TaxCorporate TaxE&Y: Bonus tax may net Treasury extra £1.5bn in tax receipts

E&Y: Bonus tax may net Treasury extra £1.5bn in tax receipts

Bank bonus tax could provide further boost for the Treasury

A one-off bank bonus tax could generate £2bn of revenue for the
Treasury
which could fund targeted measures announced in today’s Budget, Ernst &
Young has predicted, the Telegraph reported.

Such a sum would be significantly higher than the £550m the Treasury expected
to raise from the 50pc levy on bonuses over £25,000 when it was announced in the
pre-Budget report in December, the newspaper said.

“The Chancellor may announce that, while some of it will be used to reduce
the budget deficit, a proportion will be set aside to provide relief for those
in need,” Patrick Stevens, a tax partner at Ernst & Young, told the
Telegraph.

The accountancy firm also called on Alistair Darling to provide as much
detail as possible on the future direction of UK tax policy to help businesses
plan ahead, but said he should avoid major changes in the run up to the election
to ensure any measures are given proper consideration.

It said a rise in VAT was the most likely route to generate extra revenues,
either through an increase to 20% from the current 17.5% rate, or the removal of
some of the existing exemptions. However, Ernst & Young said that VAT
changes were unlikely to be announced before the election.

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