Wednesday, the British Chancellor Alistair Darling imposed a special 50% tax on bankers' bonuses in his third pre-budget presentation before the parliament.
Effective from today, the Chancellor introduced a special one-off levy of 50% on any individual discretionary bonus above GBP 25,000. Darling added if the banks use their profits for paying bonuses, instead of using it to build up their capital basis, they will have to pay a large amount back to the taxpayer.
"This will be paid by the bank not the bank employee. Anti-avoidance measures will be introduced with immediate effect," Darling said. "High-paid bank staff will of course also have to pay, as usual, income tax at their top rate on any bonus they receive. On a cautious assumption, which includes our expectation that some banks will rein back bonuses, this one-off levy is expected to yield GBP 550 million.
Darling said the government expects the British economy to return to growth in the fourth quarter, though it is forecast to contract by 4.75% this year on a whole. Gross domestic product is likely to grow by between 1% and 1.5% during 2010.
He noted that unemployment will continue to rise for some time and hence, it would not be right to withdraw all support now for homeowners. Darling added that unemployment in the UK remains lower than in France, Canada, the United States and the euro area.
Moreover, Darling confirmed that VAT will return to 17.5% on January 1 as planned. Hence, consumer inflation will rise from 1.5% to around 3% early next year, before falling back. The Bank of England expects inflation to then fall below target and reach 1.5% by the end of next year.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.