Bonuses up £700m as bankers avoid top taxe rate

 
Alamy
20 August 2013

Bonuses jumped by £700 million in the City in April as bankers deferred taking them to avoid the 50p top rate of tax, official figures reveal today.

Total bonus payments in the finance and insurance industry spiralled to £1.3 billion in April 2013, compared to 0.6 million in the same month last year.

City high flyers and other individuals on over £150,000 getting bonuses in April would have paid tax at the top 45p rate rather than 50p a month earlier.

“The reason that the bonuses have been paid in this way and come in at the level that they have is a direct consequence of the Government helping people who are doing very well indeed while the overall majority of people are struggling,” said shadow business secretary Chuka Umunna.

But ministers have stressed that cutting the top rate to 45p is raking in more revenues for the Treasury and making Britain’s tax system more internationally competitive.

The figures were published in a study by the Office for National Statistics which showed that bonuses across the whole economy were up £1.7 billion in April compared to a year ago.

“The increase in bonus payments in April 2013 partly reflects the deferrals of bonus payments by some businesses which reported that they had chosen to pay the bonuses usually paid in March in April this year,” it said.

Bonus payments in the City were still up £200 million in March 2013 to 3.7 billion, the highest month in the year.

Nearly three quarters of total bonuses paid in the finance and insurance industry in 2012/13 were paid during December to March.

Separate research today showed that male managers earned average bonuses twice as big as those of their female counterparts in the past year.

The Chartered Management Institute said the gender pay gap was being aggravated by the bonus gap.

Male managers were paid an average of £6,442 bonus last year compared with £3,029 for women, on top of basic salaries almost 25 per cent bigger.

The study of 43,000 managers also showed that male managers stand to earn over £141,000 more in bonuses than women doing the same job over the course of a working lifetime.

The gap in pay and bonuses are bigger at senior levels, with female directors paid an average bonus of £36,270, while men are given £63,700, said the report.

Ann Francke, chief executive of the CMI, said: “Despite genuine efforts to get more women onto boards, it’s disappointing to find that not only has progress stalled, but women are also losing ground at senior levels.”

Total bonus payments received across the whole economy during the financial year April 2012 to March 2013 were £36.9 billion, according to the ONS, an increase of one per cent compared with the same period in 2011/12.

The City had by far the highest bonus per employee, on average £11,900, nearly twice the next highest, mining and quarrying at £6,700.

Education and health and social work were the lowest with average bonuses of less than £100 per employee.

The average private sector worker received £1,700 in bonuses in 2012/13, more than five times the average public sector worker’s bonus of £300.

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