The government is under pressure to clamp down on attempts by banks – led by Goldman Sachs – to defer bonus payments to enable highly paid bankers to benefit from the cut to income tax on 6 April.
Chris Leslie, shadow Treasury minister, said that while banks needed to consider the reputational risk of delaying their bonuses to the new tax year when the top rate of income tax falls to 45% from 50%, it was up to the chancellor and prime minister to stop such efforts to benefit top rate taxpayers.
"Banks need to think carefully about their own reputations if they seek to avoid tax in this way, but the ultimate responsibility lies with David Cameron and George Osborne," said Leslie.
"They have refused to repeat Labour's bank bonus tax and pre-announced a £3bn income tax cut for the richest people in the country, giving them the opportunity to delay income and bonuses until April. It cannot be right that this out of touch government is making millions of working people and pensioners on modest incomes pay more while giving millionaires and bankers a huge tax cut."
Goldman, which publishes its full-year results on Wednesday, is considering whether to push deferred bonuses from 2009, 2010 and 2011, which were scheduled to be handed to staff by the end of March, into the new tax year. Bonuses for 2012, which will be given to staff shortly, are not included in the plan currently being considered.
If the Wall Street firm presses ahead with the idea it would be matching the steps it took to enable its US-based staff to avoid a tax hike at the start of the year when it paid out about £40m in so-called restricted stock just as the "fiscal cliff" budget talks led to taxes being raised.
Campaigners for a new tax on the financial sector at the Robin Hood Tax campaign also urged the government to act. "The government should not stand idly by but must act to ensure the richest sector in the UK pays its fair share to save services and create jobs," a spokesman for the campaign said. "Goldman Sachs' latest tax trick is lamentably true to form – fleecing the public purse to stuff the pockets of its bankers," he added.
City sources believe that many banks had considered whether to delay bonuses into the new tax year but that many of them have rejected the idea to avoid any negative publicity in the wake of the row surrounding corporation tax paid by Starbucks in the UK. Some bankers will benefit from the income tax cut as their bonuses for 2012 are not paid until June. This includes employees at bailed-out banks Lloyds Banking Group and Royal Bank of Scotland, who receive any bonus above £2,000 in shares in June at the earliest.
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