Bonus clampdown threshold set at £25,000
As widely predicted, chancellor Alistair Darling unveiled a “supertax” on bonuses about £25,000.
In advance of the detailed documentation emerging from the Treasury, Institute of Fiscal Studies director Robert Chote predicted that accountants would be looking for loopholes in the paperwork.
Putting the profession’s point of view CIOT tax policy director John Whiting commented: “It does sounds more of a controlling measure than a tax-raising one: we need to see the detail but the obvious thought people will have is that it may be possible to sidestep the measure by waiting a year.
“The Treasury will face some major practical issues in framing this law. Defining a bonus will need a lot of care; so will defining banks – or is this a measure that could impact all businesses? That may be necessary to manage possible challenges under human rights or anti-discrimination laws. As with all tax changes there is a risk of unintended consequences.”
Ernst & Young financial services partner Rod Roman was more robust in his criticism of the measure, warning that it could harm the banking industry at a point where it still needed to recover. Any changes would need to be one-off to avoid stifling the upturn, he warned.