*Convert bonus to salary
The tax authorities will obviously have thought of this, but it might still be tricky for them to enforce. The term "bonus" is not defined in law. Barclays' investment banking division, BarCap, seems to be moving in this direction, which means that BarCap boss Bob Diamond's £27m bonus will become an entrenched feature of his remuneration. Payment in gold coins and bars, platinum "sponge" (powdered metal), cars and property is no longer a realistic dodge.
"Gross up" your bonus
That is, persuade the bank to pay the extra tax. This is what businesspeople and bankers used to do way back in the 1960s and 1970s when governments imposed very high marginal rates of tax. Again, HM Revenue and Customs can see this one coming, but it might be troublesome for them to prove you've done anything "wrong".
Defer the bonus for a year
If your bonus is "discretionary" you could simply wait for 12 months. Obviously you don't get the cash now, and you have to trust your bank to pay up. You might even use the prospect of a future windfall as security for the loan of a similar sum now, so you can order that new Porsche 911 GT3 RS in bright orange after all.
Put it into share options
The basic aim of all manner of share option schemes is to maximising the amount of tax paid as capital gains (at just 18 per cent) rather than as income (say 60 per cent plus). They all have drawbacks, not least complexity, and the rule that you have to invest your money in the shares of your bank, which may lose value. Another risk is that the Treasury raises capital gains tax, though.
Put it in an offshore trust
Not the easy way to riches any longer, as the law on trusts has been tightened up a good deal. It may call for you to make yourself "non-resident" in the UK, at least for a while.
Move to Switzerland
Or Jersey, or anywhere with a more benign regime. You'll have to prove to HMRC that you have severed your links with the UK, so you may need to sell the Chelsea town house and extract Jessica from boarding school.
You may decide that the extreme pressures of executive responsibility are not worth the measly net payment of a six-figure sum. So you could choose to be teacher instead, say, though in reality that might be much harder work.
Give your bonus to charity
This way you can be spiteful and philanthropic at the same time. A banker could potentially give 40p to charity and deprive the government of the other 60p, by way of opening a Charities Aid Foundation Charity account. It will only cost you £400,000 to donate £1m to charity, and you choose what it is going to be spent on. But no, you can't name a charity with you as beneficiary or where you employ yourself on a huge salary and a BMW M3 as a company car.Reuse content