Asset managers will avoid paying banker bonus tax

Asset managers will not be required to pay a 50 per cent tax on their annual bonuses, the UK’s tax authority has announced.

According to HM Revenue and Customs (HMRC), professionals working for non banking financial firms in asset management or as stockbrokers will not be required to pay the levy.

Chancellor of the exchequer Alistair Darling unveiled details of the tax in the government’s pre-Budget report.

The 50 per cent tax is to apply to banking employees due to receive bonuses above £25,000.

In a statement, HMRC said: “We think that the diversity of regulated investment activities undertaken by non-banking financial service groups in the UK means that the original definition of a ‘bank’ did not effectively exclude all the groups we intended to exclude.”

Richard Saunders, chief executive of the Investment Management Association, welcomed the government’s clarifying statement.

"Since the announcement of the measure last week, the Treasury has made it clear to us that it is not their intention to include the asset management industry within its scope. We warmly welcome today's further clarification of the effect that is being sought,” he explained.

The levy, known as the bank payroll tax, will apply to bonuses paid up until April 2010.