Clarity overdue

25 January 2010 By Margaret Doyle

More than a month after the UK shocked banks with a oneoff 50 percent tax on bonus pools, the charge’s implementation remains unclear. The authorities have told independent brokers that they are excluded but lawyers disagree. The confusion needs to end.

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Banks and finance houses based in the UK are deciding on staff bonuses for 2009 amid continuing uncertainty about which institutions and individuals will be liable for the oneoff 50 percent levy on bankers' bonuses unveiled in December. HMRC, the tax authority, has said that it cannot yet determine who will have to pay the levy.

HMRC has clarified certain anomalies, for example that the bonuses of bankers who are paid in restricted stock or whose pay is subject to clawback both mechanisms favoured by the regulator will be subject to the full tax, regardless of how much bonus is eventually paid.

It has also clarified that certain institutions, such as asset managers and insurers not owned by banks, and certain individuals, such as foreigners who spend a limited amount of time in the UK, should not be caught by the tax.

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