I’ve never met Danny Alexander, the new chief secretary to the Treasury, and have no axe to grind on his behalf. I also share the widespread concerns about whether he has David Laws’ mettle for the job. More than a week ago this blog was pondering how the 38-year old had gone from Cairngorms National Park press officer to key government figure in only five years.

But this morning’s story about his not paying capital gains tax on a London property appears overblown. Alexander bought his London flat in 1999 and started claiming on it only in 2005 when he became an MP; at that point it was his only home.

When he sold it two years later he paid no cgt – even though by then he had a home in Scotland (bought in 2006) and had designated the flat as his “second home” in respect of his Parliamentary allowance.

How come? Because under HMRC rules, if you move out of your main abode there is a three-year grace period during which you don’t have to pay any capital gains tax on selling it. As a result there was no obligation on Alexander to pay the levy and therefore he didn’t breach any rule. It is neither a “legal loophole” nor a piece of cunning tax avoidance.

In fact, I’m not sure the country wants a Treasury minister idiotic enough to go out of his way to pay taxes he was not liable for.

Where the story has potential traction is the fact that Lib Dems and Nick Clegg, in particular, were vociferous in criticising other MPs who had not paid cgt on their taxpayer-funded second homes. Such as Hazel Blears*. As John Rentoul points out, we may be reaching the end of the Lib Dems as a force for sanctimony.

Here is the HMRC guidance; hat-tip Mike Smithson, Politicalbetting.

* Gordon Brown, as prime minister, also described Blears’ behaviour as “totally unacceptable”. But he had an axe to grind; he was furious with her undermining of him in her famous “YouTube if you want to” article. Brown’s attitude to the expenses crisis – in common with all political leaders – was not exactly consistent. David Cameron, in particular, seemed keen to dispose of several old-school irritants while saving younger, more favoured MPs.

UPDATE (5.05pm)

I’ve spoken to the Treasury and the 36-month exemption has been in place since 1982. Contrary to some reports today it still exists.

What has changed – in 2008 – was the withdrawal of a former of taper relief whereby you paid less cgt the longer you held the property. In case you’re interested.