Page last updated at 20:19 GMT, Tuesday, 12 May 2009 21:19 UK

Blears will pay tax on flat sale

Hazel Blears says public outrage and the need to rebuild trust prompted her decision

Hazel Blears has said she will pay £13,332 in capital gains tax on the sale of her "second home" after criticism about her expenses claims.

The communities secretary told Commons staff her London flat was her "second home" on which she claimed expenses.

But when she sold it she did not pay CGT, due on homes the Inland Revenue does not consider a "main residence".

She said she had acted within the rules but knew people were "really angry" and paying it was "the right thing to do".

Ms Blears' claims were among revelations the Daily Telegraph has published over the past few days, after details of MPs' expenses claims and receipts were leaked to the newspaper.

Public outrage

She was accused of changing the property she designated as her "second home" twice in one year - first claiming her Salford home was her second home, then changing it to a London flat which she sold before buying another London flat and claiming expenses on that.

It emerged that she had not paid CGT on the reported £45,000 profit she made on the sale of the London flat - her spokesman said there was "no liability" for CGT on the sale.

She said she had acted within the rules of the Commons and the Inland Revenue, but told Sky News she had decided to pay the money anyway after public uproar.

What's really important to me is what people think about this issue and what people think about me
Hazel Blears

She said: "I've heard absolutely the outrage and the anger the public feel about what has been going on."

She said there had to be trust between politicians and the public, adding: "I'm doing this really to see what can I do to try to get those first steps to rebuild this trust.

"I see it's not enough to say I complied with the rules because people just don't accept that.

"It affected me personally, what people said in Salford where I and my family live."

She denied she had "flipped" the properties she designated as her second home - saying Commons officials "forced" her initially to designate her constituency property as her "second home" when she became a minister.

But she said she felt that was an outdated rule as her main home was in Salford so she changed it to her London flat when she could.

She said her relationship with her Salford constituents was "the most important thing" in her life and she knew people were angry.

'Come back to haunt'

"What's really important to me is what people think about this issue and what people think about me," she said.

She had come under fire for not paying the tax. Labour MP John Mann told BBC 2's Daily Politics programme the issue would "come back to haunt some people".

"I tell you what: any Labour MP who isn't paying capital gains tax should not be a Labour MP," he said.

"And whatever the systems, people need to be honest with themselves and honest with the country. If capital gains tax needs paying, pay it."

BBC political correspondent Reeta Chakrabarti said Ms Blears had not apologised and had pointed out she had acted within the rules. She said her position in the cabinet was already under question after an article she wrote appeared to criticise Gordon Brown's appearance on YouTube.

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