United Kingdom: City Workers Deferred Bonuses To 'Avoid' 50p Tax
22 August 2013
Posted by: Author: Robert Lee
Author: Robert Lee
April saw "unusually high" levels of bonus payments in the UK, leading to accusations that companies deferred pay-outs to avoid the higher rate of income tax.
According to the latest figures from the Office of National Statistics (ONS), payments were GBP1.7bn (USD2.7bn) higher in April, 2013 than in the previous year. The ONS found that a number of businesses responding to its Monthly Wages and Salaries Survey reported that while in 2012 they handed out bonuses in March, this year they chose to do so in April.
The ONS concluded that to a certain extent "the usual definition of 'bonus season' did not apply in 2012/13." April bonus payments in the finance and insurance industry were up GBP0.7bn year-on-year, and in the rest of the economy by GBP1bn. Although March payments in the finance and insurance sector were up GBP0.2bn, the rest of the economy recorded a GBP0.7bn drop.
The UK's top rate of income tax was cut in April from 50 percent to 45 percent. The higher rate was introduced by the Labour Government in 2010.
Labour's shadow financial secretary to the Treasury, Chris Leslie, linked the deferred payments with the lower tax rate. He said: "Bonuses soared in April as bankers delayed their pay-outs to take advantage of the 50p tax cut. Millions of pounds of revenue will have been lost as a result, at a time when people across the UK are facing a cost of living crisis."
The Treasury would not be drawn on the accusations, and issued a simple statement reading: "These figures are broadly in line with the Budget forecast."