Comments on: Britain’s very modest surtax revenues

By: Uncle_Billy

Uncle_Billy — Thu, 10 Dec 2009 20:33:34 +0000

Is it really that hard to provide the bonuses in creative ways?

By: Ed2010

Ed2010 — Thu, 10 Dec 2009 17:50:37 +0000

There’s specific provision to catch arrangements which are in effect a deferral of bonus payments until after the expiry of the tax. That’s not to say that it won’t be possible (this is a good tax to keep financial planners busy, I’m sure…) but the most blatant dodge of just deferring has been anticipated.

By: petertl

petertl — Thu, 10 Dec 2009 17:22:53 +0000

Beer’s right. The windfall tax only covers a part of the bonus pool.

The government’s estimate assumes that banks will reduce their bonuses. It is also a net figure – it takes into account that the government will collect less income tax because the bankers will receive lower bonuses.

So if you assume the bonus pool covered by the tax is £3 billion, then £1 billion of that goes to the government. But because bankers aren’t paying tax on that £1bn, the government also “loses” £400m. Which gives you a net figure of $600m – close to the government’s estimate.

Deferring bonuses to April, when the tax expires, would risk classed as avoidance by the authorities. And the government’s already said it will extend the tax if it thinks banks are abusing it.

By: Beer_numbers

Beer_numbers — Thu, 10 Dec 2009 16:47:51 +0000

The original news article says this:
“Banks will be charged a 50 percent tax rate on bonuses they pay their staff above 25,000 pounds starting today until April, a powerful disincentive for big payouts this Christmas.”

So one plausible explanation is that the bulk of all bonuses are under 25,000 pounds.