Magazine |
Bonus tax to be tough and immediate

Expected taxation of banking bonuses, and anti-avoidance measures to police them, will be introduced with immediate effect, the Chancellor Alistair Darling announced in the Pre-Budget Report on 9 December.

'Banks 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,’ he told the House of Commons. ‘I have decided to introduce from today a special one-off levy of 50% on any individual discretionary bonus above £25,000. This will be paid by the bank not the bank employee. Anti-avoidance measures will be introduced with immediate effect.’

He said the ‘clawback’ was justified owing to the unprecedented taxpayer-funded rescue of major banking groups in autumn 2008.

‘The banks last year made collective losses of £80bn in this country alone. This would have been much higher without the unprecedented level of support from the taxpayer. There is no bank which has not benefited, either directly or indirectly, from this help. This should be a time for banks to rebuild their capital base and become stronger.

‘A tax on profits, as has been suggested, will prevent them from doing this. So I have decided against a windfall tax. However, there are some banks who 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.’
09/12/09