SLC Head’s Favorable Tax Deal to be Stopped

The Government has vowed to stop the head of the Student Loans Company (SLC) being paid his £182,000 salary via a private company, without tax being deducted at source.

Chief secretary to the Treasury Danny Alexander announced the move after criticism that it was allowing Ed Lester to save tens of thousands of pounds in tax, in an arrangement agreed with tax chiefs.

Lester’s arrangement - entered into in 2010 - was unearthed in an HMRC letter obtained under the Freedom of Information Act by BBC Newsnight and Exaro News.

The deal meant Lester could save as much as £40,000 a year in tax, as he would pay tax at 21 per cent rather than up to 50 per cent.

The coalition has been embarrassed by the revelation due its own high-profile campaign against tax avoidance.

It has now embarked on an urgent review of other top public officials’ tax affairs to see if the socially divisive practice is more widespread.

Alexander said: ‘The SLC will, for the remainder of the contract in question, change the arrangements and deduct tax and National Insurance at source. Across government, if any appointments are found, whether agreed by this or the previous government, which do not provide value for money I would urge departments to seek to unwind them as quickly as possible and as quickly as is compatible with securing good value for public money.

‘I have taken this action to make sure government departments do not support tax avoidance schemes.’

Margaret Hodge, chair of the Public Accounts Committee, has asked for details of the reasons why HRMC agreed the arrangement.