• Bonus Deferral: Pitfalls for the Unwary
  • January 11, 2013 | Authors: Bernadette Daley; James Hill
  • Law Firm: Mayer Brown International LLP - London Office
  • The additional rate of tax, which applies to taxable income above £150,000, has stood at 50% since it was introduced in April 2010. However, it has been announced that the additional rate will be reduced to 45% with effect from 6 April 2013. As yet, the Government has not announced or indicated that any anti-forestalling measures will be introduced. Therefore, some employers and their employees (who are within the additional rate tax band) are considering deferring bonuses that may otherwise be paid before the decrease in tax rate until on or after 6 April 2013. This could be beneficial to employers as it may incentivise key employees, who could potentially make a big saving. In deciding to defer bonuses, several tax and employment law issues must be borne in mind. In addition to this, some wider reputational issues should be considered.