I’ve been maintaining radio silence for too long – sorry about that but the day job got in the way – and thought it was about time I put up another post. Part of the problem is that there has been a lot of stuff to write about and knowing where to start. However, our darling Chancellor, or should that be Mr Darling, Chancellor – has made my task a little easier today following his Pre-Budget Report, particularly with his tax on bankers’ bonuses.
More learned commentators than me are calling this the most political PBR for a long time and that is the only way to see the imposition of the temporary payroll tax on banks that pay discretionary bonuses in excess of £25,000. The measure will raise £550mn which is a mere drop in the cesspool of debt in which we are currently swimming. It won’t apply to guaranteed bonuses (which are often the most criticised element of remuneration policies) and is presumably relatively easy to avoid by paying larger salaries instead, or paying smaller bonuses quarterly, for example? So, in missing the main target and being easy to avoid is this just another example of “gesture politics”? It looks like it.
The government must have (or ought to have) had two real concerns. One, in implementing a genuinely swingeing tax on bankers’ bonuses it would merely have recycled the money back to the taxpayer, particularly where RBS and Lloyds Group, are concerned. The second concern would be to avoid harming London as a financial centre by making it unattractive to work and trade from there. With this new supertax it seems to me that Mr Darling has addressed both issues – it won’t raise much income and won’t cause much pain, but does allow the government to say it is “doing something”: gesture politics.
My firm has a lot of experience in advising employees on bonus schemes, discretionary or otherwise. Please call me if you need any further advice on these issues. I can be contacted on 0207 464 8433 or at michaelscutt@dalelangley.co.uk