PBR: Door slammed on bonus schemes
Lucrative bonus arrangements allocated to high-earning City bankers and senior executives by means of securities to avoid income tax and National Insurance have been closed, with immediate effect by the chancellor.
Many industry figures believed that Gordon Brown would slam the door shut on these schemes earlier this spring, but no hint was given, and companies, many with 31 December year ends, continued to plan for final year bonus allocations by means of securities.
According to several senior members of the profession, the arrangements closure could also threaten the long-term future of hundreds of specialist accountants.
Alastair Kendrick, director at Ernst & Young, said: ‘I find it strange that the chancellor, having been advised of such arrangements under the disclosure regulations he introduced earlier in the year, did not step in earlier to close down this loophole if he had concerns over it.
‘It could be argued that Gordon Brown waited until today to make such an announcement simply to make life difficult for the individuals concerned. Many employers that have used this arrangement around year-end planning, which bites at 31 December, will certainly feel the affects.’