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December 9, 2009

Bankers’ bonuses hit with temporary tax

by Gill Montia

Story link: Bankers’ bonuses hit with temporary tax

In his pre-Budget report, Chancellor of the Exchequer Alistair Darling announced that banks paying discretionary individual bonuses of over £25,000 will pay a temporary tax of 50%, with immediate effect.

The charge, which will apply until April of next year, could raise £550 million which will be used to help the unemployed learn new skills.

The move reflects the level of public outrage at banks that have relied on taxpayer support paying large bonuses.

According to the Chancellor, banks should focus on rebuilding their capital strengths rather than paying bonuses to staff who are already highly paid.

However, where bonuses are paid, Mr Darling said he is “determined to claw money back for the taxpayer” and anti-avoidance measures have been introduced alongside the levy.

Last week, Royal Bank of Scotland (RBS) directors threatened to resign if the Chancellor intervened in plans to pay bonuses totalling £1.5 billion to the group’s investment banking staff.

With RBS’s investment banking division on track to post profit of £6 billion in 2009, the directors argued that £1.5 billion in bonuses was needed to ensure that the best performing staff are retained.

 

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