Banks coming to terms with bonus tax

Fur flew when the banking industry was informed of the tax on bonuses, but it
appears the banks are now coming to terms with it.

The British Bankers Association met with Treasury and HM Revenue &
Customs officials this week in a bid to gain clarity on how the bonus tax will
work and exactly who will be caught in the net – and got some assurance.

Dave Hartnett, HMRC’s senior taxman, believed the meeting would be the last
major discussion with banking representatives as they brought forward any other

“My sense is that banks are preparing to pay the tax at the end of August,
and will pay the tax – although some will grumble for years to come.

“The banks have quite sophisticated ways of remunerating people so there have
been lots of issues that have arisen of a technical nature which we’ve had to
sort out and by and large we’ve completed that now.”

Government plans will see bankers’ bonuses over £25,000, paid between 9
December 2009 and 5 April 2010, subject to a 50% tax.

A spokesman for the BBA said: “We are in ongoing constructive discussion with
HMRC and HM Treasury: therefore we can tell you it was a candid and constructive

The BBA also went to the meeting seeking assurances that the tax was a
one-off measure and will not be extended into future years. Sarah
Wulff-Cochrane, director of financial policy and operations at the BBA, said
earlier: “In addition it is vital that ministers confirm straightaway that
whichever pay arrangements are to be taxed, that this measure is only for this

Hartnett added: “This government has been very clear it’s a one-off. It’s not
like the proposal in America to do something for ten years – it’s a one-off.”

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