Chief’s tax-free deal ended

The UK government has said it will end a deal under which the head of the Student Loans Company – which has its headquarters in Glasgow – has been paid via a company without tax being deducted.

Treasury chief secretary Danny Alexander announced the move after criticism it was allowing Ed Lester to save tens of thousands of pounds in tax.

The arrangement with Mr Lester, entered into in 2010, was disclosed in an HM Revenue and Customs letter obtained under the Freedom of Information Act.

The revelation is embarrassing for the coalition, which has been mounting a high-profile campaign against tax avoidance.

Mr Alexander said the way in which Mr Lester received his £182,000 salary was now being changed. He said: “The Student Loans Company will, for the remainder of the contract in question, change the arrangements and deduct tax and National Insurance at source.”