NEWS
08/06/2018 10:49 BST | Updated 08/06/2018 17:22 BST

BBC 'Secretly' Used Private Firms To Pay Dozens Of Stars Up To £74m

The practice allows both the BBC and the worker to pay less tax.

Roberto Herrett/LOOP IMAGES via Getty Images
The BBC has been criticised for using secret companies to pay its richest stars

The BBC has reportedly used private companies to pay dozens of its richest stars nearly £74m in the past four years, it has emerged.

The Times on Friday reported the arrangement was still in place for two thirds of the BBC’s highest-paid presenters and actors despite the broadcaster pledging to stop the practice in 2012.

It allows an employer to avoid national insurance and means the workers are taxed as companies and avoid income tax at source of up to 45%. Instead, the worker pays corporate tax of 19%. 

The Times suggested the broadcaster’s practice of channeling earnings though companies could enable tax avoidance of up to £20m.

The BBC was ordered to release the information to the newspaper by the information commissioner after it did not respond to requests made under the Freedom of Information Act. 

In a statement the BBC said: “It is wrong to suggest that simply because someone is paid through a personal service company they don’t pay the right amount of tax or National Insurance.

“The use of personal service companies is common within many industries and is also used by those working for independent radio and commercial broadcasters.

“The use of PSCs is legal, complies with tax legislation and if implemented correctly should not result in any avoidance of the tax or NIC due to the Exchequer.”

It added: “All our contracts with freelancers reflect the obligation of individuals and service companies to ensure they pay the right amount of tax.”

The arrangement is controversial because the BBC has been embroiled in a gender pay gap row since being forced to publish a list of those earning above £150,000 a year last year.

The figures showed the top four male presenters across the BBC were collectively paid almost four times the total amount of the top four female presenters.

Meg Hillier, head of the Commons public accounts committee, told the Times that “whatever” the BBC’s argument was for continuing to pay stars through private companies, “they do not hold water”.

In 2012 the BBC said it would stop paying long-term presenters through so-called “personal service companies” after it was found the arrangement was in place for 133 of its highest earners. 

According to the information released to the Times, the BBC last year paid 66 of its 96 highest-earning presenters £20.8m via personal service companies. 

The figure was a £2.3m increase from 2015-16 - £18.5m.

In 2014-15 the BBC paid £17.9m and in 2013-14 it paid £16.6m through private companies. 

Tax specialists told the newspaper the figures mean the BBC could have avoided paying between £2.2m and £2.8m per year on employer’s national insurance contributions (NIC) and stars could have saved up to £10m.