Bank bonuses: More to go to the tax man than bankers Go compare with our comparison table

Bank bonuses: More to go to the tax man than bankers

05 October 2010 / by Paul Dicken

The majority share of the £7billion expected to be paid out as bonuses to UK bankers this year will go to the tax man, a think-tank has said.

The Centre for Economic and Business Research said the bonus pot would be back up to levels seen prior to the financial crisis but for the first time HM Revenue and Customs would be receiving a larger share.

CEBR economist Benjamin Williamson said: “Our research shows that the public coffers stand to gain considerably more from city bonuses than city workers themselves.

Williamson said the finding was timely because public anger over bank bonuses may be ebbing away.

“A whopping £7billion bonus payout will be easier to stomach if the lion’s share goes to the nation,” he added.

The CEBR said the 50 per cent tax rate on income over £150,000 would mean the city workers will take home around £3.8billion this year after paying National Insurance Contributions and income tax.

The government will receive £4.1billion because employers will also be paying National Insurance Contributions of 12.8 per cent on these earnings.

At the Conservative party conference in Birmingham on 4 October, the chancellor George Osborne said he would not allow money to flow ‘unimpeded out of banks into huge bonuses’ if that meant money was not being lent to small businesses.

He also fired a warning to those seeking to avoid paying taxes on their earnings, saying the coalition would not tolerate tax evasion.

“It is unacceptable at the best times; it too is morally indefensible in times like these.”

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