Bonuses ploy saves bankers £50m in tax

Their payments were deferred to dodge 50p top band

BANKERS and finance workers sidestepped about £50million in tax by deferring their bumper bonuses until after the 50p tax rate had been axed, new figures suggest.

Bonuses for City workers rose to £15billion between April 2013 and March 2014 – a 14 per cent rise on the previous year and an increase of £1.8billion.

But experts believe at least £1billion of this bumper rise is bonuses owed from the previous year which were cynically deferred for a few weeks until after the top tax rate had dropped to 45p.

It means some workers may have received two bonuses in one financial year.

Chancellor George Osborne cut the tax paid on earnings over £150,000 from 50 per cent to 45 per cent on April 6 last year.

The Office for National Statistics showed £2.1bn was paid in bonuses to financial and insurance workers during April and May 2013 – in the weeks after the tax rate dropped – compared with £1.1billion during this period the previous year.

The ONS said the shift in the typical bonus period, which is usually between December and March, ‘was likely due to companies deferring bonus payments until after the change in tax rates’.

The ONS stated in their report, issued yesterday: ‘Due to the fact that some bonuses were deferred from March to April 2013, two significant bonus seasons occurred in the 2013/14 financial year, causing a large increase in bonuses paid.’

Experts said they believed the deferral of bonuses – and the loss of five pence in the pound on these payments – could have cost UK taxpayers as much as £50million in tax, which would be enough to pay the annual salaries of more than 660 hospital consultants.

On average, City workers received £13,800 in bonuses last year, compared with £11,900 the previous year. This is almost eight times the average private sector bonus of £1,800 and 70 times the public sector bonus of £200.

Yesterday, critics said the high bonus figures for the months of

‘At the expense of public services’

April and May 2013 pointed to a cynical tax dodge by City workers.

Chris Leslie, a Labour MP and shadow financial secretary, said: ‘These figures show the effect the cut to the 50p tax rate had on bankers’ behaviour and how many millions of pounds of taxpayers money was lost. It is clear many executives were allowed to avoid the tax rate