Politicians wade into new bank bonus row

Plans by some investment banks to delay bonuses until after the top rate of income tax drops in April have been attacked by politicians.

Plans by some investment banks to delay bonuses until after the top rate of income tax drops in April have been attacked by politicians.

Goldman Sachs is said to be among a handful of banks considering delaying UK bonus payouts until after April 6th, when the top rate falls from 50 to 45%.

The Financial Times reported that the bonuses in question covered the period from 2009 - 2011.

Many other banks have decided such a move would not be worthwhile, given the inevitable reputational fall-out if they were portrayed as avoiding tax to boost bonuses.

Goldman Sachs already has form in this area, having paid out £40m-worth of bonuses before the end of 2012 to avoid tax rises ahead of a deal between US politicians to avert the 'fiscal cliff'.

Pat McFadden, a Labour member of the Treasury select committee, said the scheme made "a mockery of the government rhetoric on the 50p rate".

One of his colleagues, shadow treasury minister Chris Leslie, laid the responsibility at the feet of David Cameron and George Osborne.

"They have refused to repeat Labour's bank bonus tax and pre-announced a £3bn income tax cut for the richest people in the country, giving them the opportunity to delay income and bonuses until April," he said.

Meanwhile John Hemming, a Liberal Democrat MP, said Goldman Sachs "shouldn't expect any government contracts" if it went through with the plan.

Hemming's threat is one that could have serious implications, despite there being no suggestion that what the banks are considering is illegal.

The government is working hard to clamp down on tax avoidance.

The recent Autumn Statement included the provision that: "The Cabinet Office and HMRC will consult on the use of the procurement process to deter tax avoidance and evasion and the proposed definition of key concepts, with a view to the new arrangements coming into effect from 1 April 2013."

MM

Recommended

A UK-listed multinational engineer with strong growth and rising dividends
Share tips

A UK-listed multinational engineer with strong growth and rising dividends

Spirax-Sarco is a world-leading engineer making consistent progress in three niche markets, with an order book at an all-time high.
29 Jun 2022
How to find the best dividend stocks
Income investing

How to find the best dividend stocks

Stocks that pay dividends tend to outperform the market over the long run - as well as providing an income. Here, Rupert Hargreaves explains the best …
28 Jun 2022
Director dealings w/e 24 June: what company insiders are buying and selling
Stocks and shares

Director dealings w/e 24 June: what company insiders are buying and selling

Directors’ share dealings can often give investors an insight into the sentiment of company insiders. Here are some of the biggest deals by company di…
27 Jun 2022
Britain’s ten most-hated shares – w/e 24 June
Stocks and shares

Britain’s ten most-hated shares – w/e 24 June

Rupert Hargreaves looks at Britain's ten most-hated shares, and what short-sellers are looking at now.
27 Jun 2022

Most Popular

Market crash: have we hit bottom or is there worse to come?
Stockmarkets

Market crash: have we hit bottom or is there worse to come?

For a little while, markets looked like they were about to embark on a full-on crash. And that could still happen, says Dominic Frisby. Today, he look…
27 Jun 2022
Interest rates are rising, here are the best savings accounts on the market
Savings

Interest rates are rising, here are the best savings accounts on the market

With inflation at more than 9%, your savings are not going to keep pace with the rising cost of living. But you can at least slow the rate at which yo…
24 Jun 2022
Prepare your portfolio for recession
Investment strategy

Prepare your portfolio for recession

A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, sa…
27 Jun 2022