Bankers bonus tax will affect other bank employees

The government’s one-off levy on bankers’ bonuses will affect IT workers in the financial sector, but there is still confusion about whether the tax will extend to other functions.

The details emerged yesterday as HM Revenue & Customs (HMRC) began briefing bankers about the controversial 50% tax on bonuses of more than £25,000, reports the Times.

HMRC officials made it clear that the tax would be levied on bonuses paid not only to bankers and financiers but also to workers in banks directly supporting bankers, the newspaper said.

That would certainly affect senior IT workers in banks, but there was confusion as to whether it would extend to other functions such as marketing, legal, property services and accounting.

However, HMRC emphasised that bonuses to bank employees doing non-banking work such as fund management and insurance would not attract the new tax.

Official guidelines from HMRC have been drafted broadly so that on one interpretation almost any occupation in the City could be seen to be covered.

The result has been widespread confusion and anger in banks as they try to finalise bonus arrangements in the run-up to the financial year-end.

Earlier this week, chancellor Alastair Darling told MPs that the levy was not designed to raise money, but to change the behaviour of banks.

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