Shortages of staff exploited

THE revelations about the pay of NHS bosses show how they seem to be exploiting the health service’s desperation for experienced staff.

Top staff are able to claim early retirement – and cash in the lucrative pension pots they have built up – and then return to the NHS providing short-term help to struggling trusts.

They can move round the country, earning vast f ees despite not even working five days a week.

To further boost the benefits they receive, some set up a personal company through which they have their salary paid. Normally when someone is paid, the i ncome tax and National Insurance they owe is deducted by their employer. But when someone is paid through their own personal company the business that employs them no longer has responsibility for income tax and National Insurance.

This is essentially because they are no longer employing the services of a person, but a company.

The wages the personal company receives are classed as profit. In the case of the highest earners this means the money is taxed as corporation tax at 20 per cent, rather than as income tax at 45 per cent.

They can then use the personal company a bit like a giant piggy bank, and sit on the cash until there is a good time to take it out. This could be in a year when their earnings have dropped and they are in a lower tax bracket.

And when they take the money out of the personal company they can take it as a share dividend, rather than as an income. On top of this they can avoid National Insurance totally. Though this all seems elaborate and contrived, it is perfectly legal.

But paying your tax is not just a legal obligation, it’s a moral one. And the vast majority of taxpayers take pride in paying the right amount, at the right time.

They would never dream of vastly reducing their returns by using a personal company they had set up (and their employers would probably forbid it).

The public bodies their tax payments are funding must ensure their employees are paying the correct National Insurance and income tax.

That is why the use of companies to employ executives is so reprehensible.

Not only can the NHS not guarantee that its most senior staff are paying a fair amount of tax, but in its failure to condemn the practice it has displayed a flippant disregard for the way it spends our taxes.