Labour will include allowances in a 50 per cent one-off tax on banker bonuses designed to fund a compulsory jobs guarantee.
Allowances do not count towards the EU bonus cap, which limits bonuses to 100 per cent of salaries or 200 per cent with shareholder approval.
However, last year, the European Banking Authority called for allowances to be included within variable pay. A Labour spokesman confirms the party would include allowances in its proposed tax on bonuses in a bid to prevent people from circumventing the levy.
The news of a levy on bonuses and allowances comes just weeks after Labour announced plans to extend claw-back powers on bonuses to 10 years.
In banking reform plans published alongside the clawback announcement, Labour said it would use a one-off tax on banker bonuses to fund its compulsory jobs guarantee
A tax would follow a similar levy introduced by Alastair Darling in 2010, which saw the party bring in a 50 per cent levy on bonuses above £25,000.
The levy will be paid by employers, with staff then subject to additional income tax on bonuses.
In addition, the party plans to reintroduce a 50 per cent tax rate on earnings above £150,000.