So, this week we’ve had more news about employers deferring bonus payments until after 6 April so that staff earning more than £150k a year can pay income tax at 45% instead of 50% as currently applies.
Virgin Media defers bonus payments
The general population might squeal at the idea of ‘fatcats’ apparently avoiding higher-rate tax. But let’s be honest, this is good reward management: allowing your staff to make informed decisions about their pay and its tax implications.
But the lawyers are now popping up and pointing out problems about employers not changing employment contracts with regards to bonuses dates and potentially falling foul of HM Revenue and Customs. Our reporters are investigating as to whether this is legal scaremongering, or a genuine issue for reward managers to beware of before deferring bonuses.
Watch this website for developments.
Debi
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Debi O’Donovan, Editor, Employee Benefits
Twitter: @DebiODonovan
I think this issue illustrates the problems and tensions within the UK tax system linked to kneejerk reactions by politicians and HMRC to short term policy issues. The UK Prime Minister talks of moral duty to pay tax while UK and European regulations are so badly drafted that clever lawyers and accountants can drive a coach and horses through them.
Public Limited Companies (PLC’s) in the UK have a fiscal duty not to pay more tax than they need (arguably they have a duty to minimise the tax burden). Pay specialists in organisations could, it can be argued, have a duty of care to employees to ensure they do not pay any more tax than they are legally obliged to do.
Good tax law is certain (you know what you should pay tax on and when) equitable, (tax systems, to have legitimacy should treat everyone equally) and transparent, so it is clear how the system works and what is due. It appears to me that although HMRC tries hard to achieve this; political expediency masquerading as tax policy has resulted in a system that is not certain, transparent or equitable. Then politicians act surprised when organisations and individuals seek to minimise their tax liability in the face of this confusion. As you sow so shall you reap – as true today as it ever was.