Budget 2010 – Bank payroll tax
The Chancellor has confirmed that legislation in Finance Bill 2010 will introduce the bank payroll tax. The tax will be payable by banks on any bonuses to employees which exceed £25,000.
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.
There is an exception in place where the bank has no discretion as to the amount of the bonus where there was a contractual obligation in place at the time the Pre-Budget Report was delivered.
Following representations to HM Treasury a number of changes to the draft clauses for the bank payroll tax have been published since the Pre-Budget Report. The main changes are:
- clarification of the scope of the legislation in connection with when relevant remuneration is taken to be “awarded” during the chargeable period;
- clarification of the scope of the legislation in connection with the definition of “taxable company”;
- introduction of a 60 day rule for relevant banking employees;
- inclusion of detailed machinery provisions for the assessment and the collection of the bank payroll tax. These include provisions for penalties and interest.
The bank payroll tax will be payable on or before 31 August 2010.