Bank payroll tax 2010 - Budget Update

The Budget has provided final details of the Bank Payroll Tax.

The key changes which have been made since the tax was announced in December last year have been to reduce the scope of companies and activities caught by the tax. The final change which was pre-announced the week before the Budget is that companies which are not deposit takers (deposit takers are automatically caught by the tax) and which are wholly or mainly conducting relevant regulated financial activities will only be caught if they:

• are (or would be if they were in the UK) full scope BIPRU 730k firms; and
• have regulatory capital requirements of £100 million or more.

Stockbrokers who feared being caught should therefore now be excluded from the tax and this will be considered the result of very successful lobbying.

Insurance groups and asset management groups also now have very wide specific exemptions.

The focus on companies caught by the tax has, however, meant that little attention has been spent on which employees are actually caught. Disappointingly, there may still be very little in the legislation which sets out how many share awards are valued and taxed and the valuation of bonus promises made this year remains very difficult.

Legislation will very shortly be included in the Finance Bill, which finally starts the formal legislative process to implement the tax. While we will be monitoring the progress of the tax closely, we do not expect there to be much capacity for change to the legislation as there is now so little Parliamentary time left to consider the legislation before the General Election. However, given that the main industry issues are now out of the way, it is to be hoped that the Revenue will now focus on advisers' concerns.

Please click here to view our updated bank payroll tax guide.