Bank Payroll Tax
HMRC have clarified the definition of a ‘bank’ used in the draft legislation which will impose a one-off 50% stealth tax on bankers’ bonuses of more than £25,000. The tax known as the ‘Bank Payroll Tax’ will be payable by banks on any bonuses above £25,000 paid to employees in the period to 5 April 2010.
The tax will be payable by all Banks, financial businesses and holding companies in banking groups, building societies, financial businesses and holding companies in building society groups and UK branches of foreign banks that pay bonuses either directly or through intermediaries.
However, HMRC will amend the draft legislation to ensure that corporate groups inadvertently brought within the scope of a ‘banking group’ are excluded.
HMRC have also published responses to a number of questions received from interested parties following the announcement of the Bank Payroll Tax at the recent Pre-Budget Report.
The Bank Payroll Tax will be payable on 31 August 2010.