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BBC celebs rush to avoid paying 50% tax on salaries

Top BBC celebrities setting up service companies to avoid 50% income tax on earnings over £150,000 may be jumping from the tax frying pan in to the service company fire.

Big name presenters like Jeremy Paxman, Sophie Raworth, Fiona Bruce and Jeremy Vine are all said to have recently formed companies to receive their BBC earnings.

Most BBC big name freelances have restrictive contracts allowing them to take on little work outside the corporation, and HM Revenue and Customs has already warned the BBC that contracting more or less full time ‘freelancers’ to avoid tax and NIC is an employment sham. HMRC apparently warned the BBC that freelances should become employees or run their own service companies.

The BBC saves millions of pounds a year in employer's national insurance payments, levied at 12.8% of any salaries paid.

Now, the importance of good tax and accountancy advice comes to the fore as an individual working for a company with a single employer smacks of falling under service company legislation, that puts the celebrities right back where they started – facing top rate tax on the majority of their incomes.

Some of the news and current affairs presenters like Paxman could also stand accused of double standards after putting MPs through the shredder over their expense claims while making their own personal arrangements to avoid paying tax.

A BBC spokesman said: 'We are not going to discuss individuals' tax arrangements. Clearly how people organise their tax status is something that they would need to take their own personal advice on. 

'Some individuals working as freelancers in broadcasting, and a range of other sectors, like IT, set up service companies which deal with their tax arrangements and this is perfectly lawful.' 

Of course, there is no suggestion that any BBC staff are acting unlawfully with their actions – just an observation that any business should have robust and legal tax advice from a reputable source to avoid moving from one untenable tax position to another.

Nevertheless, they are public employees whose incomes are funded out of public money – the TV licence fee.

If a presenter were on a £1 million a year salary – which many of the BBC top earners exceed – working via service company could save about £106,000 in tax once the 50% rate comes in to force next year.


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