Desmond pension move cuts tax bill

Express publisher Northern and Shell paid £31m into owner Richard Desmond's pension pot last year as a way of reducing taxes ahead of a government clampdown in 2006.

The company paid its founder and chairman a total of £46.2m in 2003, according to accounts filed with Companies House and published yesterday, more than double the £20.9m it paid the year before. The company's total contribution to Mr Desmond's money purchase pension pot was £51.4m over two years.

The payout comes ahead of government proposals to cap retirement savings at £1.4m and end tax benefits for schemes used by the country's top earners. These schemes, known as funded unapproved retirement benefit schemes or furbs, tax income at the basic rate for earners who otherwise would pay 40% tax on savings.

The company's contributions to furbs, introduced in 1989, are also taxed as a "benefit in kind" rather than as corporation tax. Under proposals announced by the Treasury, such advantages will end from April 2006. Financial consultants have advised top earners, such as Mr Desmond, to invest as much as possible in the schemes before the cut-off date. Savers aged over 50 can then cash in their schemes.

Northern and Shell made an operating profit of £45.8m last year, which became a loss of £3.2m once the 53-year-old Mr Desmond's pay, other charges and interest were taken into account. His company made a profit of £16.6m in 2002. The £15.1m salary paid to Mr Desmond last year attracted national insurance and tax.

Furbs can also be used to provide loans to the sponsoring company. Under scheme rules, this loan must then be repaid using a commercial rate of interest.

A spokesman for the company denied that Mr Desmond's payout jeopardised any future investment plans. The owner of OK and other celebrity magazines plans a London freesheet to compete with the Evening Standard, a £20m investment in his jointly owned West Ferry print site, and an expansion of company broadcasting activities.

The report filed yesterday also revealed commitments to spend £11.8m on refurbishments. Last month, the company moved into new London headquarters on Lower Thames Street understood to have cost £40m.

The spokesman said: "He will put back what he needs to put back and he will invest what he needs to invest and he will take out what he needs to take out. This is a private company."

In an interview last month, Mr Desmond said: "It's never wrong to take cash if it's there."

He has taken about £85m out of the business since taking it over in 2000, at the same time as turnover has risen eight fold to £421m.

Last month sales of the Express fell to 960,320, only slightly down from the time of Mr Desmond's £125m takeover in 2000. Sales for Northern and Shell rose 9% to £34m last year.

The company's charitable contributions more than doubled to £452,371 in the year.