David Buik Comments: Banks Hit With A Super-Tax On Bonuses-Daily Express

BANKS face having to pay a 50 per cent “super-tax” on bonuses they dish out to top staff, Alistair Darling confirmed yesterday.
The new levy on payouts, designed to claw back at least some of the taxpayers' cash dished out to the City, will last for just one year.

It is expected to raise only ­£500million – a tiny fraction of the £178billion in extra debt now expected be to piled up by the ­Government this year. The tax on all “discretionary” bonuses over £25,000 sparked outrage in the City and a flurry of warnings that many firms will find ways of dodging it. Employers are expected to turn bonus payouts into ordinary salary payments – dramatically cutting their tax bills.

Others were planning to make the payments as capital gains which attracts tax of just 18 per cent or will defer bonuses for 12 months to avoid the new levy. The proposals mean if a bank wants to pay a member of staff a £1million bonus, it will face a total cost of £2.25million – the bonus itself, plus the extra tax bill and higher National Insurance. The banker receiving the £1million will have to pay income tax at the appropriate rate on the money as usual.

Bankers' bonuses have prompted huge anger in the past year. State-owned Royal Bank of Scotland is still planning to hand out £1.5billion to its already well-paid staff despite having to beg taxpayers for more than £53billion to save its skin after making reckless bets on the US property market. Many RBS payouts will be well above £100,000 per employee.

But there was still real anger in the City.

David Buik, of BGC Partners, said: “If the Prime Minister and the Chancellor are prepared to dice with the future of the country for the sake of temporary political expediency then we might as well send the men in white coats around to Number 10 and 11 immediately.”

One unnamed banker warned it would drive talent out of the UK. He said: “I have a chalet in Switzerland and many of my mates have moved to live in Geneva permanently, paying about 18 per cent tax.”

Shadow Chancellor George Osborne said Labour was playing class politics and “setting one part of the country against another”.

But he has refused to rule out bringing in his own version of a windfall tax on bankers.

Liberal Democrat Treasury spokesman Vince Cable condemned the plans as “the worst type of ­gesture politics and a gift-wrapped invitation to tax avoidance”.

British Bankers' Association chief executive Angela Knight said: “Viewed from abroad, those foreign banks which reward their UK staff with contractually agreed bonuses are likely to be the hardest hit. London may well look to them now like a significantly less attractive place to build a business.”

Mr Darling said he would push news laws through the Commons to make dodging the tax impossible. He said: “Some banks still believe their priority is to pay substantial bonuses to their already high-paid staff. Their priority should be to rebuild their financial strength and increase their lending. “So I am giving them a choice. They can use their profits to build up their capital base. “But if they insist on paying substantial rewards, I am determined to claw money back for the taxpayer.”

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