Tax loopholes for civil service workers

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.

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