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Companies should come clean on bonus tax dodges, investor group says Companies should come clean on bonus tax dodges, investor group says
(about 4 hours later)
Major companies should be forced to disclose if they have helped their highest paid staff pay a lower rate of tax on bonuses, according to a leading shareholder advisory firm. Large companies should be forced to disclose if they have helped their highest paid staff pay a lower rate of tax on bonuses, according to a leading shareholder advisory firm.
Pirc, which advises pension funds on corporate governance issues, has written to the remuneration consultants employed by companies to ask whether they have been suggesting ways their clients can take advantage of the cut in the top rate of income tax on 6 April.Pirc, which advises pension funds on corporate governance issues, has written to the remuneration consultants employed by companies to ask whether they have been suggesting ways their clients can take advantage of the cut in the top rate of income tax on 6 April.
The move has been prompted by the revelation in the Guardian that insurer Aon has allowed 250 of its highest paid staff to defer bonuses to the start of the new tax year when the top rate of tax falls to 45% to 50%.The move has been prompted by the revelation in the Guardian that insurer Aon has allowed 250 of its highest paid staff to defer bonuses to the start of the new tax year when the top rate of tax falls to 45% to 50%.
Pirc wants to know if any of the companies have acted on advice by remuneration consultants to push payments into the new tax year and if the remuneration firms have themselves introduced any such changes for their own staff.Pirc wants to know if any of the companies have acted on advice by remuneration consultants to push payments into the new tax year and if the remuneration firms have themselves introduced any such changes for their own staff.
In any cases where deferrals have been made, Pirc suggests that the information be disclosed in the company annual report.In any cases where deferrals have been made, Pirc suggests that the information be disclosed in the company annual report.
The idea of deferring payments to allow staff earning more than £150,000 to pay less tax was first highlighted by Goldman Sachs which had been considering whether to allow part payments from 2009, 2010 and 2011, due to be handed out before March, to be deferred into April. Goldman dropped the plan after Bank of England governor Sir Mervyn King said he found it "depressing" that firms should consider ways to help high paid staff benefit from the tax cut. A Treasury minister also spoke to Goldman officials behind the scenes. Goldman had not been considering whether to change its 2012 bonuses.The idea of deferring payments to allow staff earning more than £150,000 to pay less tax was first highlighted by Goldman Sachs which had been considering whether to allow part payments from 2009, 2010 and 2011, due to be handed out before March, to be deferred into April. Goldman dropped the plan after Bank of England governor Sir Mervyn King said he found it "depressing" that firms should consider ways to help high paid staff benefit from the tax cut. A Treasury minister also spoke to Goldman officials behind the scenes. Goldman had not been considering whether to change its 2012 bonuses.
Aon moved its headquarters to London from Chicago last year to be closer to the Lloyd's of London insurance market. But in addition to insurance it also owns a number of businesses, including the HR and remuneration consultancy Hewitt. Aon said that the 250 staff whose bonuses were being deferred by a month to April amounted to 4% of its UK workforce.Aon moved its headquarters to London from Chicago last year to be closer to the Lloyd's of London insurance market. But in addition to insurance it also owns a number of businesses, including the HR and remuneration consultancy Hewitt. Aon said that the 250 staff whose bonuses were being deferred by a month to April amounted to 4% of its UK workforce.
Another insurer Willis has also said that it is " reviewing" is position on pay. Another insurer Willis has also said that it is " reviewing" its position on pay.
City sources believe that many firms will have considered whether to defer payments into the new year because of the 12 months' notice the chancellor gave of his intention to reverse the rise implemented by Labour. But sources believed that many firms would reject the idea following the furore surrounding the amount of tax paid by US coffee chain Starbucks in the UK. City sources believe that many firms will have considered whether to defer payments into the new year because of the 12 months' notice the chancellor gave of his intention to reverse the rise implemented by Labour. But sources believed many firms would reject the idea following the furore surrounding the amount of tax paid by US coffee chain Starbucks in the UK.