Westminster Council is one of the Councils that the ‘Evening Standard’ says pays staff via Personal Service Companies (PSCs) which enables them to avoid paying full income tax.
The Standard says
“Westminster pays 12 PSCs sums ranging from £1,086 to £54,641. Last year it paid 15 from £973 up to £133,100.
The full article says;
“Town halls across London are using “BBC-style” payment schemes which help staff avoid full income tax, the Standard has learned.
Thousands of local government workers are paid “off-payroll”, allowing councils to sidestep huge sums in national insurance.
The figures come after the BBC was forced to review the freelance contracts of more than 800 staff, including Jeremy Paxman and Fiona Bruce, who were being paid through their own firms.
The Local Government Association suggested the practice was not wide-spread in town halls.
But Freedom of Information requests found that Westminster, Wandsworth, Croydon, Hounslow, Kingston-upon-Thames and other councils were paying staff off-payroll or through personal service companies.
Only Barking and Dagenham, Lambeth, Tower Hamlets and Camden said they did not.
Other London boroughs claimed they did not keep the information or had no way of distinguishing between different types of companies on their books. Some councils said the information would take too long to compile.
Labour MP Margaret Hodge, chairwoman of the Commons Public Accounts Committee, said: “It’s not on for people who are paid through the public purse not to contribute their fair share of income tax and national insurance back.”
According to FoI responses, Croydon pays two personal service companies a total of £16,500 a month and Westminster pays 12 PSCs sums ranging from £1,086 to £54,641. Last year it paid 15 from £973 up to £133,100.
Wandsworth has 12 off-payroll arrangements or contracts with PSCs, worth a maximum of £400 a day, while Hammersmith and Fulham said it “occasionally” made use of them.
Waltham Forest employed 144 consultants off-payroll last year on contracts ranging from £47 to £226,334 and Hounslow paid nine people a total of £456,000. However, Hounslow said it had since “actively sought” to end these arrangements.
Kingston pays 24 “limited direct companies” daily rates ranging from £180 to £840; Richmond and Sutton said there were “occasions” when they used self-employed consultants, and Islington admitted using consultants who were sole traders.
Most councils employ some temporary staff through agencies, which deduct tax and national insurance.
A recent report found about 2,400 Whitehall civil servants off-payroll”