Vir Cantium

I'm right, you know …

Bankers’ Bonuses: I Don’t Like To Say I Told You So …

… nah,  who am I kidding?

Well, although a few may be playing the residency system, most will have paid tax on those bonuses…. They would have paid tax at typically 51% (ignoring the effects of pension and personal allowance restrictions). Now, those bonuses, if not paid and retained by the bank, will be taxed with the banks profits at 28%. if circumventing the rules involves converting the bonus into capital, then we’re looking at just 18% tax.

And lo:

Bankers’ pay cuts lead to £5bn tax loss

The Treasury will lose up to £5bn of tax revenue in the next five years because of a reduction in bonuses to UK bankers following a crackdown on pay packages.

An analysis by the Office for Budget Responsibility reveals that the UK’s bankers will receive about £10bn less in bonuses over the next six years than had previously been expected.

The OBR has cut its forecasts for tax receipts from “financial sector bonuses” by £1bn a year between 2010 and 2015. At the effective 60pc tax rate the OBR uses – from 13pc national insurance and a weighted average of 47pc income tax – the annual cut in bonus payments is £1.6bn.

That is all.

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