Public funds tax bills of some of Britain's most senior civil servants

Reports have emerged suggesting that public funds pay for the tax bills of some of Britain's most senior civil servants - leaving them tens of thousands of pounds better off annually.

Government departments were subsidising the taxes on benefits such as official cars, first class rail travel and rent-free accommodation, according to The Daily Telegraph.

One senior Conservative MP expressed surprise at the arrangements, saying they were out of line with what could be expected in the private sector.

However, the system has been approved by HM Revenue and Customs (HMRC), who insist that taxpayers did not lose out as a result of rules dating back to the 1970s.

According to the Telegraph, officials who have benefited from the system include the Cabinet Secretary, Sir Jeremy Heywood, the head of NHS England, Sir David Nicholson, and the former head of the Serious Fraud Office, Phillippa Williamson.

Sir Jeremy allegedly has the use of a chauffeur-driven Toyota Prius which has reportedly cost taxpayers £172,100 over the past two years - including a tax bill estimated at more than £49,000. The Cabinet Office said that the car was also used to transport other senior officials and was not solely for Sir Jeremy’s use.

Sir David was said have received benefits worth £320,303 over the last six years, including the cost of a rented flat in London, the use of a chauffeured car and first-class train journeys.

Richard Bacon, a Conservative member of the Commons Public Accounts Committee, expressed concern at the arrangements and said tax-payers may be surprised at discovering that they are funding tax bills.

"These are out of line with what one would expect from the way people in the private sector are treated," he told the Telegraph.

"Taxpayers are already paying a lot for these people, I don't think they would be expecting to dig into their pocket to pay for the tax on the benefit as well."

However HMRC insisted that the arrangements were above board.

"We can't discuss individual cases. However, cars provided by an employer that are available for employee use are a benefit in kind for the employee and are taxable. These rules have been in place for 37 years," it said in a statement.

"Employers may choose to pay the tax due on the benefit. If so any such payment will constitute an additional benefit - which will also be taxable on the employee.

"This is quite a common practice by employers and is a matter between employer and employee. HMRC makes sure all the tax due is paid."