More than 2,000 public sector staff could be avoiding the full rate of income tax through special contracts, government research suggests.
An investigation took place after a civil servant was found to be getting paid £182,000 without amounts deducted for tax or National Insurance.
Treasury Secretary Danny Alexander says he is shocked at “the sheer scale of the off-payroll deals,” and he is recommending that anyone paid more than about £58,000 should not be able to use this loophole to avoid paying tax.
In a letter to Chancellor George Osborne, Alexander says that he would implement a range of sanctions on those being paid through companies. Any civil servant who has been employed for more than six months and earns £220 a day or more will have to provide evidence they are paying full income tax and National Insurance contributions within three months.