Pre-Budget Report 2009 - bank payroll tax
The Chancellor has announced in his Pre-Budget Report the expected measures to claw-back some of the large bankers’ bonuses for the tax payer. The key details are as follows:
- Legislation in Finance Bill 2010 will introduce a new bank payroll tax. This will be set at 50%.
- It will be payable by a bank, on the amount of a bonus to which a banking employee is entitled, to the extent that the bonus exceeds £25,000.
- A bank will also be liable to the bank payroll tax where the bonus entitlement arises in respect of services performed for the bank regardless of who awards the bonus.
- The bank payroll tax will have effect from the time of the announcement on 9 December 2009 until 5 April 2010 for all discretionary and contractual bonus awards.
- There is an exception for contractual bonus entitlements where the payer has no discretion as to the amount of the bonus because of a contractual obligation existing at the time of the Chancellor’s announcement.
Barry Hallam is a senior manager at Mercer & Hole. If you would like to discuss the contents of this post with Barry you can call him on 020 7353 1597.
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