Wednesday, Dec 09, 2009
Bye bye - but please come back after the election
Bloomberg: Darling Levies 50% Tax on U.K. Bank Bonuses Above 25,000 Pounds
What is involved in a banker relocating (moving heavy machinery?)
Posted by matt_the_hat @ 01:13 PM (1836 views) Add Comment
24 Comments
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1. rumble said...
"effective from today until April 5" - gosh, delay your bonus for four months and get double.
2. cynicalsoothsayer said...
Bonuses banned until after election.
3. wdbeast said...
I bet the tax advisors will be in for a big bonus after all the fees they earn for the advice they will be giving to the banking sector.
Maybe we should tax them as well!
4. cat and canary said...
stupid question... but aren't these bonuses taxed anyway at 40%?!??? Am i missing something???
So an increase in bonus tax to 50% isn't going to stop bonuses anyway, but should increase the headline bonus amount by ...erm....approximately 10%!?!?
....more deceptive headline grabbing manipulative trickery from a dirty corrupt excuse for a government
5. crunchy said...
Darling Levies 50% Tax on U.K. Bank Bonuses Above 25,000 Pounds.
So, are we now bailling out our government? Sorry!
6. tenant super said...
Forgive my ignorance but does this mean (loopholes aside) if a bank wants to pay Mr Crabs 1 million pounds as a bonus, they have to pay his £1 million and then an extra £500k surcharge to the government. Mr Crabs would then have to pay his 50% income tax of £500k as well, so that means the gov get £1 million for a £1 million bonus? The aim is that the bank have only set aside £1 million for Mr Crabs so they can only afford to give him £500K and the gov their 500K. He pays £250K income tax effectively halving his net bonus? The government tax take on the million is effectively 75%?
Or have I misunderstood?
7. Str07 And Trying To Stay True To The Cause said...
no the tax is on the bank. then the individual pays their normal rate of tax. for example if the bonus is £125k bank will have to pay tax charge of 50% on £100k - i.e. £50k. The banker then gets his £125k and pays tax as normal. it is designed to stop the banks paying the bouns in the first place.
8. tenant super said...
Sorry...if they set aside a million, they give him approx £660K and the gov their 330K. He pays £330K income tax. The government tax take on the million is effectively two thirds? Maths was never my strongest subject!
9. cat and canary said...
ah, from the BBC article...."Mr Darling said the banks, rather than the bankers, will pay the levy", guess that answers our questions tenant super?
10. crunchy said...
I'm sure letthemfall will correct all this. "It can't be so!" LOL
11. letthemfall said...
By my reckoning, the banks will have to pay 70% of the value of the bonuses they dole out, which may discourage them, or rather encourage them to find another dodge. Note that the "allowance" equates to the average salary. Oh to be a banker in bonus time!
12. letthemfall said...
Are you psychic crunchy?
13. matt_the_hat said...
For a bonus of £1m the government takes 500k, then the banker pays 40% of that. So bankers bonus' until April will be 50% less. As someone said previously I think bankers bonus' will go down by 100% then double after April, these guys detest paying tex to educate the plebs.
14. timmy t said...
As rumble says - as these bankers are so f***ing talented I'm sure they've figured out that waiting til April 6th is truly genius... Although my betting would be either an extension or revision of this policy to be announced closer to the time (and coincidentally the election), to remind us voters just how tough Labour are on those pesky bankers.
15. crunchy said...
10. I sense you! Was that 1 second or longer? : ) I live in hope bro.
16. timmy t said...
Is it not:
Bonus = 1 million
Company tax on bonus = 500K
Therefore cost to company of bonus = 1.5m
Banker pays 40% = 400K
Tax take = 500K + 400K = 0.9m
17. letthemfall said...
crunchy: I knew you were going to say that
timmyt: I wouldn't have thought the rates would be added, but we can live in hope. Not quite 'One for you, nineteen for me', but close.
18. tenant super said...
I thought top level income tax (over 150k) was going up from 40% to 50%?
19. jack c said...
How about the Banks offer to temporarily convert any bonus into salary and pay it as normal - then change the employment contracts back over after the next election - there will be dozens of ways to get around this Tax - note Vince Cable has just described the Gov's proposals as "exrtaordinarily complicated"
Where is Mr Wadsworth our resident Tax expert?
20. letthemfall said...
tenant
I'd forgotten about that. 100% tax rate on bonuses? That's what I call a redistribution.
jack c "Where is Mr Wadsworth our resident Tax expert?"
Feverishly looking into tax avoidance measures?
21. cat and canary said...
...here's another possibility...
...RBS now risks even more money to retain their jaw-droppingly talented senior bankers..... requiring more taxpayers money to support it!
bankers win, treasury tax take wins, voters don't
22. mark wadsworth said...
@ 18, 19, I'd assume from a quick reading that Timmy T @ 15 is correct, effective overall rate 69%, once you add on Employer's NIC 13.3% and 50% surcharge (total cost for £100 bonus = £163.30) and then minus off 50% income tax plus 1% Employee's NI (net bonus £49).
Which ironically, is still less than the marginal deduction rate faced by people entitled to Working Tax Credits!! Can we kick up a stink about that topic while we're at it?
23. jack c said...
Mark W - thanks for the input - it is still a large amount of cash after the tax has been paid to carry home in one's pay packet - more than most will maybe take home in a lifetime, but to put things into perspective and get back on topic, nowhere near enough to buy a decent house in London based on current valuations.
24. tenant super said...
I don't actually agree with redistribution per se. If somebody makes themselves vast sums of money by ingenuity or luck, I don't think they should be heavily taxed.
What I take exception to is people paying themselves huge salaries out of insolvent companies (which many of the UK banks effectively are or were).