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UK: Bonus Tax Impact on Business Visitors
U.K. and Bonus Tax Impact on Business Visitors
The United Kingdom’s new Bank Payroll Tax (“BPT”) introduces a one-off 50-percent tax charge on discretionary bonuses of over £25,000 paid from 9 December 2009 until 5 April 2010 (subject to any extension and certain anti-avoidance provisions). The BPT will be paid by the employer and not the employee. The tax is payable by 31 August 2010, and will not be deductible for corporation tax purposes.
The BPT is intended to apply in relation to “bank” employees who are employed in a “banking employment”.
One of the uncertainties with the new BPT is the extent to which it applies to individuals who have only worked for short periods in the United Kingdom. This is because the draft legislation could be interpreted as imposing a charge where an individual worked in the U.K. for only one day. Her Majesty’s Revenue & Customs (HMRC) has now issued further guidance on this point.
Business Visitors to the U.K.
Question 27 of HMRC’s “Bank Payroll Tax – Responses to Some Questions” published on 23 December 2009, announced HMRC’s intention to limit the application of the BPT to bonuses paid to individuals who visited the U.K. for 60 or more days during the tax year ending 5 April 2010.
KPMG Note
Where practicable, companies impacted by the BPT that have banking employees who haven’t yet breached the 60-day threshold may wish to consider limiting their further visits to the U.K. before 6 April 2010, so that their bonuses should not become subject to the BPT. This is particularly important as it appears that the whole of any bonus of £25,000 or more would be chargeable and not just the proportion of the bonus that relates to U.K. duties. KPMG LLP (U.K.) will continue to request further clarification on the application of the BPT to bonuses paid to individuals who work in more than one country during the year ending 5 April 2010.
If you think you may be affected by the BPT, please consider contacting your tax adviser to discuss the situation.
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Tags: Bonus, Business Visitors, Global Mobility, Impact, international assignment, Tax, UK
This entry was posted on Thursday, January 7th, 2010 at 10:17 am and is filed under Global Mobility, Tax, UK. You can follow any responses to this entry through the RSS 2.0 feed.
