Banking bonus – further points

Mark Joscelyne, Tax Partner, CMS

A few further points. 

The 50% levy will not be  deductible for corporation tax purposes.

It will be payable on 31 August 2010.

Although they are only stated as applying to bonuses awarded or paid before 6 April 2010 one could imagine that date maybe being extended.

It is not just banks – UK resident companies will be caught if they are authorised persons for the purposes of FSMA who accept deposits or whose activities consist in wholly or mainly certain regulated activities such as dealing in investments as principal or agent or arranging deals in investments. 

For the levy to apply, the employee’s duties must consist wholly or mainly in certain regulated activities such as accepting deposits, dealing in or arranging transactions in investments and lending money.  If any part of his duties  are performed in the UK in the year 2009/10 or he or she is UK resident in that time then the whole the bonus will be caught.

3 thoughts on “Banking bonus – further points”

  1. Isn’t the whole point of this that Banks won’t pay the bonuses until after April 5th to avoid the 50% levy on them, but recipients will then pay 50% and not 40% as would have been the case if they had received the bonuses in March. So the Revenue gets an extra 10% in tax, albeit one month later, but from the bankers themselves and probably nothing much from the banks.

  2. Mark- I understand that 50% tax applies form 30th April 2010, so technically there’s a small gap ( which possibly will be closed)

    who is in or out of scope if unclear at present- does anyone know what the government plans to release the clarifications?

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