1 per cent” on account of his opposition to the 50p tax rate. In an interesting acknowledgment of Ken’s vulnerability, they used David Lammy MP for the attack, not Livingstone. But David Cameron nailed it rather well at PMQs when he said that “The difference between Boris and Ken is that Boris pays his taxes, and Ken doesn’t.”

Ironically, for all Labour’s attacks, the Budget may have nailed a genuine member of the tax-avoiding 1 per cent – Ken Livingstone himself. Perhaps the Government might even have moved because of the publicity about Ken. Perhaps for the first time in his life, Ken has done the ordinary taxpayer a favour.

Ken Livingstone tax avoidance: 'Red Ken caught red-handed,' says PM

Only one of these men has paid his full share of tax

The astonishing story of Ken’s tax affairs continues to build, with further revelations in today’s Standard. After I revealed, on Sunday, that this great critic of “rich bastard” tax avoiders had avoided at least £50,000 in tax by channelling his earnings through a personal company (paying 21% corporation tax rather than 40% income tax), Ken said he would shut the company down if he became mayor.

It now turns out, however, that for about six years of his previous mayoralty, Ken had a similar arrangement. As I described on Monday, he channelled most of his (very large) income before his election in 2000 through a personal tax-shelter company, Localaction. What the Standard today reveals is that he did not shut down Localaction, and continued to process his non-mayoral-salary income through it, until 2006.

Ken insisted today that he had simply been “too busy” to wind down Localaction and that all the non-salary income he earned after becoming mayor had been donated to an (unspecified) charity “for the education of children who had had their fathers killed in India.” I’ve just asked his spokesman what charity that is and will update you when he responds.

The Standard has done a lead editorial today saying Ken’s behaviour “sits uncomfortably with his jibes about ‘rich bastards’ avoiding tax… Mr Livingstone’s public image does not quite square with minimising tax obligations.”

Ken’s tax avoidance also came up at Prime Minister’s Questions today. Asked by a London Tory MP about the issue, David Cameron said: “Whether it is Barclays Bank or, frankly, Ken Livingstone, people should pay the full amount of tax.

“I hope HMRC will look carefully at all these sorts of cases. Frankly, Londoners, many of whom live in Labour-controlled areas with high Labour council taxes, will be pretty angry about what they have seen. They will probably conclude Red Ken has been caught red-handed.”

Ouch.

Ken Livingstone promises to take a pay cut. Well, he can afford it…

When a product is hard to shift, you cut the price. Not enough voters are buying Ken Livingstone’s election promises at the moment – can’t think why – so Ken’s launched a money-off sale. Of himself.

In the Guardian, Ken has promised that he will take a tax pay cut if he is elected mayor in May. He’s offering to reduce his mayoral salary by “at least” five per cent, saving Londoners £7,150 annually. That’s – let me see – a big-value 0.1p a year each!

Not sure this’ll have us rushing to the polling stations on its own, Ken – you’ll probably have to think up some more bargain deals. How about a free Lee Jasper with every Ken Livingstone purchased?

There’s one rather glaring problem, of course. As I revealed on Sunday, Ken is one of those progressives who only appears to believe in progressive taxation for other people. He has been using what he describes as a “tax avoidance option:” channelling his very substantial earnings (£232,000 in 2009) through a personal company, paying 21% corporation tax (a lower rate than my cleaner) instead of 40% income tax, splitting his income with his wife (even though it was earned solely by him) and depriving the Revenue of at least £50,000 in tax (a conservative estimate.) This despite his condemning tax avoiders as “rich bastards” who should not be allowed to vote.

It’ll take more than a 5% pay cut to make up for taxpayers’ losses on that canny little deal.

Ken Livingstone: what I am doing is a 'tax avoidance option'

Ken: that's pretty rich, in two ways

Ken, scourge of “rich bastard” tax avoiders, believer that “everybody should pay tax at the same rate on their earnings and all other income,” was pressed on the BBC tonight about my story that he avoided at least £50,000 in tax in 2009 alone by channelling his earnings (£232,000 that year) through a personal company, Silveta Ltd, with himself and his wife as the sole shareholders.

Under this arrangement, he paid corporation tax (20-21%) on the £232k instead of income tax (40% at the time).  Ken claimed to the BBC today that he was “not avoiding tax” because he paid further tax on any money that he drew out from the company. However, this statement has been contradicted from Ken’s own lips.

Ken has been accused of tax avoidance in the past. In 2000, before first being elected mayor, he channelled his non-parliamentary earnings through a company called Localaction. There, too, he paid corporation tax, rather than income tax, on it. His defence at the time was much the same – he’d paid further amounts in income tax on what he drew out of the company.

“It is only a tax avoidance option provided you’re not drawing the money out,” he said (Sunday Times, 23 January 2000.)

This “tax avoidance option” is, in fact, precisely what Ken is doing now. In 2009 and 2010, the only years for which Silveta’s accounts are available, he has drawn out little, if any, money from the company. By June 2010, the last date for which figures are available, he had piled up a cash mountain in the company of £320,000.

By the way, Ken’s claim that he is not avoiding tax if he draws money out of the company is not true, either.  You do indeed have to pay income tax on company dividends – but at a far lower rate than normal. National insurance (effectively another form of income tax, levied at up to 12% on the rest of us) is not payable at all. So even if you add the corporation tax and the dividend income tax together, you are still paying quite a lot less than some poor sap (such as myself or, well, most people) who is on PAYE, or a freelance who submits a tax return for his earnings in the normal way.

All that is even before Ken’s ability to split his company’s dividend 50-50 between himself and his wife, as joint owner of Silveta, even though all its money was earned by him. He can use Mrs L’s tax allowances and her status as a basic-rate taxpayer to make yet further lovely savings!

And in yet another money-saver, it appears that Ken has been paying his wife – from company funds – to act as his PA and ammanuensis for his autobiography. “I don’t think anyone pays tax on the money they pay other people to work for them,” he claimed today. That’s a typically slippery formulation, if I may say so, Ken. When I pay, say, my cleaner, or plumber, I do so from income on which I have already paid my full share of tax. When you pay Mrs L, it sounds like you are paying her from untaxed (or partially taxed) income, treating her services as “company expenses” and setting them against tax, further reducing your already shrunken bills.

As several of my commenters have said, I hope UK Uncut’s reading all this. Some form of direct action against this particular tax-avoiding member of the “1 per cent” would seem due.