The Chancellor said it was only fair to impose this tax on banks who pay out more than £25,000 in individual bonuses because all UK banks have benefited from the taxpayers’ bailouts and fiscal measures.
The move was widely predicted today and is expected to raise £550m. It is a one-off levy.
Darling said: “This should be a time for banks to rebuild their capital base and become stronger.
“A tax on profits, as has been suggested, will prevent them from doing this. So I have decided against a windfall tax.”
He added: “However, there are some banks who still believe their priority is to pay substantial bonuses to their already high-paid staff.
“Their priority should be to rebuild their financial strength and increase their lending.
“So I am giving them a choice. They can use their profits to build up their capital base. But if they insist on paying substantial rewards, I am determined to claw money back for the taxpayer.
“I have decided to introduce from today a special one-off levy of 50 per cent on any individual discretionary bonus above £25,000. This will be paid by the bank not the bank employee.”
Darling said that high-paid bank staff would also have to pay, as usual, income tax at their top rate on any bonus they receive.
He said that “on a cautious assumption” the one-off levy is expected to yield £550m, which would be used to fund measures announced elsewhere in the pre-Budget report, like help for the young and older unemployed to get back into work.