Post by Teddy Bear on Oct 4, 2009 18:29:28 GMT
These are the folks trusted to ensure their reportage is fair and unbiased. Meanwhile they use every trick to avoid paying their fair share of tax on the huge earnings they rake in.
Can you really trust them?
Can you really trust them?
Big-earning BBC stars set up companies to escape high tax bills
By Arthur Martin
A host of the BBC's highest-paid presenters are classing themselves as freelancers to avoid paying the new 50per cent tax levy on the rich.
Household names like Jeremy Paxman, Fiona Bruce and Emily Maitlis have set up companies which they use to channel their earnings through.
By switching their staff jobs to freelance contracts, the presenters are able to lower their tax bills significantly.
The rouse means they will avoid paying the highest tax rate, which will increase from 40p to 50p in the pound for all earners on more than £150,000 per annum next April.
Critics branded the move as 'unacceptable' and claimed the BBC was hiding the fact that the stars were actually full time members of staff rather than legitimate freelancers.
The arrangement allows the corporation to avoid paying millions in National Insurance contributions which all employers are legally bound to do for members of staff.
The presenters usually negotiate higher pay, as they have to forgo paid holidays and membership of the BBC’s generous pension scheme.
Such an arrangement leaves the rest of the country with a larger burden of tax payments to shoulder.
More than 20 BBC presenters who are classed as freelance for tax purposes and have set up service companies to channel their earnings.
They include Newsnight hosts Gavin Esler, Sophie Raworth, the One O’clock News presenter, Sarah Montague, presenter of Radio 4’s Today programme, and Jeremy Vine, the Radio 2 host.
The corporation has also kept hundreds of other presenters off its books by putting them on freelance deals. They include John Humphrys, who has presented the Today programme since 1987.
Jeremy Hunt, the shadow media secretary, said the freelance payments were staff salaries 'in all but name'.
'The BBC should be transparent about the salaries it pays and it is not acceptable to hide that by paying someone as a freelancer,' he said.
Don Foster, the Liberal Democrat media spokesman, said: 'The salaries of BBC staff and their tax arrangements provide yet another reason why all the corporation’s finances need to be opened up to the National Audit Office.'
HM Revenue & Customs has attempted to take a tough line on employees posing as freelances.
It is understood that the HMRC has told the BBC that the current arrangement would have to stop.
Since a clampdown by the taxman two years ago, many of the BBC's stars have founded independent companies.
James Naughtie, a presenter on the Today programme founded Pagoda Works in late 2007.
Gavin Esler then founded Eat the Peach, Maitlis called her company Mouse Inc, and Bruce has launched Paradox Productions. Paxman founded Out in the Dark in May this year.
By designating a presenter as freelance rather than staff, the BBC saves the cost of paying National Insurance, which is levied at 12.8per cent of a salary.
An individual paid through a service company pays corporation tax of as little as 21per cent. Then there is a further dividend tax on any other money they take out.
But the finally tax bill for these highly paid stars is still significantly smaller than it would be if they were staff members
The tax payable by a star such as Paxman, earning £1m, would be £627,000 from April if he were on staff, compared with £520,100 corporation tax and dividend tax if he used a service company and paid out the entire fee as a dividend.
Presenters using a service company could also defer tax and make use of large expenses allowances.
Tight restrictions make it difficult for most BBC news and current affairs presenters to pick up enough outside work to justify their freelance status.
Many are barred from working for rival broadcasters and are forbidden to give paid speeches in case they compromise their impartiality.
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.'
Under the system, the former saves £106,900 in tax while the latter saves £89,105.
Other well-known BBC presenters and journalists who are classed as freelance or work out of service companies include Newsnight hosts Emily Maitlis and Gavin Esler, newsreader Sophie Raworth and Jeremy Vine.
John Humphrys is also on the BBC's books as a freelancer, despite having been the Today programme's presenter since 1987.
As these details emerged following an investigation by the Sunday Times, politicians have been quick to criticise the BBC and its staff.
Shadow media secretary Jeremy Hunt said: 'The BBC should be transparent about the salaries it pays and it is not acceptable to hide that by paying someone as a freelancer. These are salaries in all but name.'
Liberal Democrat spokesperson Don Foster said: 'The salaries of the BBC staff and their tax arrangements provide yet another reason why all the corporation's finances need to be opened up to the National Audit Office.'
Working as freelancers, BBC staff can demand a larger salary as they have to sacrifice paid holidays and the benefits of the corporation's pension scheme. In turn, the broadcaster avoids paying out millions in National Insurance.
The Sunday Times discovered Inland Revenue is aware of this system and tried to curb it two years ago.
A former senior BBC executive said: 'The Revenue came to the BBC and said: you've got a whole lot of people on freelance contracts who are really employees.
'In the case of someone like Paxman, who is essentially an employee, the revenue told the BBC it should either take them on as staff or make them set up their own independent service company which trades directly with the BBC.'
A spokesman for the BBC commented: 'The BBC can't be held responsible for running the tax system and ensuring tax receipts are maximised. These arrangements are legal, proper and commonplace within the industry.
By Arthur Martin
A host of the BBC's highest-paid presenters are classing themselves as freelancers to avoid paying the new 50per cent tax levy on the rich.
Household names like Jeremy Paxman, Fiona Bruce and Emily Maitlis have set up companies which they use to channel their earnings through.
By switching their staff jobs to freelance contracts, the presenters are able to lower their tax bills significantly.
The rouse means they will avoid paying the highest tax rate, which will increase from 40p to 50p in the pound for all earners on more than £150,000 per annum next April.
Critics branded the move as 'unacceptable' and claimed the BBC was hiding the fact that the stars were actually full time members of staff rather than legitimate freelancers.
The arrangement allows the corporation to avoid paying millions in National Insurance contributions which all employers are legally bound to do for members of staff.
The presenters usually negotiate higher pay, as they have to forgo paid holidays and membership of the BBC’s generous pension scheme.
Such an arrangement leaves the rest of the country with a larger burden of tax payments to shoulder.
More than 20 BBC presenters who are classed as freelance for tax purposes and have set up service companies to channel their earnings.
They include Newsnight hosts Gavin Esler, Sophie Raworth, the One O’clock News presenter, Sarah Montague, presenter of Radio 4’s Today programme, and Jeremy Vine, the Radio 2 host.
The corporation has also kept hundreds of other presenters off its books by putting them on freelance deals. They include John Humphrys, who has presented the Today programme since 1987.
Jeremy Hunt, the shadow media secretary, said the freelance payments were staff salaries 'in all but name'.
'The BBC should be transparent about the salaries it pays and it is not acceptable to hide that by paying someone as a freelancer,' he said.
Don Foster, the Liberal Democrat media spokesman, said: 'The salaries of BBC staff and their tax arrangements provide yet another reason why all the corporation’s finances need to be opened up to the National Audit Office.'
HM Revenue & Customs has attempted to take a tough line on employees posing as freelances.
It is understood that the HMRC has told the BBC that the current arrangement would have to stop.
Since a clampdown by the taxman two years ago, many of the BBC's stars have founded independent companies.
James Naughtie, a presenter on the Today programme founded Pagoda Works in late 2007.
Gavin Esler then founded Eat the Peach, Maitlis called her company Mouse Inc, and Bruce has launched Paradox Productions. Paxman founded Out in the Dark in May this year.
By designating a presenter as freelance rather than staff, the BBC saves the cost of paying National Insurance, which is levied at 12.8per cent of a salary.
An individual paid through a service company pays corporation tax of as little as 21per cent. Then there is a further dividend tax on any other money they take out.
But the finally tax bill for these highly paid stars is still significantly smaller than it would be if they were staff members
The tax payable by a star such as Paxman, earning £1m, would be £627,000 from April if he were on staff, compared with £520,100 corporation tax and dividend tax if he used a service company and paid out the entire fee as a dividend.
Presenters using a service company could also defer tax and make use of large expenses allowances.
Tight restrictions make it difficult for most BBC news and current affairs presenters to pick up enough outside work to justify their freelance status.
Many are barred from working for rival broadcasters and are forbidden to give paid speeches in case they compromise their impartiality.
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.'
Under the system, the former saves £106,900 in tax while the latter saves £89,105.
Other well-known BBC presenters and journalists who are classed as freelance or work out of service companies include Newsnight hosts Emily Maitlis and Gavin Esler, newsreader Sophie Raworth and Jeremy Vine.
John Humphrys is also on the BBC's books as a freelancer, despite having been the Today programme's presenter since 1987.
As these details emerged following an investigation by the Sunday Times, politicians have been quick to criticise the BBC and its staff.
Shadow media secretary Jeremy Hunt said: 'The BBC should be transparent about the salaries it pays and it is not acceptable to hide that by paying someone as a freelancer. These are salaries in all but name.'
Liberal Democrat spokesperson Don Foster said: 'The salaries of the BBC staff and their tax arrangements provide yet another reason why all the corporation's finances need to be opened up to the National Audit Office.'
Working as freelancers, BBC staff can demand a larger salary as they have to sacrifice paid holidays and the benefits of the corporation's pension scheme. In turn, the broadcaster avoids paying out millions in National Insurance.
The Sunday Times discovered Inland Revenue is aware of this system and tried to curb it two years ago.
A former senior BBC executive said: 'The Revenue came to the BBC and said: you've got a whole lot of people on freelance contracts who are really employees.
'In the case of someone like Paxman, who is essentially an employee, the revenue told the BBC it should either take them on as staff or make them set up their own independent service company which trades directly with the BBC.'
A spokesman for the BBC commented: 'The BBC can't be held responsible for running the tax system and ensuring tax receipts are maximised. These arrangements are legal, proper and commonplace within the industry.