This is how those sods at the BBC are dodging all their taxes
DO you recall a year or so back when we were all having a lovely time shouting at the BBC stars who were all avoiding tax by being paid into companies? And the BBC promised to do something about it?
It’s a year later and not a lot has been done. For the terribly difficult question is, well, what should be done?
BBC plans to force freelance presenters back on to the employment books to end suspicions of tax avoidance have descended into chaos, it emerged last night,
Stars are being made to sign short-term contracts because the BBC has been unable to thrash out an acceptable way of paying them on a full time basis.
The corporation decided to act following concerns from MPs about the corporation’s use of so-called personal service companies as a way of channelling stars’ earnings.
The problem is that, yes, this payment into companies does indeed lead to tax dodging. But not particularly by the stars themselves: it’s the BBC that gets off a large tax bill through the process.
So, you’re a PAYE employee. You get paid: you pay income tax and national insurance on your whack. But after about £40k, you’re only paying 1 or 2 % NI. Plus income tax of course.
Instead, you set yourself up a little company. You pay yourself £4k a year from the company and don’t pay any NI. The company pays corporation tax on the profits. You then pay yourself the profits as a dividend which don’t pay NI either. Basically, you gain the 12 % or so NI that you would pay between £6k and £40 k or so.
You swine tax dodger you.
However, the same sums looked at from the point of view of the employer: they also have to pay NI. Employers’ NI. This is, erm, 13.8 % at present. And there is no cap on it.
So, the BBC shovels you into a services company and pays the company. They save 13.8% on your wage bill. Or, the BBC now says that they don’t want you to be in a services company, they would prefer you to be on PAYE. Which means that they’ve got to pay 13.8% employers’ NI.
Now do you see why there’s not much headway being made over this problem?
Posted: 15th, May 2013 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink