There is not much sympathy for MPs after the expenses scandal. Certainly, there have been times, when I had to catch the last commuter train home after working late into the evening, that I wondered why MPs were entitled to a second home in London on expenses when the rest of us were not.

But one of the deepest circles of the special hell that MPs find themselves in seems to be reserved for those who have “flipped” their homes to reduce capital gains tax (CGT).

Most of us are not entitled to a tax-free allowance for a second home, but anyone who does own two homes is allowed to nominate which one qualifies for CGT exemption. So why do we criticise MPs more for claiming the latter than the former?

There are two reasons why it is important to know which of an MP’s homes is the main one. The first is because they are not allowed to claim expenses for their main home, only for their second home. Deciding which is which is a matter of fact, but MPs were (in the past, at least) trusted to nominate the “correct” home.

Where MPs are suspected of having flipped between two homes simply to maximise their expenses claim, they will rightly come under scrutiny.

The other reason for needing to know which of two homes is the main residence is that you do not have to pay CGT on any gain made when you sell it, whereas tax is due on the sale of a second home.

But the crucial difference is that, if you have two homes, you are specifically permitted by law to nominate which one the exemption should apply to, even if it is not actually your main home.

This is not a special rule that benefits only MPs. Any taxpayer with two homes is entitled to nominate which of them should get the exemption and to maximise the claim within the statutory rules.

Any tax adviser would tell any client that they have every right to make the choice of which home to nominate for the CGT exemption based purely on minimising their tax liability.

In fact, any adviser would go farther and explain that the client could keep the relief on their main residence and still pick up relief for the last three years of ownership of the second home.

This information is freely available on the internet, in the HM Revenue & Customs internal manuals.

So why criticise MPs? There is a debate to be had about tax avoidance and whether legality should be the only measure of whether something is acceptable.

However, asking MPs to pay more tax deliberately while we take whatever opportunity we can to pay less is not morality — it is hypocrisy.

? Mike Truman is the editor of LexisNexis Taxation magazine

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