Finance Bill — Clause 200 — Tax on Bankers' Bonuses — 17 Apr 2013 at 19:00

The majority of MPs voted against requiring the Chancellor to consider reinstating a tax on bankers' bonuses. Such a tax, known formally as a "bank payroll tax" was levied as a one-off in 2009^[1]. During the debate clarity was sought as to if the proposal was for another one-off tax or to re-introduce it on a permanent basis^[2]; the response was that it was certainly a proposal to reintroduce it for the current financial year and that policies for the future would be set our in the next general election manifesto^[3].

MPs were considering the Finance Bill^[4][5]; the text of the rejected amendment which was the subject of this vote stated:

• I beg to move amendment 2, page 118, line 22, at end add—
• (14) The Chancellor of the Exchequer shall review the possibility of incorporating a bank payroll tax within the bank levy and publish a report, within six months of the passing of this Act, on how additional revenue raised would be invested to create new jobs and tackle unemployment.’.

Had it been approved this amendment would have added the above new section at the end of clause 200^[6] of the Bill which deals with the rates of the Bank levy.

The Bank levy itsself is provided for by Schedule 19 of the Finance Act 2011^[7]; it raises a tax on banks based on their total applicable liabilities and equities.

The chancellor announced, and immediately brought in, a the tax on bankers' bonuses in his pre-budget report speech on the 9th of December 2009^[8]; he said:

• I have decided to introduce from today a special one-off levy of 50 per cent. on any individual discretionary bonus above £25,000. This will be paid by the bank, not the bank employee, and anti-avoidance measures will be introduced with immediate effect.

The bank payroll tax was introduced into law by Section 22 of the Finance Act 2010^[9]; Schedule 1 of that Act^[10] set the rate of the bank payroll tax at 50% which applied to bank bonuses exceeding £25,000. This legislation was agreed in the ‘wash up’ period before the Dissolution of the House prior to the 2010 general election so was not debated or voted on by MPs.

• [1] Taxation of banking - House of Commons Library - Standard Note - 17 July 2013
• [2] Greg Clark MP (Tunbridge Wells, Conservative), House of Commons, 17 April 2013
• [3] Christopher Leslie MP (Nottingham East, Labour), House of Commons, 17 April 2013
• [4] Parliament's webpage on the Finance Bill (now the Finance Act 2013)
• [5] Finance Bill as introduced 28 March 2013
• [6] Clause 200 of the Finance Bill as introduced 28 March 2013
• [7] Schedule 19 of the Finance Act 2011 which provides for the Bank Levy
• [8] Alistair Darling MP, (Edinburgh South West, Labour), House of Commons, 9 December 2009
• [9] Section 22 of the Finance Act 2010
• [10] Schedule 1 of the Finance Act 2010

Debate in Parliament | Source |