HOLYROOD officials have watered down plans to force MSPs to pay tax on their second home profits.

A recent expenses review had called for MSPs to commit to paying capital gains tax (CGT) on their taxpayer-funded flats.

However, the agreement drawn up by Parliament only applies to a handful of MSPs who claimed mortgage payments from the public.

Under the Edinburgh Accommodation Allowance, MSPs were able to bill the Parliament for mortgage interest on homes in the capital.

The Parliament abolished the scheme following a succession of scandals involving MSP claims.

No mortgage costs will be reimbursed from this month onwards.

In 2009, a review of allowances concluded that MSPs should be permitted to keep any profits made after the sale of their second homes.

The probe by Sir Neil McIntosh instead recommended that Holyrood obtain a “binding commitment” from MSPs that they would declare their Edinburgh properties to HMRC for capital gains tax.

However, the declaration agreed by the Parliament’s governing corporate body falls short of the McIntosh proposal.

Currently, serving MSPs who claimed mortgage costs for an Edinburgh property have two realistic options for future claims.

Although mortgage payments are now banned, MSPs can stay in their existing Edinburgh homes and bill the taxpayer for council tax and utility costs. Or, they can sell their properties and charge the public for renting or staying in hotels.

A Holyrood spokesman said: “The Scottish Parliament has taken all the steps open to it to achieve the intended effect of McIntosh’s recommendation.