MPs will quiz top officials from the BBC and a public sector union today about about presenters who are not actually their employees.
How is the BBC paying people to avoid the usual PAYE (Pay-As-You-Earn) tax and National Insurance which teachers nurses and most civil servants pay? There are three main ways this happens, and all of them deliver tax or NIC savings to the BBC and the worker:
- Payment via the person’s limited company – a personal service company
- Payment as self-employed freelance workers
- Payment via large umbrella companies handling numerous workers
Why do the BBC and other public sector bodies do this?
- They will not have to pay Employer’s National Insurance because they are paying a company or a self-employed person.
- The worker can pay less tax.
- The organisation may have more flexibility about binning someone because they are not BBC employees. (Though the big hitters will have tightly-written contracts.)
- Such practices can disguise (reduce) the numbers of senior staff or well-paid staff, making the organisation seem more efficient. In fact the people are still there, just not as ‘employees’.
The background to this is the increasing awareness that a lot of people who earn their living working in public sector organisations are not paying the normal tax that employees should.
Danny Alexander MP the Financial Secretary to the Treasury has taken this issue on board and wants to find out how big the issue is. So far he has learned that 2,400 senior workers on over £58,000pa are not being paid under PAYE but via limited companies, making big savings. After hearing this, the Public Accounts Committee hearing was scheduled.
The BBC has been forced via Freedom of Information to admit that 36 of its workers/presenters earning over £100,000 were being paid via companies. Some of these will be household names – presenting some of the biggest shows in the country for the Beeb.
In a previous column, I explained how Ed Lester, head of the Student Loans Company was not being paid via the payroll. View it at www.YouTube.com/HustonTV
Once the BBC gets its mauling by MPs today, we can expect Health bodies and other public sector organisations to face scrutiny over why some of their senior people are not senior employees.
Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co