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Labour to roll allowances into 50% banker bonus tax

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.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Good God! I can’t even work out what what the effective rate of tax is at that level. The politics of envy and banker bashing can only play for so long.

  2. Christine Brightwell 25th February 2015 at 12:46 pm

    I hope some one sorts out the tricky tax calculation for earning over £100,000 where the personal allowance is clawed back. It makes my head hurt trying to work it out – thank goodness for accountants!

  3. I think I’ll invest in Berlitz. Obviously there will be a rush for bankers learning German before they all go off to Zurich or Basle. Then who will the numpties squeeze?

  4. These public school twits have been ripping us off for to long now I am happy they will have to pay their fair share of tax.

  5. @Paul Woolley
    No different to those thieving IFA rip-off merchants then?

    Now, I could be mistaken and you may well know all these public school twits personally and so are well placed to make this comment. But somehow I doubt it…

    Sigh

  6. @ Paul Woolley

    Why disparage Public Schools? From my own experience there are far more twits that have been to Comprehensives and Secondary Modern’s.

  7. @ Grey, I am well placed and agree some of those IFA’s were, just the scale was different.
    I went to neither @ Harry, good old Grammar school boy here.

  8. They really are stupid. Clinets will pay us and accountants to legitimately reduce the liability when we all have better things to do than try and reduce tax liabilities by adjusting how we live.

  9. is it just me or has Labour totally run out of ideas. This will bring in a tiny amount of money because no-one will pay a bonus in the year in which this second helpings ‘one off’ tax will apply. They will save it for the year after. For evidence witness the bumper tax receipts this January following the reduction in the 50p tax rate.

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