Bank payroll tax
The measure
Following the announcement in the Pre-Budget Report, the Finance Bill will introduce the bank payroll tax (BPT), for which draft clauses have already been published.
Who will be affected?
The measure affects banks and certain other financial companies operating in the UK, where discretionary remuneration exceeding £25,000 is awarded to an individual by such entities. Whilst considerable detail was included within the previously published draft clauses, today's announcement does give further clarification on both the scope of companies and remuneration caught. Final detail is still awaited, however, including that on the content of the returns HMRC will expect to accompany BPT payments on 31 August 2010.
When?
BPT applies for a finite chargeable period, in that it is charged on relevant remuneration awarded during the period 9 December 2009 to 5 April 2010. BPT must be paid and the supporting return filed by 31 August 2010.
The broad impact of BPT was clear from the earlier announcements and HMRC discussions. The clarifications on scope are to be welcomed in giving potentially affected businesses greater clarity around:
- the exclusion of certain stand alone businesses, such as some asset managers; and
- an exemption for short term visitors in the UK for less than 60 days.
In practice, care will still need to be taken in applying the BPT definitions. For example, in relation to the definition of 'bank' and 'banking' group for BPT purposes, a stand-alone commodity trading company now appears to be out of scope, but commodity trading activity within a banking group can be within scope. Further, the burden of compliance will not be clear until further detail is provided in the Finance Bill on the format of the return expected by HMRC.
