Billions in bankers' bonuses could be delayed until April when top rate of tax is cut
City firms planning to defer bonus payments until after top 50p tax rate drops to 45p
Pressure is building on George Osborne tonight to introduce emergency measures to prevent big city banks from deferring multi-million pound bonus payments to their UK staff until after the 50p top rate of tax is abolished in April.
Today it emerged that Goldman Sachs was one of a number of city institutions looking at pushing back the pay-out date for deferred bonuses awarded in 2010, 2011 and 2012 until after April 6 when the top rate of income tax drops to 45p.
While the Treasury said matters of tax compliance was “for HMRC” and that they did not comment on the tax affairs of individual companies pressure was growing on Mr Osborne to look at ways to claw back any under-payment in his March budget.
Labour said while banks needed to think carefully about their own reputations ultimate responsibility lay with Mr Osborne.
“It cannot be right that this out of touch government is making millions of working people and pensioners on modest incomes pay more while giving millionaires and bankers a huge tax cut,” said Chris Leslie the Shadow Treasury Minister.
The former Liberal Democrat Treasury spokesman Lord Oakeshott said it was a “real test” for David Cameron and Mr Osborne.
“Cameron shoots off soundbites condemning Jimmy Carr but runs away when Tory donors use the same tax dodge.
“Osborne excoriated aggressive tax avoidance in the Budget. He should now name and shame Goldmans and confirm that this behaviour would disqualify them from Government contracts”
City sources tonight said they expected a large number of companies to follow Goldman’s lead by delaying payment of top executives’ pay until after April.
A senior City adviser said: “When the 50p top rate on earnings above £150,000 was brought in by former Chancellor Alistair Darling a number of our clients paid their executives early to avoid it.
“I’d be absolutely amazed if it they didn’t delay payment this time around so their executives can take advantage of the lower tax rate.”
A number of foreign banks are also understood to be considering a similar move to Goldman. Bankers at state backed Royal Bank of Scotland will also benefit because it regularly pays bonuses in June.
However Britain’s other big banks with sizeable investment banking operations won’t change the dates on which their staff are paid even if this means they pay more tax as a result.
Barclays declined to comment but it is understood that the company has taken the decision because of the degree of scrutiny it is under after paying nearly £290m in fines as a result of attempts by its traders to try and fix Libor interest rates.
An HSBC spokesman said: “We will pay in March, as we usually do.”
David Hillman, spokesperson for the Robin Hood Tax campaign, said: “Goldman Sachs’ latest tax trick is lamentably true to form - fleecing the public purse to stuff the pockets of its bankers.
“The Government should not stand idly by but must act to ensure the richest sector in the UK pays its fair share to save services and create jobs.”
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