Spursex
Alert Team
But, I have to say this is one instance where I can only applaud the inland revenue for bringing this tax-avoidance nonsense to an end...after the borrowings this country has been forced into, schemes and arrangements like this in public bodies MUST be ended.
Game on as taxman goes after Gary Lineker for £5 million
David Byers, Assistant Money Editor
Friday May 07 2021, 9.00am, The Times
Personal finance
The taxman claims that Lineker, 60, owes £3.62 million in income tax and £1.31 million in national insurance
Gary Lineker, the television presenter and former England footballer, is being pursued for £4.9 million in tax and national insurance in the most high-profile battle so far between HMRC and celebrities over their employment status.
The taxman claims that Lineker, 60, owes £3.62 million in income tax and £1.31 million in national insurance because he should have been taxed as a direct employee of the BBC, where he presents the Match of the Day highlights programme, and the sports channel BT Sport, where he presents coverage of the Uefa Champions League.
Instead, he has worked as a contractor through Gary Lineker Media, a company he set up in 2012 jointly with his ex-wife Danielle Bux, which means that he would have been remunerated partly in dividends, paying a lower rate of tax. In court documents released yesterday prior to a first-tier tax tribunal, HMRC put Lineker’s precise bill at £3,621.735.90 in income tax and £1,313,755.38 in national insurance for work undertaken during the periods of 2013-17 to the BBC and 2015-18 for BT Sport.
Although it is not known how Lineker chose to split his income through Gary Lineker Media, contractors usually receive their pay through their companies and then pay their income to themselves partly in dividends, for which the additional tax rate is 38.1 per cent instead of the 45 per cent income tax rate. They also save money on national insurance, which employees and employers normally pay.
A source close to Lineker described the proceedings as “a shambles” and stated that he strongly disputed the figures HMRC said he owed, and owed only a fraction of the sum.
“Being paid through a personal service company is quite legitimate if the revenue accepts that you are genuinely a self-employed individual,” Robert Salter, an adviser at the tax firm Blick Rothenberg, said. “In the simplest terms, whether or not you are genuinely self-employed or an employee in another name is the revenue’s bone of contention in these cases.”
The former Tottenham and Leicester City striker was the BBC’s highest-earning star in the 2019-20 tax year, with an annual salary of £1.75 million, but the corporation announced in September that he had agreed a £400,000 pay cut.
The court battle is the highest-profile tax tribunal confrontation yet between HMRC and celebrities who work as freelancers through their own companies but who the taxman claims are, in effect, employees and so ought to be paying more tax.
Eamonn Holmes, 61, the television presenter, faces a £250,000 tax bill after losing his case, while Lorraine Kelly, 61, his former co-presenter, won a similar case for an estimated £1.2 million. In February Kaye Adams, 58, the host of ITV’s Loose Women, also won her case over a tax bill of £120,000.
Freelancers’ representatives said that the taxman’s pursuit of Lineker was unfair because the BBC had been the main beneficiary of his arms-length employment status by saving on the employers’ slice of national insurance.
Dave Chaplin, chief executive of Contractor Calculator, a body representing contractors, said: “The tax efficiency by hiring someone self-employed is actually obtained by the firm that hires them, in this case the BBC, who would have avoided having to pay employers’ national insurance of 13.8 per cent on top of whatever moneys were paid to Mr Lineker. To suggest that he has avoided tax is pointing the finger in entirely the wrong direction.”
Seb Maley, chief executive of Qdos, another contractor body, said: “This case highlights the potential risks of non-compliance — not just to freelancers and contractors, but also to businesses that engage them.”
Under the Treasury’s new contractor tax rules, known as IR35, which came into force last month, all “off-payroll” workers must be treated as full-time employees by their companies, with medium and large businesses in the UK responsible for setting the tax status of contractors they hire. This had already been the case in the public sector since 2017.
An HMRC spokesman said: “We do not comment on identifiable taxpayers or ongoing legal proceedings. HMRC has recently won a number of important cases, including at the upper tribunal, which set a useful precedent and give welcome clarity to taxpayers and HMRC alike.”
A spokesman for Lineker said that the true tax bill he faced was much smaller than HMRC’s declared total because he had paid much of it had already. “The tax involved is a nominal amount and he is appealing it.”
A date for the tribunal has not yet been set.
Limited liabilities
• HMRC is pursuing freelance presenters for tax using legislation known as IR35, which is designed to crack down on tax avoidance by so-called disguised employees.
• The taxman says that by working through the structure of limited companies instead of as direct employees, contractors avoid paying substantial amounts of income tax and national insurance.
• This is because after being paid their wage by their television station via their limited companies the stars will then only funnel themselves a small percentage as income and the rest as dividends. This has tax benefits for the worker because dividend taxes are much lower than income tax rates. The basic rate dividend tax rate is 7.5 per cent, while the highest-rate level is 32.5 per cent and the additional rate is 38.1 per cent. By contrast, the regular income tax rates are 20 per cent, 40 per cent and 45 per cent.
• Presenters are furious. Many say that they were encouraged to work this way by the TV companies themselves who saved significant sums in national insurance by not employing them directly.
• Under new rules which were put in place last month, medium and large private sector businesses in the UK have become responsible for setting the tax status of contractors they hire — a situation that has already been the case in the public sector since 2017. The Treasury expects the change to raise £3 billion by 2024.
• Contractors have complained that IR35 is reducing the earnings of ordinary workers by 25 per cent and is making them give up flexible working. Businesses claim that the changes are costing them millions of pounds in administration costs after the Covid-19 crisis.
Game on as taxman goes after Gary Lineker for £5 million
David Byers, Assistant Money Editor
Friday May 07 2021, 9.00am, The Times
Personal finance
The taxman claims that Lineker, 60, owes £3.62 million in income tax and £1.31 million in national insurance
Gary Lineker, the television presenter and former England footballer, is being pursued for £4.9 million in tax and national insurance in the most high-profile battle so far between HMRC and celebrities over their employment status.
The taxman claims that Lineker, 60, owes £3.62 million in income tax and £1.31 million in national insurance because he should have been taxed as a direct employee of the BBC, where he presents the Match of the Day highlights programme, and the sports channel BT Sport, where he presents coverage of the Uefa Champions League.
Instead, he has worked as a contractor through Gary Lineker Media, a company he set up in 2012 jointly with his ex-wife Danielle Bux, which means that he would have been remunerated partly in dividends, paying a lower rate of tax. In court documents released yesterday prior to a first-tier tax tribunal, HMRC put Lineker’s precise bill at £3,621.735.90 in income tax and £1,313,755.38 in national insurance for work undertaken during the periods of 2013-17 to the BBC and 2015-18 for BT Sport.
Although it is not known how Lineker chose to split his income through Gary Lineker Media, contractors usually receive their pay through their companies and then pay their income to themselves partly in dividends, for which the additional tax rate is 38.1 per cent instead of the 45 per cent income tax rate. They also save money on national insurance, which employees and employers normally pay.
A source close to Lineker described the proceedings as “a shambles” and stated that he strongly disputed the figures HMRC said he owed, and owed only a fraction of the sum.
“Being paid through a personal service company is quite legitimate if the revenue accepts that you are genuinely a self-employed individual,” Robert Salter, an adviser at the tax firm Blick Rothenberg, said. “In the simplest terms, whether or not you are genuinely self-employed or an employee in another name is the revenue’s bone of contention in these cases.”
The former Tottenham and Leicester City striker was the BBC’s highest-earning star in the 2019-20 tax year, with an annual salary of £1.75 million, but the corporation announced in September that he had agreed a £400,000 pay cut.
The court battle is the highest-profile tax tribunal confrontation yet between HMRC and celebrities who work as freelancers through their own companies but who the taxman claims are, in effect, employees and so ought to be paying more tax.
Eamonn Holmes, 61, the television presenter, faces a £250,000 tax bill after losing his case, while Lorraine Kelly, 61, his former co-presenter, won a similar case for an estimated £1.2 million. In February Kaye Adams, 58, the host of ITV’s Loose Women, also won her case over a tax bill of £120,000.
Freelancers’ representatives said that the taxman’s pursuit of Lineker was unfair because the BBC had been the main beneficiary of his arms-length employment status by saving on the employers’ slice of national insurance.
Dave Chaplin, chief executive of Contractor Calculator, a body representing contractors, said: “The tax efficiency by hiring someone self-employed is actually obtained by the firm that hires them, in this case the BBC, who would have avoided having to pay employers’ national insurance of 13.8 per cent on top of whatever moneys were paid to Mr Lineker. To suggest that he has avoided tax is pointing the finger in entirely the wrong direction.”
Seb Maley, chief executive of Qdos, another contractor body, said: “This case highlights the potential risks of non-compliance — not just to freelancers and contractors, but also to businesses that engage them.”
Under the Treasury’s new contractor tax rules, known as IR35, which came into force last month, all “off-payroll” workers must be treated as full-time employees by their companies, with medium and large businesses in the UK responsible for setting the tax status of contractors they hire. This had already been the case in the public sector since 2017.
An HMRC spokesman said: “We do not comment on identifiable taxpayers or ongoing legal proceedings. HMRC has recently won a number of important cases, including at the upper tribunal, which set a useful precedent and give welcome clarity to taxpayers and HMRC alike.”
A spokesman for Lineker said that the true tax bill he faced was much smaller than HMRC’s declared total because he had paid much of it had already. “The tax involved is a nominal amount and he is appealing it.”
A date for the tribunal has not yet been set.
Limited liabilities
• HMRC is pursuing freelance presenters for tax using legislation known as IR35, which is designed to crack down on tax avoidance by so-called disguised employees.
• The taxman says that by working through the structure of limited companies instead of as direct employees, contractors avoid paying substantial amounts of income tax and national insurance.
• This is because after being paid their wage by their television station via their limited companies the stars will then only funnel themselves a small percentage as income and the rest as dividends. This has tax benefits for the worker because dividend taxes are much lower than income tax rates. The basic rate dividend tax rate is 7.5 per cent, while the highest-rate level is 32.5 per cent and the additional rate is 38.1 per cent. By contrast, the regular income tax rates are 20 per cent, 40 per cent and 45 per cent.
• Presenters are furious. Many say that they were encouraged to work this way by the TV companies themselves who saved significant sums in national insurance by not employing them directly.
• Under new rules which were put in place last month, medium and large private sector businesses in the UK have become responsible for setting the tax status of contractors they hire — a situation that has already been the case in the public sector since 2017. The Treasury expects the change to raise £3 billion by 2024.
• Contractors have complained that IR35 is reducing the earnings of ordinary workers by 25 per cent and is making them give up flexible working. Businesses claim that the changes are costing them millions of pounds in administration costs after the Covid-19 crisis.