Millionaire Osborne not a 50p rate payer

If you were heir to a decorating fortune, rented out a Notting Hill flat and earned £134,565 a year you would probably find yourself in the crosshairs of the £150,000 tax band.

Oddly, George Osborne claims he doesn't pay this 50p tax rate. "My salary is less than £150,000..." he told the BBC this morning. "I'm not personally affected". Let's take a closer look.

Nipping under the wire?

George Osborne told the nation yesterday he found aggressive tax avoidance morally repugnant so he must be confident he has personally not crossed the £150k threshold. But he will be within a whisker or two from it. His £134,545 House of Commons salary pushes him close. But there are other considerations, such as the rental income from his flat.

But as one well-placed tax expert told AOL Money, "you would have thought that he would own that jointly with his wife. So that's fine. I also think he's only rented it out since last July. There's nothing to suggest he's renting it out at the full whack". Though he could have, of course.

Few pension worries

Notting Hill rents aren't bargain basement. Rent for even a basic one bedroom flat would comfortably exceed £2,000 a month. "However, bear in mind," says this tax source, "that he might make charitable donations as well, which would lower his liability."

Osborne is likely not contributing to a private pension as he will be entitled to the very generous House of Commons arrangements. What of the family fabrics and wallpaper making business, Osborne & Little?

If this company was profit-making, Osborne and the other family beneficiaries might receive a dividend. But Osborne & Little struggled last year with a pre-tax loss of well over £700,000. No dividend income there, then.

Corporation cut

"He will benefit," this tax expert added, "by the cutting of corporation tax to 24% from 26% - when Osborne & Little become a profit-making company again."

Cabinet ministers' salaries have also been cut, giving him slightly more leeway too. Of course, there are plenty of millionaires on paper that don't have huge incomes. Property prices, particularly in the South East and London, see to that. And though Osborne has a sizeable claim on the Osborne & Little business, it doesn't - as we've seen - guarantee regular dough.

Allegations that Osborne's family previously set up offshore trusts to avoid inheritance tax have swirled around before, notably from a Channel 4 Dispatches program in 2010, which also implicated Andrew Mitchell and Philip Hammond.

All in, then, Osborne is likely to have just slipped under the wire. Just. It's important to remember that even if Osborne was caught by the 50p tax threshold, he would only be paying the higher rate of income over this £150k marker - a point that seems to get consistently lost in coverage of this issue.

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