Lewis Silkin has published a guide (pdf) to the new, one-off 'bank payroll tax' (BPT) that was announced by the Government last month. The tax is payable at a rate of 50% on bonuses (including deferred bonuses and share awards) paid or awarded by banks and certain other financial institutions in the period between 9 December 2009 and 5 April 2010. (The Government has, however, indicated that this period might be extended.) BPT is in addition to the income tax and national insurance contributions also payable on bonuses and results in a combined effective tax rate of over 100%.
The Government's main purpose in introducing the tax is to encourage banks to use their profits to build up their capital base. If they insist on paying their executives substantial rewards, the Government is determined to claw back the money for the UK taxpayer. BPT must be paid no later than 31 August 2010.
This entry was written by Richard Lister