Banking bonus tax 'will raise $3.75bn for the UK'

5 March 2010

A survey of 16 global banks has suggested that the British Treasury is set to boost its coffers by more than £2.5 billion ($3.75 billion) as a result of the banking bonus tax.

Last December, chancellor Alistair Darling announced that a one-off levy of 50 per cent was to be introduced on bonuses of more than £25,000 – with banks rather than employees footing the bill.

The intention of the legislation was to encourage financial institutions to cut the amount they were going to pay staff in bonuses and Mr Darling initially said he expected the tax to raise around £550 million.

However, the figure has almost been surpassed already by the banks who have released their additional remuneration plans for UK employees.

Barclays handed over £225 million to employees, HSBC passed on £235 million, Royal Bank of Scotland paid out £208 million and Deutsche Bank employees shared £204 million between them.

In a survey of banks yet to disclose their figures carried out by the Financial Times, a total figure of £1.5 billion was calculated after 11 firms were quizzed.

A further five - JPMorgan Chase, Bank of America, Morgan Stanley, UBS and Credit Suisse – declined to reveal their planned bonus figures, but it was estimated that a total of at least £1 billion can be expected from these companies.

Mr Darling is expected to announce how the money will be used when he delivers his Budget later this month.

It has been speculated that it could be put towards tackling issues such as youth unemployment or providing funding for building the "industries of the future" – a key theme for the Labour government as it approaches the forthcoming general election.

In January, government sources forecast to the Guardian that the banking bonus tax could raise as much as £3 billion for the Treasury.

By Asim Shah

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