ALEX Salmond has defended his financial arrangements, insisting they are all above board after it was claimed that they opened him up to the charge of hypocrisy.

The former First Minister defended the use of a so-called private service company, the Chronicles of Deer, through which he channelled more than £120,000 for his newspaper columns, book sales and media appearances. The use of such an arrangement would allow him to pay corporation tax at 20 per cent on the money rather than income tax at up to 45 per cent.

Ruth Davidson, leader of the Scottish Conservatives, noted: "Only this time last year, the SNP said the wealthiest in society should not be able to avoid paying income tax. The SNP is good at preaching to others but not so good at putting it into practice; with the result that Mr Salmond has left himself open to charges of blatant hypocrisy."

But Mr Salmond was adamant that the company existed to "separate my parliamentary income from my income from publishing and journalism and for no purpose of tax avoidance or evasion".

The MP for Gordon explained that all the expenses he set against tax through the company were "entirely legitimate and necessary" and it also paid VAT. He said he would only incur a tax advantage if he ceased to be a higher-rate taxpayer when income was taken from the firm, which he stressed was unlikely.

Mr Salmond also told The Sunday Telegraph that he would pay tax on any income he received from the company and had "no intention of paying less tax; that is not the purpose of the company and indeed(I) will make sure that I do not."

Last month, the former SNP leader defended his status as Scotland's highest-paid politician after taking up the high profile post as host of a London radio station phone-in show.

With his £74,000 a year salary as an MP and around £108,000 from his newspaper articles, Mr Salmond already earns more than David Cameron, whose wage is £149,440, and Nicola Sturgeon, who receives £144,687.

But Mr Salmond, stressing that everything he earned was above board and registered properly, claimed no other politician gave as much to charities and good causes as he did.

He pointed out that some 60 per cent of his parliamentary earnings over the last year - his MSP's salary and his First Minister's pension - had gone to charity.

"I may be the highest-paid politician in Scotland but I am the one who has given far more to charities and good causes," he declared.

Most of his charitable giving is channelled through the Mary Salmond Trust, a charity set up in 2007 in honour of his late mother, which helps community and youth organisations across the north-east of Scotland.

Since its inception it has helped more than 240 local organisations and individuals and raised more than £108,000. In the last year alone, it raised almost £40,000.