Commentary

D7.706 Scope and administration

Corporate tax
Corporate tax | Commentary

D7.706 Scope and administration

Corporate tax | Commentary

Bank payroll tax

D7.706 Scope and administration

Scope

The bank payroll tax (BPT) was introduced by FA 20101 and essentially charges tax at 50% on all bonuses paid by taxable companies to employees during the chargeable period beginning at 12.30 pm on 9 December 2009 and ending on 5 April 20102.

It must be stressed that BPT has no effect on the employee receiving the bonus, who is taxed in the normal way on the income he/she receives. However as BPT is not deductible against corporation tax3, the real cost is the 50% BPT, plus the applicable rate of corporation tax on the amount of the tax — at least where the institution is profitable.

BPT applies to a company which is either4:

  1.  

    (a)     a UK resident bank or a relevant foreign bank5

  2.  

    (b)     not within (a), but is a member of a banking group and is either a UK resident investment company, a UK resident financial trading company or a relevant foreign financial trading

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