Income Tax (Earnings and Pensions) Act 2003 section 291

Termination payments to MPs and others ceasing to hold office

Section 291 ensures that termination payments made to MPs, members of devolved legislatures, and other political office-holders when they leave office are not taxed as earnings but are instead treated as termination payments eligible for the £30,000 tax-free threshold.

• Grants and payments made to MPs, ministers, and members of devolved parliaments and assemblies on leaving office are exempt from income tax as earnings
• These payments are instead taxed under the termination payment rules in Chapter 3 of Part 6, which provides a £30,000 tax-free threshold
• The exemption covers members of the House of Commons, Scottish Parliament, Welsh Assembly, Northern Ireland Assembly, European Parliament, London Assembly, and holders of certain ministerial and other offices
• "Relevant office" broadly covers government ministers, opposition leaders, whips, and certain parliamentary committee chairs in both Houses