"Gordon Brown gave his £700,000 flat in central London to his wife Sarah weeks before he moved into 10 Downing Street, The Daily Telegraph can disclose.
The Prime Minister’s wife then cashed in on recent soaring property prices by taking out a special type of mortgage against the value of the flat with a private bank.
Downing Street sources said that there were no tax implications from the transaction and insisted that Mrs Brown had borrowed against the flat to give her more financial independence.
However, tax experts pointed out that the change of ownership could save the Browns thousands of pounds in income tax if Mrs Brown decided to rent out the one-bedroom flat now that the Browns live in Downing Street.
Both Mr and Mrs Brown are listed on the most recent copy of the Electoral Register as residents at the flat in Westminster. Documents filed at the Land Registry show that Mr Brown handed over the title to the flat to his wife on March 19, days before he delivered his final Budget as Chancellor of the Exchequer.
Less than a month later, on April 17, the documents show that Mrs Brown took out a new mortgage on the flat with a branch of Lloyds TSB Private Banking Limited in Grosvenor Street, Mayfair.
Downing Street sources said that the Browns had acted legitimately, saying that Mr Brown had decided to give the flat to Mrs Brown because she did not own a property in her own name.
Mr Brown is listed in official documents as the sole owner of Drumcarling, his large family house in North Queensferry, Fife, which he bought for £210,000 in September 1990.
He received a 37 per cent pay rise to £187,311 when he became Prime Minister.
However, unlike Cherie Blair, who was a successful barrister when Tony Blair arrived at No 10, Mrs Brown, 43, has no regular income.
This means she was facing potential cash-flow problems because she was not able to obtain a bank overdraft without an income. Using the flat as collateral would mean she could borrow more.
The insider said: “She has got some money in the bank. But she does not have a steady income which would allow her to take out more than she has in the bank. All she is doing is using the value of the property as collateral in case she needs to borrow against it.”
Tax experts said Mrs Brown was likely to have used an equity release scheme to free some of the flat’s value. Such deals are used by pensioners to fund their retirement.
A Lloyds TSB Private Banking spokesman said these deals were negotiated with a private banker who would weigh up the applicants’ means and chances of repaying.
Such arrangements are not offered by normal high street banks.
A Halifax spokesman said: “Lending decisions are usually based on the applicant’s income.”
...
Tax experts said that if the Browns rented the property for £2,500 a month, bringing them £30,000 a year, the transfer of ownership could save them up to £7,000 a year in income tax.
This is because Mrs Brown would have a £5,225 income tax allowance, as well as paying at the lower 10 per cent and 22 per cent rates.
If Mr Brown still owned the flat he would be taxed at 40 per cent of £30,000 — £12,000.
Downing Street sources said there were no plans to rent the property or sell it in the next year. It would be made available for family and friends.
“She will not rent it out,” said an insider.
If the Browns do decide to find tenants, the change of ownership means that Mr Brown will not have to declare his wife’s rental income on the Register of Members’ Interests at the Commons because MPs’ spouses are exempt.
A Downing Street spokesman said: “Sarah Brown’s financial arrangements are private and anything that would need to be declared would be declared.” "
It is interesting that Gordon Brown appears to have looked after his and his wife's financial affairs somewhat better than he has the financial affairs of the United Kingdom.
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