It was clearly silly season for accountant's yesterday. Take this:
John Whiting, policy director of Chartered Institute of Taxation, said the total tax rate on bonuses for high-earning bankers would be about 104 per cent, of which about half would be paid by the employee. For an individual receiving a bonus of £1m, the bank would pay the new tax of £500,000, total national insurance would be £138,000 and personal income tax would be £400,000.
PwC, the professional services firm, calculated that it would cost a bank £131 to deliver £59 to an employee caught by these rules.
This is absurd. Express any tax in terms of the net return and the tax rate looks high. Express the tax rate as a percentage of the total cost of paying and you get the true tax rate. Here it is, using this appropriate methodology, 63.7%.
Actually, after corporation tax disallowance at 28% on the bank payroll tax that is higher still at 67.6%. But it is never, and nowhere near, 104%.
I know and like John Whiting. I'm surprised he's succumbed to such silly games.