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 (2285 views)
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24 Comments

1. rumble said...

"effective from today until April 5" - gosh, delay your bonus for four months and get double.

Wednesday, December 9, 2009 01:19PM Report Comment
 

2. cynicalsoothsayer said...

Bonuses banned until after election.

Wednesday, December 9, 2009 01:21PM Report Comment
 

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!

Wednesday, December 9, 2009 01:25PM Report Comment
 

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

Wednesday, December 9, 2009 01:34PM Report Comment
 

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!

Wednesday, December 9, 2009 01:34PM Report Comment
 

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?

Wednesday, December 9, 2009 01:38PM Report Comment
 

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.

Wednesday, December 9, 2009 01:42PM Report Comment
 

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!

Wednesday, December 9, 2009 01:43PM Report Comment
 

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?

Wednesday, December 9, 2009 01:44PM Report Comment
 

10. crunchy said...

I'm sure letthemfall will correct all this. "It can't be so!" LOL

Wednesday, December 9, 2009 01:51PM Report Comment
 

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!

Wednesday, December 9, 2009 01:52PM Report Comment
 

12. letthemfall said...

Are you psychic crunchy?

Wednesday, December 9, 2009 01:53PM Report Comment
 

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.

Wednesday, December 9, 2009 01:55PM Report Comment
 

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.

Wednesday, December 9, 2009 02:00PM Report Comment
 

15. crunchy said...

10. I sense you! Was that 1 second or longer? : ) I live in hope bro.

Wednesday, December 9, 2009 02:03PM Report Comment
 

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

Wednesday, December 9, 2009 02:04PM Report Comment
 

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.

Wednesday, December 9, 2009 02:13PM Report Comment
 

18. tenant super said...

I thought top level income tax (over 150k) was going up from 40% to 50%?

Wednesday, December 9, 2009 02:17PM Report Comment
 

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?

Wednesday, December 9, 2009 02:22PM Report Comment
 

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?

Wednesday, December 9, 2009 02:31PM Report Comment
 

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

Wednesday, December 9, 2009 02:50PM Report Comment
 

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?

Wednesday, December 9, 2009 03:06PM Report Comment
 

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.

Wednesday, December 9, 2009 03:31PM Report Comment
 

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).

Wednesday, December 9, 2009 05:46PM Report Comment
 

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