HM Revenue and Customs (HMRC) has insisted that the tax benefits enjoyed by top civil servants were past of a scheme that is "quite a common practice by employers".
Responding to the Daily Telegraph's report, the department said:
A senior Conservative MP has criticised the reported tax bill benefits enjoyed by senior civil servants in Whitehall.
Some of Britain's top civil servants are enjoying an effective pay boost of up to £30,000 a year by having part of their tax bills paid out of public funds, The Daily Telegraph has reported.
The newspaper said Government departments were paying the taxes on perks such as official cars, first class rail travel and rent-free accommodation.
HM Revenue and Customs (HMRC) said the rules have been in place since the 1970s and insisted taxpayers do not lose out.
The report said those benefiting from the system included 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.
Plans to shake up the way government departments in Whitehall are run could mean that under-performing civil servants lose their jobs.
According to The Independent Ministers are planning to extend performance-related pay. That could see some staff taking a 10 per cent pay cut if they under-perform.