It might be worth watching Newsnight tonight, seems likely that there will be piece on 'avoidance' using limited companies!!
The chief executive of the Student Loan Company, Ed Lester, was the subject of a Newsnight investigation on BBC2 on Wednesday night, the investigation was carried out by Exaro News in conjunction with the Newsnight team.
The core ‘allegation’ was that Mr Lester has been using his own company to avoid tax on the payment of his fees for his work as the Student Loan Company chief. Nothing that he has done is illegal and has simply arranged his affairs to keep his tax bill as low as possible.
Ed Lester, chief executive of the Student Loans Company, was paid through his own company, Placepass Limited, a private company rather than being paid direct – a legal tax avoidance mechanism thought to reduce his income tax liability by £40,000 a year.
Documents show the deal was signed off by David Willetts, the Universities minister, who said in a letter that it had been “agreed by the Chief Secretary to the Treasury” Danny Alexander.
Mr Alexander insisted he did not know that the arrangement allowed him to avoid tax, and has ordered an urgent investigation across Whitehall to see if the practice is widespread.
He is paid a basic salary of £140,000 a year, and can qualify annually for a £14,000 bonus and a cash pension contribution of £28,000, taking his total pay to £182,000, via the head-hunter which placed him with the Student Loan Company.
Mr Lester, a former chief executive of NHS Direct, was hired as interim chief executive in May 2010 before the deal was made permanent in December 2010. His two year contract runs from 1 February 2011 to 31 January 2013.
Mr Lester to pay corporation tax of 20 per cent, rather than up to 52 per cent, income tax & national insurance on his earnings. Any funds extracted from the company could be liable for additional personal tax. Of course the Student Loan Company will also save money as it will not be liable to employer’s NIC on the payments to Mr Lester, a saving of over £20,000.
Mr Alexander’s spokesman insisted he had not been aware of “any potential tax benefit”, insisting that Mr Lester’s terms were agreed by the Department for Business.
He said: “Terms and conditions are negotiated by the appointing department, and presented to the Chief Secretary for approval of the salary level.
“The Chief Secretary approved the overall pay, at a reduced rate and in a continuation of the interim arrangements previously agreed. The Chief Secretary was not made aware of any potential tax benefit to an individual.
“The Chief Secretary has now asked the Treasury to urgently review the appropriateness of allowing public sector appointees to be paid through an agency by a personal service company.”
A Business, Innovation and Skills spokesman added: “The Department adopted the correct processes and was satisfied it had come up with a package that met the relevant guidelines including value for money.
“Terms and conditions were negotiated by the SLC and BIS, and presented to the Chief Secretary of the Treasury for approval of the salary level. Details of the arrangements were transparent throughout, including through published accounts.”
The chief executive of the Student Loan Company, Ed Lester, was the subject of a Newsnight investigation on BBC2 on Wednesday night, the investigation was carried out by Exaro News in conjunction with the Newsnight team.
The core ‘allegation’ was that Mr Lester has been using his own company to avoid tax on the payment of his fees for his work as the Student Loan Company chief. Nothing that he has done is illegal and has simply arranged his affairs to keep his tax bill as low as possible.
Ed Lester, chief executive of the Student Loans Company, was paid through his own company, Placepass Limited, a private company rather than being paid direct – a legal tax avoidance mechanism thought to reduce his income tax liability by £40,000 a year.
Documents show the deal was signed off by David Willetts, the Universities minister, who said in a letter that it had been “agreed by the Chief Secretary to the Treasury” Danny Alexander.
Mr Alexander insisted he did not know that the arrangement allowed him to avoid tax, and has ordered an urgent investigation across Whitehall to see if the practice is widespread.
He is paid a basic salary of £140,000 a year, and can qualify annually for a £14,000 bonus and a cash pension contribution of £28,000, taking his total pay to £182,000, via the head-hunter which placed him with the Student Loan Company.
Mr Lester, a former chief executive of NHS Direct, was hired as interim chief executive in May 2010 before the deal was made permanent in December 2010. His two year contract runs from 1 February 2011 to 31 January 2013.
Mr Lester to pay corporation tax of 20 per cent, rather than up to 52 per cent, income tax & national insurance on his earnings. Any funds extracted from the company could be liable for additional personal tax. Of course the Student Loan Company will also save money as it will not be liable to employer’s NIC on the payments to Mr Lester, a saving of over £20,000.
Mr Alexander’s spokesman insisted he had not been aware of “any potential tax benefit”, insisting that Mr Lester’s terms were agreed by the Department for Business.
He said: “Terms and conditions are negotiated by the appointing department, and presented to the Chief Secretary for approval of the salary level.
“The Chief Secretary approved the overall pay, at a reduced rate and in a continuation of the interim arrangements previously agreed. The Chief Secretary was not made aware of any potential tax benefit to an individual.
“The Chief Secretary has now asked the Treasury to urgently review the appropriateness of allowing public sector appointees to be paid through an agency by a personal service company.”
A Business, Innovation and Skills spokesman added: “The Department adopted the correct processes and was satisfied it had come up with a package that met the relevant guidelines including value for money.
“Terms and conditions were negotiated by the SLC and BIS, and presented to the Chief Secretary of the Treasury for approval of the salary level. Details of the arrangements were transparent throughout, including through published accounts.”
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