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David Cameron and George Osborne in Downing Street flats Treasury tax blunder

A Treasury blunder meant David Cameron and George Osborne were told to pay less tax than they should have for the use of their Downing Street flats.

The Prime Minister and his Chancellor were each billed £2,000 less than they should have been for the use of their official homes, 10 and 11 Downing Street, The Sun reported.

The mistake was spotted and corrected but Labour seized on the error to claim that the Government "cannot get the Prime Minister and Chancellor's houses in order".

The two men are required to pay tax for the heating, lighting and other expenses of their official residences as a benefit in kind.

The sum should be calculated as income tax on the benefit in kind, which is capped at 10% of their gross annual ministerial salaries. But the Treasury's 2013-14 annual report said that the liability was based on the Chancellor's net income - after taxes and pension contributions had been deducted.

The report said: "The benefit in kind for 2013-14 is capped at 10% per cent of his net salary, whereas in 2012-13 it was capped at his gross salary. This has been agreed by the HM Revenue & Customs."

But a Treasury spokeswoman said that had been a mistake and replacement P11D forms reporting the benefits in kind had been issued.

She said: " The benefit in kind of residence in Number 10 and Number 11 Downing Street was misreported in the 2014 Annual Report.

"This was spotted and corrected before tax returns for the year were submitted. Due tax was paid in full and on time."

The latest Treasury annual report, for 2014-15, states that the £6,900 sum for that year was calculated based on 10% of the gross ministerial salary.

The Chancellor gets £67,505 in ministerial pay on top of his MPs' salary of £67,060, a total of £134,565.

The Prime Minister gets £75,440 on top of his wage as an MP, a total of £142,500.

Shadow chancellor Chris Leslie said: "If the Treasury cannot get the Prime Minister and Chancellor's own houses in order literally, how will they close the widening tax gap?

"It's no wonder the gap between what people owe and what they pay is growing by the year.

"The country cannot afford basic errors like this."

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