Council high earners pay themselves through tax avoidance schemes

Posted: 13/03/2012

A report on the BBC by Fran Abrams reveals that council high earners are paying themselves through Ltd companies which they set up to avoid National Insurance Contributions (NIC) and income tax. If their salary is below £8000 pa then it is tax and NIC free. The balance of their salary is paid as share dividend which attracts a lower tax rate than PAYE.

Nick Small Snr from Pali Ltd comments “I don't know what all the fuss is about. Some MP's pay themselves this way. Business men pay themselves this way. Bankers pay themselves this way and I pay myself this way. If it is not illegal then every one should be paid this way. However If council officials set up a Ltd company, contracted to the council, which makes them shareholders and pays them at or below the PAYE threshold and pays the balance of their pay via dividends this is fine but surely the council is not entitled to then give them access to local government pension schemes, holiday or sickness pay or any of the other perks available to public employees because they have ceased to be public employees?”

(3) Comments tax avoidance scheme, council workers, high earners

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