Our London office just published an alert on the United Kingdom’s new 50% Bank Payroll Tax. While not directly relevant for most U.S. banks (although it does apply to U.S. banks with U.K offices), it does serve as a strong reminder of the international focus on bank compensation. We understand that France has announced that it intends to introduce a similar tax.
The U.K. Government announced on December 9, 2009, that the award of bonuses to bank employees will render the bank liable to a new “bank payroll tax” through April 5, 2010. The amount of the tax will be equal to 50% of the amount by which the bonus (or aggregate bonuses) awarded to the particular employee, in that period, exceeds £25,000. The tax referable to all such awards will be payable in one lump sum on 31 August 2010. The Government has however reserved the right to extend the period of the charge, and keep the tax in place until certain regulatory changes affecting banks have come into force.
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