It has been revealed, following a Freedom of Information request, that the head of the Student Loans Company (SLC) receives his annual salary of £182,000 via his own personal service company. The gross payments potentially save Ed Lester, the SLC chief, approximately £40,000 tax a year.
The deal had to be approved by Danny Alexander, chief secretary to the Treasury, because Mr Lester's salary exceeded the Prime Minister's pay.
It also appears that the manner in which the remuneration was paid got the nod from HMRC, initially when Ed Lester was taken on under a temporary contract and then again when the role became permanent. The SLC also said that it had followed all government guidelines on the appointment and remuneration of its head.
This latest revelation serves to embarrass a government that has vowed to crack down on tax avoidance and prompted Mr Alexander to declare that Mr Lester would now have tax deducted at source from his pay. Danny Alexander also told the 'Newsnight' programme that he has ordered an urgent enquiry across all government departments to ascertain how prevalent this practice has been.
He has also asked the Treasury to review whether it is appropriate that public sector employees should be paid via personal service companies. Surely the answer to this must be 'no' not only from a political point of view but also should this practice be allowed to continue then it will create a rod for HMRC's back in its policing and implementation of IR35.
Ed Lester refused to answer any detailed questions about the arrangement so we do not know whether he declared being inside or outside of IR35.
This is why IR35 was brought in. The unintended consequences are that those of us who do genuinely undertake temporary assignments run the continual compliance risk.
Presumably now that mr Lester is a permanent employee he will be furnished with a Civil Service pension and paid holiday( at least 5 weeks). This will probably amount to more that £40,000 and will end up costing taxpayers more.
Durrr!!!!
This saddens but does not surprise me!
There is so much talk in the press about the massive amounts of money given to bankers and other captains of industry, and they all seem to miss the simple point.
Nobody is worth that much money for the simple reason is that the are only human at the end of the day, and a company does not stop when they go home.
Another poster (Mark) mentioned unintentional consequence pof IR35 and I totally disagree with that because the Labour government designed the whole IR35 system in order to hit the self-employed and to tilt the system in favour of big-business and the gap between rich and poor widened faster than ever.
@The Snail,
The SLC is, as I understand it, a limited liability company, not a branch of the civil service. He’ll be eligible for a company pension plan, not a civil service one.
And just in case you hadn’t noticed, the civil service pension plan has been massacred anyway….
And so Mr Snail, what is the problem with the Civil Service pension being massacred as you put it, seems only fair when the Labour party client of the Civil Service unions set out not only to screw the self employed but also anyone with a non government pension. I am 62, i would have retired at 58 but for G*rd*n Br*wn ruining the private pension sector. Perhaps I would then have done some voluntary work to help those worse off than me – as it is I will have to work for as long as brain and body allow – well beyond the CS retirement age anyway.
Mark (different one!),
I would be surprised if many of get any kind of a pension because the system will have long since gone bankrupt!
There are so many immigrants coming in to the country, and then after just a few years, because of political-correctness, drawing the same pension as those who have made 30 years contributions.
I stopped paying my pensions years ago and just put the money into saving schemes, because at least I have some chance of getting my money back.