Oh well, anything, eh?
Nigel Farage is using a private company to reduce his tax bill on his GB News media appearances and other outside employment in a television star-style arrangement that has in recent years become frowned on by major broadcasters.
The Reform UK leader diverts money from his prime-time TV show into his company, which means that he paid only 25% corporation tax on profits, instead of 40% income tax, and could offset some expenses.
yes, and he then pays dividend tax on anything he takes out which means 54% rate in toto. Which is how it’s supposed to work of course – corp tax plus divvie tax is about income tax.
The Clacton MP, who is also paid a £94,000-a-year MP’s salary,…..The use of personal service companies is not illegal, but it has been criticised across the political spectrum as a way to reduce tax bills.
But someone with at least two – perhaps three or four – independent income streams is exactly who should be using a psc. It’s when you’ve *only* got the BBC income – say – that you shouldn’t.
But, you know, throw stuff around, eh?
“and could offset some expenses.”
Just like how an employee can deduct employment related expenses from their tax bill then?
But surely ‘a way to reduce tax bills’ is a good thing? Or does it purely depend on who is doing it?
Sorry, rhetorical question, I know!
Meanwhile tax paid by the Scott Trust amounted to………?
But that’s diffewent!
.The use of personal service companies is not illegal,
Marv. So, no story then. “Not illegal” also means “perfectly legal and above board”.
If you don’t like the law, campaign for it to be changed. Don’t bleat about people who obey it.
Using a company is a scam though. If NF is the employee of the company providing the ‘personal services’ then the company can put its expenses incurred in providing his ‘services’ against the income gained, such as providing a fancy car to take him to work, or putting him up in posh hotels. Which a direct employee of the client could not do. So by using a company lots of expenses that would have to come out of taxed income for the directly employed instead come out of untaxed income, thus saving a lot of tax.
Its exactly the same scam as ‘The office of Gordon and Sarah Brown’. They get to swan around on first class flights and hotels, all paid for out of untaxed income.
https://find-and-update.company-information.service.gov.uk/company/07362179
“Just like how an employee can deduct employment related expenses from their tax bill then?”
But it depends what ‘work related expenses’ are. Travel to and from your place of employment is not a work related expense. The trick with a PSC is that your ‘place of work’ moves from where you actually work (in NF’s case a TV studio somewhere, presumably London) to where your PSC is registered. So lets say NF lives in Kent. If he works for GB News direct then he has to pay all his travel and hotel costs to and from London out of his taxed income. But if he has a PSC based in Kent then his place of work is no longer London, its Kent, and when his company sends him to London to work, suddenly all the travel etc is ‘work related’ and thus gets paid out of untaxed income. As I said, a scam.
“the Scott Trust”: there is no such thing. It’s now the Scott Trust Ltd. The change of status was implemented to let it evade/avoid/mitigate tax. Which was also the reason the original Scott Trust was set up.
– Which is how it’s supposed to work of course – corp tax plus divvie tax is about income tax.
If the result of special arrangements is about the same as normal arrangements then what is the incentive to go through the arse of special arrangements?
@ Jim
My employment contract with the company I work for (FTSE250) is a home worker. My place of work is my home office and I get expenses when I travel to any of the company offices. If I stay over, they pay for my hotel.
Is this a scam also?
@Jim
I’m not sure it makes much difference. If NF was a direct employee, most of this stuff would be paid by his employer. Who then puts it down as a cost against the pre-tax. His travel to & from his place of employment? If it’s the studio, the cost’s going to be folded into the remuneration he’s agreed with his employer. Like any commuter’s is. And thus gets shown as a cost
Using a company is a scam…
No, Jim. It is a perfectly legal way to avoid tax. There’s nothing dishonest or fraudulent about it. The taxers set the rules permitting it; and taxpayers follow those rules to avoid paying more tax than necessary. Who wouldn’t?
Jim
I know that it’s difficult to read an entire post but the real point Tim was making was (as is often the case) at the end of his post:
“But someone with at least two – perhaps three or four – independent income streams is exactly who should be using a psc. It’s when you’ve *only* got the BBC income – say – that you shouldn’t.”
It’s very awkward to be an employee of more than one company from a tax as well as an employment contract point of view. So the choice is really between being a “sole trader” or doing this through a company. In either case you would deduct expenses
Damn, Farage caught following the law!
‘it has been criticised across the political spectrum as a way to reduce tax bills’
I read their whole article to find the list of criticizers. Never found it.
Petītiō principiī.
@PJF – September 5, 2025 at 9:23 am
If the result of special arrangements is about the same as normal arrangements then what is the incentive to go through the arse of special arrangements?
I’d guess that it’s because you don’t have to draw all the company’s income as salary every year and can let the dosh accumulate in the company’s bank account (or investment account more likely). It can then be drawn or paid as dividends in the future – the equivalent of a pension scheme without handing over the ownership of the money.
” So the choice is really between being a “sole trader” or doing this through a company”
No, it isn’t. You can’t call yourself a self employed sole trader if you turn up to the same place of work, at the same time day after day. HMRC will declare that to be employment. There’s very strict rules on whether a worker is self employed or employed, as Uber et al are finding out. So the choice is not between self employment and employment, its between a PSC and employment. And the PSC gets to claim travel expenses pretax, and the employee doesn’t.
“My employment contract with the company I work for (FTSE250) is a home worker. My place of work is my home office and I get expenses when I travel to any of the company offices. If I stay over, they pay for my hotel. Is this a scam also?”
It is. Imagine your neighbour who works for exactly the same company but has to go to the office every day (lets say he’s the security guard). You go to the office sitting next to him on the train one day, he has to pay his train ticket out of taxed income, you don’t. Thats not fair. Either both of you should get expenses out of untaxed income or neither should. Your case is just another sharp elbowed middle class ‘working from home’ advantage the working classes (who by and large have to show up at their place of employment every day) don’t get.
I think the rules might have changed, but when I had a limited company I bunged as much as I was allowed in to my pension as a company contribution. It’s a lot easier to do than negotiating with a big employer to do the same thing and I could be flexible.
@ Jim
Take it up with HMRC – https://www.gov.uk/guidance/ordinary-commuting-and-private-travel-490-chapter-3#permanent-workplace
Using a company is a scam though.
No it isn’t. It is a perfectly legal way to organise one’s affairs.
Jim
“You can’t call yourself a self employed sole trader if you turn up to the same place of work, at the same time day after day.”
But Farage is not doing that… as the Guardian article acknowledges in the very first phrase of the article (that Tim quoted)
” It is a perfectly legal way to organise one’s affairs.”
The best scams are the legal ones.
Jim
The best scams are the legal ones.
Scams can be (borderline) legal; but this is not a scam because tax avoidance is not dishonest or fraudulent. Rather, tax avoidance involves scrupulously and honestly following the rules. We have in effect a legal right – and, I would argue, a moral duty – to minimise the tax we pay, not least because a big state is a bad state.
Why is it ok for Farage to use tax avoidance.
But not for working class labour women like the former Deputy PM.?
It seems that posh boys can do whatever they want. Ome rule for them, and one rule for us commoners.
The media is disgusting.
You’re in hte wrong place for that. I insist that “tax avoidance” does not exist. There is obeying tax law and there is not obeying tax law – and that’s it. Nigel is obeying it, Anjie didn’t.
@Jim
Can’t be arsed to explain everything you’ve got wrong but a few will do. If NF’s company provides him with a car, then NF will be taxed on this as a BIK. If his company pays a hotel bill, then he will be taxed on this unless it’s work related. If NF were directly employed by GB News, exactly the same rules would apply.
“Place of work”. HMRC think you can have more than one. Anywhere you attend regularly can be a place of work. No legislation defines this but HMRC’s rule of thumb is 20% of your working time.
NF may well get his company to make pension contributions but he could do that as an employee. Salary sacrifice works well- saves NIC too.
I don’t know where you get your tax information from but it’s as reliable as the advice Raynor got on SDLT.
@ Jim “the choice is not between self employment and employment, its between a PSC and employment. ”
I suggest you Google “IR35”
You can’t call yourself a self employed sole trader if you turn up to the same place of work, at the same time day after day. HMRC will declare that to be employment.
Even being a local councillor (or an MP) which by definition is not employment (it’s holding an office), is stated by HMRC as employment, and processed and dealt with and prosecuted for as though it was employment.
If I get all the statutory benefits and protections an employee has, then I’m an employee. If I don’t, and have to pay for those benefits and take those risks myself (and provide my own kit) out of my total earnings, I’m not. If I’m an employee of my own PSC and can’t afford to take a year’s statutory maternity leave (because if I did my business and career would collapse) then I think my company being allowed to claim things that employees can’t is a reasonable exchange.
One of the pernicious problems with IR35 is that it doesn’t recognise the grey area between simple day-jobbing work-for-hire and permanent employment. I was a muso. I might spend a week in a studio producing a single, or a week or 10 days laying tracks for an album, during which time I’m not free to work for anyone else. Am I an employee? What if I’m out on tour for 3 months? Am I an employee? I may be able to sneak in a session for someone on a day off. Can an employee do that? And whilst doing all that, WTF is happening to stakeholder pensions, statutory leave and all that shit?
The whole area of employment is a confused mess which only persists because so many people think of employment as being a single job at a time for a long period. It would be much more sensible for everyone to have a tax account where they pay in anything earned tax free and withdraw whatever they want (negative balance allowed in some circumstances) paying the current rate of tax. Then abolish holiday pay, sick pay, unemployment benefits, state pensions and all such things. You pay in as you earn and use this money to tide you over as necessary. When you retire, you should have accumulated enough to live on. Most people would have their balance go negative until they are old enough to work, then see it rise, covering any absences from employment regardless of the reason, and eventually retire and live off the remainder.
There would obviously have to be special provision for appropriate limits to negative (and even positive) balance to allow for those with severe disabilities who cannot cover their life’s cost by their own work and to prevent people spending everything and leaving themselves with no provision for necessity. And ways to recover unused money from those who die with a credit to cover those who die in debt.
“If I’m an employee of my own PSC and can’t afford to take a year’s statutory maternity leave (because if I did my business and career would collapse) then I think my company being allowed to claim things that employees can’t is a reasonable exchange.”
If you can’t take your statutory employment entitlements because if you did your employer would collapse, then to me that says the whole scenario is an artificial construct. No one who works for an unrelated company has to think ‘Oh, I can’t go on holiday at the moment because if I do my employer will go bust’. If you are having to take the financial into account then the relationship is not a true employer/employee one.
I can’t get paid holiday leave, or sick pay or parental leave, because I’m self employed. If you’re in the position that you can’t have all those things either despite being nominally employed then you aren’t really employed at all.
And you trust the government not to dip its fingers into that account, Charles? I have a bridge to sell you.
You’re being a bit fundamentalist, Jim.
Imagine a tiny company doing fairly specialist stuff. Every staff member counts. Everything is great until one of the girlies gets up the duff. Then the company has to provide a year’s paid leave, at the end of which the new mum may decide she prefers to stay at home, so so long and thanks fo all the fish. In the meantime the company has had to bear the costs and disruption of finding and training a temporary employee. This could sink many small companies. So, your position is that small companies aren’t viable because of the possible consequences of employment law.
What does that company do? In this position an 8-person company I look after has transformed from being an employer to a co-ordinator of freelancers, in order to escape the effects of onerous employment legislation that was slowly strangling it. Should it have gone bust instead? By staying in business it’s providing a living for its owner and those freelancers, and value to its clients.
It is perfectly legal for me to own a company of which I’m the sole employee and in some circumstances it’s necessary. My wife and I trade through our own company, largely because our Japanese clients will only deal with companies, not individuals. Would you rather we didn’t trade? Or punt the trade to Megacorp instead and be dole wallahs or corporate drones? My wife and I don’t have the personality to be corporate drones. We’ve tried and failed.
It takes a certain critical mass before a company can survive statutory maternity leave, or sick pay, or HR, or any of the myriad new burdens companies have to carry. Are you saying that there should only be freelancers or companies large enough to survive bureaucracy? How does anyone starting up bridge that gap?
@Norman: I’m just being purposely contentious, to make people think about the reality of what is happening. PSCs are of course 100% legal etc, I’m looking at whether its actually a real relationship between actual people, or a construct. The relationship between employer and employee in the small company scenario you suggest is still different to the PSC one. An employee of a company they are not a shareholder in does not have to take the financial position of the their employer into account when deciding whether to exercise their statutory employment rights. Its up to the company owner to have considered all that, and deal with the fallout should a vital person go awol at a critical time. Don’t forget there’s many small employers out there who are not incorporated anyway, they have to deal with exactly the same employee rights issues. Their employees don’t have to consider the boss’s financial position either.
The issue is that in a PSC an individual (or small number of individuals) is operating with two hats on – employer and employee, roles that in real life have differing self interests. This is an artificial scenario that cannot exist outside of the legal fiction that is a limited company. A sole trader cannot employ themselves, because the idea is a nonsense, so why should a limited company owner also be able to employ them self?
How would I solve the problem you ask? I would abolish limited companies, because I think they are one of the sources of our economic and social malaise. They allow the MegaCorps to exist. If limited companies did not exist businesses would have to remain at a certain level of size, and would retain a human scale, which is lost once a company gets too big. We need to return power to individual people, far too much of it has been siphoned away into the (entirely imaginary) corporate sphere.
“I would abolish limited companies”
And significantly scale back the modern world? Hey, maybe you’re right, the Amish seem to manage perfectly well? But we should be clear. For better or worse, small unlimited cos / partnerships are highly unlikely to have provided a large chunk of what we take for granted today. So much western advancement over the last century or more occurred as least partially as a benefit of limited liability. And worldwide? That’s a bold move if now done unilaterally?
“being purposely contentious”
It’s an interesting idea.
And my Amish comment wasn’t intended to be as extreme as it might sound. Simply that the consequences of all employees (partners) being fully liable “to their employer” or “for their collective efforts” (at least to my mind) really does change the underlying dynamic of how business takes place? Particularly in any areas involving innovation. It becomes risky, if you have anything worthwhile, to work with others if their incompetence could bankrupt you? Or even if the market timing was simply wrong?
” It becomes risky, if you have anything worthwhile, to work with others if their incompetence could bankrupt you”
This is why limited liability exists. Large scale economic organisation is impossible without it. If every investment you make in any thing is on a partnership basis – so, like Lloyds names, down to your cufflinks – then no one will ever invest in anything except what is run by themselves and perhaps a couple of close partners.
Good luck funding a few £ billion for a steel mill that way.
But, to be fair to Charles, take the government out of that schema and it’s a pretty fair description of how the world works (when it does) in practice. You start off a dependent, start to make a bit, go into debt again to create some dependents of your own, gain a bit, the run down and become dependent on those (hopefully no longer) dependents.
” If every investment you make in any thing is on a partnership basis – so, like Lloyds names, down to your cufflinks – then no one will ever invest in anything except what is run by themselves and perhaps a couple of close partners.”
And life might be a lot better if things were run like that too. Everything would have to be at a human level, instead of the impersonalised global corporation ‘computer says no’ world we live in today.
You yourself have often talked about the idea of government being devolved to the lowest level possible, so the man who decides who gets what drinks in the same bar as you do, so has a vested interest in not pissing off the locals. My idea is the same, just for business. Just as there’s no reason why governance has to be be made remote and all powerful, there is no reason why businesses should be allowed to be likewise.
“And life might be a lot better if things were run like that too.”
Then you might want to hand most of your modern sophisticated farm equipment back, with your landrover, computers, smartphone, etc…
“so the man who decides who gets what drinks in the same bar as you do”
Is it OK if I keep one or two of the toys I have? 🙂
Jim,
How could an airline operate on the sort of scale you propose?
Or a car manufacturer?
Or a phone network?
Or electric power generation?
All of those depend on economies of scale.
“How could an airline operate on the sort of scale you propose?
Or a car manufacturer?
Or a phone network?
Or electric power generation?
All of those depend on economies of scale.”
Were there such things before US Global MegaCorps took over the world? Yes there were.
“Then you might want to hand most of your modern sophisticated farm equipment back, with your landrover, computers, smartphone, etc…”
Most of my farming equipment came in with the Ark. We managed just fine 60-70 years ago when the MF35 was the average tractor size, and not one computer chip in sight. And we made more money. All the whizzy tech has not helped farming one jot.
The trouble is that the Right are as blinded by their own ideological biases as the Left are. Anything that helps big business must be A Good Thing, and supported regardless. Whereas it seems quite obvious to me that allowing Big Business to get to the size and power it has has been completely destructive to Western societies. Yes we may be ‘wealthier’ but the country is a sh*thole as a result. Making everything cheaper while the country turns to sh*t does not seem like a great trade off to me.
@Jim – “If limited companies did not exist businesses would have to remain at a certain level of size,”
Limited liability was introduced by the Limited Liability Act 1855. The East India Company was founded in 1600 and had its own private army, ruled lots of modern day India, and regulated a lot of international trade. Small it was not.
– “Were there such things before US Global MegaCorps took over the world? Yes there were.”
That’s a pretty massive moving of goalposts there. There were no such things before limited liability companies.