Jessica Fino 4 Sep 2017 11:41am

BBC's highest-paid stars to switch to PAYE

The broadcaster has written to its highest-paid staff telling them they would now be taxed as BBC employees, not self-employed

This means they will now be taxed at the 45% PAYE rate, instead of the 20% corporate tax rate. The majority of BBC stars earning £150,000 plus previously by used personal service companies, according to a report from the Daily Mirror.

The changes follow criticism over the pay packages of its highest-paid stars, after the broadcaster was forced to disclose the names of those earning £150,000 and more.

An unnamed source told the newspaper, “This issue has ruined relations between the BBC and its top stars, which will be irreparable and will lead to a talent drain.”

An HMRC spokesperson said, “We don’t discuss identifiable taxpayers. Employment status is never a matter of choice but is always dictated by the facts."

HMRC highlighted that the government announced at its Budget last year that, from April this year, where the public sector engages an off-payroll worker through their own limited company, that body will become responsible for determining whether the rules should apply, and for paying the right tax and NICs.

It also explained that an individual earning £100,000 per year would typically pay around £34,000 in employment taxes, while a non-compliant individual operating through their own company could structure their affairs to pay as little as £13,000.

Stefan Stern, director of the High Pay Centre, told economia, “The nature of the employment relationship is obviously changing in an era of flexible work and longer working lives.

“People should have the option of being self-employed or freelance, but if someone is de facto an employee, doing a lot of hours of work for one employer, then that person should enjoy the benefits and security of being an employee, but also pay the tax that is due as an employee.

“This is perhaps not as complicated as we have made it.”

A BBC spokesperson said, "The government's new rules apply to all public bodies including the BBC and Channel 4. We are making sure we comply with the law and licence fee payers don't pick up the liability for the wrong tax or NI contributions being paid."

It emerged last year that HMRC was examining a large number of freelance staff at the BBC who were being paid through personal service companies.

In a witness statement, Jennifer Henderson, head of global mobility and employment tax at the BBC, revealed that HMRC began investigating 23 BBC presenters in May 2015 to establish whether they had violated IR35 rules which regulate self-employment status.