Hundreds of peers are exploiting a loophole on expenses to give themselves a tax free income of up to £48,000 a year, The Times has found.

Rules agreed by Parliament allow members of the House of Lords to claim up to £308 a day to pay for meals, hotels, taxis and other travel expenses associated with their role.

But peers do not have to submit receipts and an analysis of their expenses shows that nearly two thirds automatically claim the maximum almost every time they visit the Lords.

Several Lords have told The Times that they see the expense payments as an allowance and that routinely claiming the maximum amount is common practice. This discrepancy could lead to an investigation by HM Revenue & Customs. The payments are currently tax free because they are “reimbursement of actual expenses”, according to the Lords’ rule book, rather than a form of salary.

Lord Brabazon of Tara, the head of the Privileges Committee, the watchdog in the Lords, has admitted that the rules are ambiguous. One veteran Conservative peer said that there was an “element of hypocrisy” in the arrangement but it represented the best compromise possible after the 1999 reforms.

An analysis of peers’ expenses for The Times reveals:

— 359 of the 550 Lords who claimed “day subsistence” — a £78.50 payment for meals and taxis — claimed the maximum on 95 per cent of occasions or more.

— 272 of the 406 peers who live outside London and claim “overnight subsistence” for hotels — worth £159.50 — claimed the maximum on 95 per cent of occasions or more.

— 338 of 514 Lords who claim office expenses, worth £69 a day, claimed the maximum on 95 per cent of occasions or more. Unlike the House of Commons, secretarial costs are paid to the peer to distribute.

A number of Lords have claimed allowances regularly while voting infrequently. Lord Paul, a friend of Gordon Brown whose family is reportedly worth around £1.5 billion, claimed allowances for 137 days between April 2006 and March 2007. He voted 26 times on 21 different days over the same period, according to the Public Whip website. He said: “Most votes are before 5pm. I usually go after that. After work.”

However, Lord Paul and a number of other peers defended the amounts that they claimed, saying that their actual expenses were higher than the maximum that they could claim. He said: “That’s far less than I deserve. If a lawyer can charge thousands of pounds, then I can charge that. I spend more money than that, so I put in for the amount I can. That’s what I’m allowed to do, and that’s what I do.”

Peers’ expenses cost the taxpayer £17.7 million in the year to March, representing 18 per cent of the running cost of the Lords.

The rule book on the House of Lords website says: “All amounts paid in settlement of claims represent reimbursement of actual expenses arising out of unpaid parliamentary duty, rather than income from employment. Consequently they are not subject to income tax, and need not be included on a tax return.” It adds: “A member’s signature effectively certifies that the amount claimed has been spent.” Claims are checked by the House of Lords finance department and audited by the National Audit Office.

Lord Brabazon said: “Frankly most people claim the maximum. It’s up to individual peers to claim what they claim, within the limits. That’s the way the Lords works. You don’t have to prove how much you spent overnight.”

Asked if that could allow for abuses, he said: “I couldn’t possibly comment.” Asked if there was conflicting guidance, he said: “I can see what you’re getting at. I would agree that it’s ambiguous and that’s the way it works.”

Maurice Fitzpatrick, senior tax manager for Grant Thornton, said: “The general rule in the private sector is that when Revenue & Customs conduct inspections that they expect expenses reimbursed to employees to be backed up by receipts. I can’t see a general exemption for this allowance, and I can’t see anything that says this daily allowance is automatically free of tax.”

HM Revenue & Customs said: “Payment of expenses is a matter for House authorities. HMRC do not comment on individual cases.”

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