UK banks hit by 'super tax'

10 December 2009

Banks operating in the UK will pay a 50 per cent levy on bonus payouts of more than £25,000 ($40,600) to their staff, chancellor Alistair Darling has announced.

The windfall from the one-off tax would be put towards employment schemes across the country but Mr Darling said that he hoped the move would encourage banks to keep the money in order to improve their long-term financial positions.

While the government said it will introduce anti-avoidance measures to stop banks getting round the tax, opposing political parties have already expressed scepticism about the strength of the regulation.

Liberal Democrat Treasury spokesman Vince Cable told the BBC that there are "half a dozen fairly obvious ways" in which accountants could get round the levy.

But Angela Knight, chief executive of the British Bankers' Association, stated her concern that the move will hit the UK's banking sector.

"Foreign banks which reward their UK staff with contractually-agreed bonuses are likely to be the hardest hit," she said.

"London may well look to them now like a significantly less attractive place to build a business."

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