Partner Article

Confusion still remains over bonus taxes

Further details are needed after HM Revenue and Customs (HMRC) tried to clarify its standpoint over the bonus levy announced in the pre-budget report.

It was said in the pre-budget report that there would be a 50% charge on bonuses in excess of £25,000, but wording of the draft legislation lead to widespread confusion over who exactly would have to pay.

In a statement, HMRC said: “The bank payroll tax announced in the pre-budget report 2009 applies to retail and investment banks (including building societies), and to banking groups. It does not apply to non-banking companies outside of banking groups (for example, insurance companies, asset managers, stockbrokers etc.).”

However, professional services firm PricewaterhouseCooper LLP(PwC) has said there is still some confusion to clear-up, even though recent clarification will be well-received by many companies now excluded from the tax.

“In the absence of further clarity,” said Ian Lithgow, director of human resources services at PwC in Newcastle, “an unlevel playing field could develop as people performing similar roles in different organisations are subject to different payroll tax treatment – for example, asset managers in businesses which are part of a banking group are currently still within the scope of the tax,”

He added: “There is particular uncertainty about the type of middle and back office roles caught, and, until the revised draft legislation is published, this and other grey areas are making it difficult for firms to make commercial decisions.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .