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HMRC confirms bonus tax will not hit non-banks

HM Revenue & Customs has confirmed that asset managers, stockbrokers and insurance companies will all be exempt from the Government’s bank payroll tax announced in the pre-Budget report. 

HMRC issued clarification on the definition of a bank on Friday following complaints from firms about the terms of the draft legislation. 

The windfall 50 per cent tax will apply to retail and investment banks, including building societies, and to banking groups.

It does not apply to non-banking companies outside of banking groups, for example, insurance companies, asset managers and stockbrokers. 

HMRC said: “Since PBR we have received a number of representations concerning the definition of a ‘bank’ used in the draft legislation. In particular we have received representations that the definition of a bank inadvertently catches companies which would not be regarded as a bank from a commercial or legal perspective.

“Having considered these, we think that the diversity of regulated investment activities undertaken by non-banking financial service groups in the UK means that the original definition of a ‘bank’ did not effectively exclude all the groups we intended to exclude.

“This resulted in a number of corporate groups inadvertently being brought within the definition of a ‘banking group’, and therefore within the scope of the bank payroll tax.”

The Investment Management Association welcomed the clarification.

Chief executive Richard Saunders says: “Since the announcement of the  measure last week, the Treasury have made it clear to us that it is not their  intention to include the asset management industry within its scope.  We warmly welcome today’s further clarification of the effect that is being sought.”

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