Bonuses paid in the form of life policies. They have been used by a small number of large investment banks over the past two to three years.
Bonuses paid offshore in the form of shares. Some organisations grant executives options that are not liable to tax when they are exercised, though there may be capital gains tax to pay if the shares are sold. It is possible legitimately to avoid paying UK tax if the options are put into a trust based offshore.
Pre-retirement employee benefit schemes (Prebs) paid into a discretionary trust set up by the company. Though officially no individual has any right to the money, in practice there is an agreement between the company and its executives that a slug of the money is theirs. The absence of a right over the money means that the executive does not pay tax until the fund is distributed, and if, in the words of one tax specialist, "they are retired and living on the Costa del Sol, they might not pay tax at all".
One variant of the Preb is the loan from a trust. Money can be lent from the trust to employees or their spouses.
Another variant is the loan against the offshore trust. Provided the employee can demonstrate that there are funds in the trust, and that there will be some form of distribution, a bank may grant a loan, and so allow an employee to gain income through having funds deposited offshore which are not immediately liable for tax.
Some US banks in London employ US personnel with separate contracts for work that they do outside the UK. Though they are based in Britain, they are able to claim that a proportion of their income relates to work done in other countries and is therefore not subject to UK tax.Reuse content