Catch in tax dodge

October 4, 1996

I read with interest your report of the Profit Related Pay scheme (PRP) at the University of the West of England, whereby an element of salary will be paid as a tax-free "profit" distribution.

No details of the scheme were given, but the notion of a "profit" distribution in a non-profit making organisation seems decidedly odd (most universities are registered charities).

Since the greater part of university funding is public money such schemes merely take money from one pocket and transfer it to another, the global amount of money is not increased.

Where is the catch? Since the PRP element will vary from year to year, and individually, and is not a permanent payment, it follows that the "profit" top-up of salary cannot be superannuable.

At the end of the day terminal salaries will be lower, and hence the pensions paid: jam today, bread and dripping tomorrow. Someone must pay for such schemes and if introduced by Government the advantage must be to the Treasury in the long run.

Thomas Simmonds Chelsea Cloisters London SW3

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