Every little helps

14 May 2010 By Nicholas Paisner

Britain’s bonus tax could raise more than 2.5 bln pounds, according to a Breakingviews analysis of banks’ disclosures. That’s twice the Treasury’s most recent estimate. Banks will try to reduce their payments. But the windfall is still a pleasant surprise for the new government.

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Citigroup and Bank of America Merrill Lynch both revealed the estimated cost of the UK Bank Payroll Tax in first quarter results filed with the SEC on May 7. The banks said the cost would be $400 million (274 million pounds) and $465 million (318 million pounds), respectively.

In recent months, a number of banks have indicated what they expect to pay as a result of the tax: Goldman Sachs : $600 million (411 million pounds) Bank of America Merrill Lynch: $465 million (318 million pounds) Deutsche Bank : 345 million euros (298 million pounds) Citigroup: $400 million (274 million pounds) Credit Suisse : 400 million Swiss francs (245 million pounds) HSBC : $355 million (243 million pounds) Barclays : 225 million pounds Royal Bank of Scotland : 208 million pounds UBS : 300 million Swiss francs (184 million pounds).

The UK Treasury will not know the exact level of bank payroll tax receipts until payment is made in August 2010. The Treasury revised its forecasts for the tax in the 2010 budget. It said "the gross yield is estimated at 2 billion pounds...the net yield, after reductions in PAYE due to lower bonus payments resulting from the tax, is 1.3 billion pounds."

When the tax was announced in the December 2009 prebudget report, the levy was expected to yield 550 million on a net basis.

(Corrects to 25,000 pounds in paragraph 2 on the view.)

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When the tax was announced in the December 2009 prebudget report, the levy was expected to yield 550 million on a net basis.

(Corrects to 25,000 pounds in paragraph 2 on the view.)

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